Abbott (ABT): A Resurrection Of The Stent Business

The stent business in the US has been dying and it is in trouble overseas. Stents are small mesh tubs which keep clogged arteries open.

Last year, several studies showed that stents could cause clotting which in turn could trigger heart attacks. More recently scientists have pointed out that open heart surgery can be more effective than stents for managing cardiac disease.

The bad medicine almost scuttled Boston Scientific (BSX). It had taken on huge debt to buy rival Guidant. Stents are one of the company’s largest product lines. The sharp drop in sales after the challenging research was issued took BSX shares to a series of 52-week lows.

The two other stent manufacturers, Abbott (ABT) and Johnson & Johnson (JNJ), have broad and diverse business operations, some outside of medicine. The damage to stent sales hurt them but did not pose a meaningful threat to their sales or earnings.

After a hellish period, one stent product has begun to show progress which may bring doctors back to the treatment. According to The Wall Street Journal, Abbott’s Xience drug-coated stent is exceeding the company’s expectations following its introduction in the U.S. in early July.

The news could simply be viewed as more trouble for BSX. Abbott’s new product may steal market share. There is, however, just as much chance that a view of stents as a reliable treatment for artery problems will resurrect the market and even Boston Scientific will get some benefit.

Douglas A. McIntyre