Boston Scientific Targets Japan - Analyst Blog

In an attempt to target the Japanese market, leading medical devices player, Boston Scientific Corporation (BSX) has entered into an agreement with Fukuda Denshi Co to sell its cardiac rhythm management (CRM) devices and accessories. Banking on Fukuda Denshi's strong sales team and distribution network, Boston Scientific would be better placed to reach the consumers in Japan.

Boston Scientific derived 32% of its revenues from the CRM segment. This segment includes a broad product portfolio including pacemakers, implantable cardioverter defibrillators (ICDs), cardiac resynchronization therapy defibrillators (CRT-Ds), cardiac leads and patient management systems.

During the third quarter of fiscal 2010, Boston Scientific recorded CRM sales of $550 million, down 10% from the year-ago quarter. While sales in the domestic market declined 10% to $362 million, the company recorded an 8% increase in international sales ($188 million).

Worldwide ICD sales declined 8.7% year over year to $406 million, with 11% decline in the US ($280 million) and a 3% decline in international sales ($126 million). The international growth continued to be driven by strong market acceptance of the Teligen ICD and Cognis CRT-D in Japan and the new Foresight leads. 

In May 2010, Boston Scientific resumed the US distribution of its Cognis CRT-Ds and Teligen ICDs, representing virtually all of the company's defibrillator implant volume in the US.

Earlier in the first quarter 2010, the company had to suspend sales of its defibrillators after it failed to inform the US Food and Drug Administration (FDA) regarding changes in the manufacturing process of these devices. The resumption of CRT-Ds and ICDs sales helped the company prevent erosion of its top-line and market share.

Further, the company expects to exit the year with a 26% market share in ICDs, higher than the previous estimates of 25%. However, the company faces tough competition from players like Medtronic (MDT) and St. Jude(STJ). We believe the agreement with Fukuda Denshi should enable Boston Scientific to strengthen its position in Japan, thereby having a positive impact on the top line.

We are currently Neutral on the stock.

 
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
 
MEDTRONIC (MDT): Free Stock Analysis Report
 
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
 
Zacks Investment Research