Stents are big business
By Edward R. Silverman
STAFF WRITER
Last year, Dr. Mark Blum, a cardiologist at Morristown Memorial Hospital, performed nearly 150 procedures in which he used a stent, a narrow tube of a medical device, to open clogged coronary arteries.
Most of the stents he employed were made by Johnson & Johnson, the health care giant that four years ago pioneered the use of these stainless steel meshes for repairing blood vessels. But by year's end, Blum was increasingly using stents made by a rival
manufacturer, Guidant Corp. So, in fact, were thousands of other
physicians nationwide.
"The new one is a more flexible stent and it's caught on," explained Blum, who runs the hospital's cardiac catheterization lab and is also a partner in Mid-Atlantic Cardiology Group, a large New Jersey practice. "It can go places where you can't go with J&J's rigid stent. Look at your heart and you'll see the arteries ain't straight like a pipe. I need to go around curves."
This dramatic shift among doctors also has thrown a curve at Johnson & Johnson. Once the dominant player in a business that last year was estimated at about $740 million in the U.S., its market share has plummeted from 90 percent last summer to just 35 percent at the end of 1997, according to Eli Kammerman, a
securities analyst at Raymond James and Associates.
Now, the company that is widely credited with revolutionizing interventional cardiology, a cost-saving alternative to bypass surgery, finds itself rushing to place updated stents in the hands of cardiologists, fending off a growing number of competitors and preparing for a price war that many expect to erupt later this year.
"The problem was that they didn't upgrade the product to become more flexible," said Darrell Riley, an investment analyst at T. Rowe Price, the big mutual-fund manager. "And there's recently been a variety of efforts by other companies to develop superior stents.
But Johnson & Johnson was still selling its dinosaur." The company's stent, which was already being used for other
procedures, became an instant hit in 1994 because it reduced the risks associated with coronary angioplasty. This involves inserting a
balloon and a stent to open damaged blood vessels. While not
flawless, a stent prevents vessels from re-closing, which used to
occur in 40 percent of patients.
Thanks to stents, which are now sold in different lengths, that figure has dropped to 15 percent. Not surprisingly, stents made angioplasty more popular. According to Raymond James' Kammerman, stents are now used in 43 percent of all angioplasty performed. Last year, that meant more than 250,000 procedures involved stents.
Despite the recent consolidation among hospitals prompted by managed care, stents quickly became a lucrative business for Johnson & Johnson. Generally, analysts say hospitals were paying between $1,200 and $1,500 for a stent along with the balloon
catheter used in angioplasty, since the devices must be sold together.
Now, new stents are about to be released by other manufacturers and still more are being tested by cardiologists. It's unlikely, therefore, that Johnson & Johnson will regain its leading position any time soon, despite having received approval from the Food and Drug Administration last month to sell an upgraded stent it calls the Palmaz-Schatz Crown.
"Interventional cardiologists are willing to try many new products,usually because they're comfortable with their own capabilities," said Ronald Dollens, Guidant's chief executive. "And if you offer them an improved model, they'll stay with it. And our product has been available in Europe for two years. So it was actually a known product."
Indeed, doctors were quick to use Guidant's Multi-Link stent,which was released here last October, because it's been widely available overseas, where new products are frequently approved much faster and physicians often attend seminars. "I've been going to conferences in Europe and Israel and was laughed at when I
told them what I was using," Blum said.
Johnson & Johnson's disappointment over the sudden turnabout of
its stent business was evident last week to anyone reading the
company's earnings reports. In discussing its latest financial results, the New Brunswick health-care giant didn't even mention the
product, which in the past was often singled out as a key
contributor to sales growth.
"I wished we'd moved faster" in developing follow-up models, acknowledged Robert Crowe, the Johnson & Johnson executive who oversees the interventional cardiology business. "But we're getting criticized for being late, when we were two to three years ahead of everybody else. We could ask, 'Where were the other
guys?"'
No one is suggesting that this setback, whatever its duration, will diminish the company's overall prospects. With a product line-up
that includes Tylenol, Band-Aids and numerous pharmaceuticals,
analysts say stents sales amounted to $700 million, or less than 3
percent of companywide sales of $22.6 billion last year -- a
smidgeon in the scheme of things.
Still, Johnson & Johnson is actively trying to grow its interventional cardiology business, as evidenced by its $1.8 billion hostile takeover in 1996 of Cordis Corp., which makes the balloons used in angioplasty, and lawsuits filed against three rival stent makers over patent issues. Litigation with two other competitors has been settled.
Besides Guidant, other stent makers include Medtronic Inc., Boston Scientific Corp., Arterial Vascular Engineering Inc. and Cook Group Inc. In addition, C.R. Bard Inc., a medical-device
maker based in Murray Hill, recently completed clinical trials of its
stent and plans to seek FDA approval later this year.
To combat these entrants, Crowe says Johnson & Johnson hopes
to release two more stents this year and is also working on a
radiated stent, which would use radiation to repair damaged blood
vessels. In effect, the stent would resemble a drug-delivery system.
"If it works, this could be their coup de gras," said Kammerman.
Of course, nothing is certain. Although radiation would likely do a
better job of preventing arteries from re-closing, such stents may
have a fixed shelf life, suggesting that hospitals may encounter
inventory problems. Also, it's not clear how easy it will be to tailor
the needed dosages of radiation without causing other medical
complications.
Crowe is nonplussed. "I think you'll see lots of turmoil and market
share shifting back and forth, and it's difficult to see how all that will turn out," he said. "But interventional cardiology is very
technology-driven. There'll probably never be one stent for all
situations. And there are a lot of things happening in this market."
Now what will happen if ABMI Stents surpass the existing stents in terms of quality compared to the rest in the market ? Any Ideas ? Opinions ?
Regards,
Sri |
