Tough week for biomedical industry

Guidant technician
A technician works on a defibrillator at Guidant's manufacturing facility in Arden Hills. Boston Scientific, based in Natick, Mass., bought Guidant last year.
MPR Photo/Jeff Horwich

Boston Scientific, the the world's biggest maker of drug-coated heart stents, said profits -- excluding some big one-time expenses -- beat Wall Street's expectations. Sales of stents, which prop open clogged arteries, fell 22 percent. But that was less of a tumble than expected.

More importantly, perhaps, Boston Scientific's revenue from implantable cardiac defibrillators rose 18 percent. The devices shock a heart back to normal rhythm when its beat becomes chaotic and life-threatening.

The sale of defibrillators has been plummeting as problems with the devices and recalls shook consumer confidence. The drug-eluting stents Boston Scientific makes have also suffered major sales declines. Some studies have raised questions about the safety and effectiveness of the devices, which release a medication to prevent a blood vessel from reclosing.

But Boston Scientific CEO Jim Tobin was encouraged by the sales figures for stents and implantable cardiac defibrillators.

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"We'd like to drive cars that are as reliable as these devices are."

"This quarter had a better feel to it. The best way I can express it is to say the quarter represented the beginning of a turn for us," said Tobin.

Maybe. But even it if does, Boston Scientific plans to soon cut some 2,300 jobs. But the company won't say where the cuts will come.

In the Twin Cites, Boston Scientific has some 6,400 employees, mostly in Maple Grove and Arden Hills.

Despite the planned cuts, Tobin insists Boston Scientific will preserve its ability to invest in product quality, research and development, and people.

"In the end, these reductions will create greater value for our customers and their patients, as well as for our employees and shareholders," Tobin said.

Little Canada-based St. Jude has apparently benefited from its competitors troubles and posted a nearly 40 percent increase in profits. But that wasn't enough for investors, and the company's stock plunged.

Analysts say a turnaround for the industry won't be swift.

"I think we're talking another year of slow growth," says Piper Jaffray medical device analyst Tim Nelson.

Nelson says medical device sales are down largely because of all the news in recent years about recalls and malfunctions.

All the bad news worries many doctors and patients. Nelson says folks have been especially concerned about the reliability of defibrillators.

"A huge number of patients really should have these devices put in. But they're not being referred, largely because of these emerging and continuing quality issues," says Nelson. "These quality issues themselves, as a percentage of the people who have the devices, are relatively small. But they're scary."

Analysts and industry experts say manufacturers need to do a better job educating doctors and consumers about the relative benefits and risks of the devices.

"They hear about the ones that go bad. But the reliability of these devices is still pretty high, and the safety is pretty good," says Jan Wald, a Boston-based analyst at Stanford Group.

Wald says there's no shortage of studies and other evidence to show the benefits of devices such as defibrillators outweigh their risks.

"There's a lot of data now that suggests there really isn't a big difference, if at all, between bare-metal stents and drug-eluting stents, for example. Or the reliability of the cardiac rhythm management devices are very high," says Wald. "We'd like to drive cars that are as reliable as these devices are."

Many heart experts continue to express great confidence in defibrillators. Dr. Steve Hustead, a cardiologist at Mercy Hospital in Coon Rapids, is one. But Hustead sees a lot of worry among patients.

"More patients have probably died who have declined defibrillators than were ever really hurt by a defibrillator. And I don't think that gets out in the press the way it should," says Hustead. "I think patients are confused and upset, and they don't really understand the facts."

The fortunes of Boston Scientific and other area medical device manufacturers will largely rest with their ability to bring the public around to Hustead's perspective. To do that, they'll have to improve the quality of their production enough to avoid high-profile device recalls.