Boston Scientific, which employs some 5,000 Minnesotans, is keeping mum about reports it's planning job cuts that could fall heavily in the state. But with some of the company's key businesses in the doldrums, analysts say job cuts would make sense.
Boston Scientific reduced employment company-wide by 1,000 last year. And the company told the Dow Jones news service Thursday that it will be conducting "focused workforce reductions."
Boston Scientific declined to offer specifics. And the firm did not say if these are new reductions -- or part of a downsizing program announced about a year ago.
Earlier in the day, Reuters reported the medical device maker plans to lay off about 5 percent of the workers in its unit that makes pacemakers and other heart devices. Much of that work is concentrated in Minnesota.
Boston Scientific did not respond to repeated requests for comment.
Tim Nelson, an analyst for Nuveen Asset Management, says job cuts wouldn't surprise him. He says Boston Scientific and most other medtech firms are struggling to keep up sales -- and prices -- for devices that keep hearts beating, and prop open clogged arteries.
"Those markets have really stopped growing from a unit perspective. And we don't really know what's going to cause them to grow again," said Nelson.
Last month, Fridley-based Medtronic announced it will cut up to 2,000 jobs companywide amid disappointing sales.
Meanwhile, Little-Canada based St. Jude Medical plans to hire about 200 people this year. The company has been taking sales away from rivals. Analysts says St. Jude, unlike its rivals, has a steady stream of new products lined up.
But Nelson says St. Jude will also feel the impact of slowing sales for medical devices.
"They're not experiencing as much pressure as Medtronic and Boston Scientific, but definitely are hurt by the maturing of the marketplace," he said.
Nelson says many people who need implants already have them, and the pace at which people are getting them has been slowing.
"Competition is fierce," said Aaron Vaughn, an analyst with Edward Jones.
Vaughn notes that Boston Scientific's overall sales fell 5 percent last year. And sales for its Twin Cities-based cardiac rhythm management business plunged 10 percent.
Not only are sales slowing for medical device companies, but Medicaid, Medicare and private insurers are also demanding lower prices, according to Vaughn.
"We have seen cardiac rhythm management mid-single-digit price declines year over year," he said. "And in the drug-eluting stent, it's even worse. We're seeing upper-single-digit price declines."
Drug eluting stents, once a blockbuster product, prop open a clogged artery and slowly release medication to prevent scar tissue from growing and reclosing the blood vessel.
Vaughn says that some patients are also delaying some procedures requiring expensive implants, if they can.
"That's certainly part of the equation as well," he said. "People may be losing insurance, and the people keeping their insurance ... are facing higher deductibles. Or they're going to a health savings account, where there's a much higher deductible."
What the med tech industry needs is some new home-run products to boost sales, according to analyst Tim Nelson with Nuveen.
"Innovation is really the lifeblood of the industry. And we've seen a significant slowdown in innovation and new product approvals," he said.
It's the kind of malaise some folks never envisioned would hit medical device companies. But recent months have proven they are not immune from stagnant markets and falling demand.