Medical device maker Boston Scientific (NYSE:BSX) recently received FDA approval for its new advanced range of pacemakers and defibrillators. These devices include the Dynagen Mini and Inogen Mini ICDs (Implantable Cardioverter Defibrillators) as well as Dynagen X4 and Inogen X4 CRT-Ds (Cardiac Resynchronization Therapy-Defibrillators). The approval adds to the company’s long list of devices already available, including its innovative Subcutaneous-ICD (S-ICD).
CRT-Ds and ICDs are a part of Boston Scientific’s Cardiac Rhythm Management (CRM) business, also referred to as the Pacemakers/Defibrillators division. This division generated about $1.9 billion in sales last year and currently contributes more than 26% of the company’s valuation, second only to the Interventional Cardiology division. In the past few years, sales in this division have declined in mid-to-high single digits owing to macroeconomic headwinds and increasing competition. However, they are gradually stabilizing as macroeconomic conditions improve and the company’s new products gain acceptance. We expect Boston Scientific’s growing product line and acceptance of new products to help in boosting CRM division sales and arresting the company’s declining share in the global CRM market.
We currently have a price estimate of around $13 for Boston Scientific, which is slightly below the current market price.
New Products Could Help Expand Boston Scientific’s Market Share
ICDs and CRT-Ds are used to treat patients with moderate-to-severe heart failure. These devices provide mild electric impulses to the heart, helping it to produce regular heartbeats and aiding in the normal pumping of blood. Boston Scientific’s latest generation of heart failure devices, such as the Dynagen Mini and Inogen Mini ICDs, are considered to be among the world’s smallest and thinnest defibrillator devices, and the company claims that they are capable of providing unmatched patient comfort. In the pacemaker market, its Dynagen X4 and Inogen X4 CRT-Ds offer a significantly higher number of pacing options than other industry-leading products and also boasts a larger battery capacity than its rivals. The devices also come with a six year warranty. (Press Release, Boston Scientific, April 15 2014)
Considering that some of the major concerns for patients using such medical devices are discomfort, mobility constraints due to their large bulky size and need for regular replacement of the battery/device, the company’s newly approved small-sized and higher longevity devices could encourage patients who were skeptical about using such products to start using them and incentivize existing users to switch from their older products. This could improve the company’s acceptance in the global cardiac device market and help arrest its declining market share. The company’s market share is also likely to benefit from growing acceptance of its lead-free and minimally-invasive S-ICD in the global market. Boston Scientific’s S-ICD is currently the only commercially available subcutaneous implantable defibrillator system in the world. 
Technological Advancements & Emerging Economies Likely To Expand CRM Market
There is a huge untapped market for these products; according to the American Heart Association, there are close to 400,000 patients suffering out-of-hospital cardiac arrests every year in the U.S. alone.  These cardiac arrests could be avoided and better managed if patients use pacemakers/defibrillators, after consulting with a cardiologist. Additionally, as medical device companies increase their presence in emerging markets such as China, India and Brazil, the global cardiac rhythm market (CRM) is expected to grow in high-single digits in the near term and mid-single digits in the medium term.
- S-ICD in short, Boston Scientific, July 2013
- Heart Attack or Sudden Cardiac Arrest: How Are They Different?, AHA, May 14 2013
Disclosure: No positions