FDA Lifts All Restrictions on Boston Scientific's Minnesota Guidant Plant

Boston Scientific's shares rose over 7% yesterday -- their biggest gain since February 2005 -- on news that the FDA has cleared its St. Paul cardiac rhythm-management device plant for operation. The plant was originally owned by Guidant, which Boston Scientific purchased for $27.5 billion last year. Guidant recalled 109,000 defibrillators in 2005 because of electrical and battery defects, prompting the FDA to inspect the plant. The FDA then sent Guidant a warning letter about deficiencies at the plant in December 2005, all of which have now been resolved. Boston Scientific is now free to seek approvals for new devices in the $10 billion-a-year global market for pacemakers and implantable cardioverter defibrillators [ICDs]. "[T]he competitive dynamics have changed over the past year and it remains to be seen how successful and quickly (Boston Scientific) will be able to take back lost ICD market share," said Bank of America analyst Glenn Novarro. Boston Scientific has yet to resolve a second warning letter about quality control problems at plants in Massachusetts, Minnesota and Indiana.

Sources: MarketWatch, Reuters, CNN.com, Bloomberg, 24/7 Wall Street
Commentary: Bypassing Surgery - Will Stents Survive The Bad News? • Boston Scientific Addresses Quality Issues at JPMorgan's HealthCare Conference • JNJ, Boston Scientific Heart Stents Are Safe, Says FDA
Stocks/ETFs to watch: Boston Scientific Corp. (BSX). Competitors: Johnson & Johnson (JNJ), Medtronic Inc. (MDT), St. Jude Medical Inc. (STJ), Abbott Laboratories (ABT). ETFs: iShares Dow Jones US Medical Devices (IHI)

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