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Boston Scientific plots expansion

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January 12, 2012|By Robert Weisman

SAN FRANCISCO - Boston Scientific Corp. plans to introduce two dozen new products this year, part of a plan by its new executives to broaden the device maker’s business base and increase earnings at a double-digit rate over the next five years.

That ambitious agenda was laid out by Boston Scientific’s new chief executive, Hank Kucheman, and new president, Mike Mahoney, to investors at the 30th annual J.P. Morgan Healthcare Conference in San Francisco.

While profits at the Natick, Mass., company have been squeezed in recent years by reimbursement cuts in its core markets of cardiac and endoscopy devices, investments in new products and new geographic markets should enable Boston Scientific to grow in the coming years, they said.

The products slated for this year range from pacemakers to a new series of platinum chromium stents to a device that treats patients with severe asthma. Executives said many of these products are expected to reduce health care costs because they will help patients stay out of the hospital.

“We think innovation is the heart of Boston Scientific,’’ Kucheman said. “I feel real positive about the future of the company.’’

Kucheman conceded, however, that investors have not yet acknowledged the company’s diversification moves by driving up Boston Scientific’s stock price. Shares of Boston Scientific remain well below the $11 mark of 2009, and after Kucheman’s remarks yesterday, closed up by only 1 cent, at $5.54.

Mahoney, who is scheduled to take over as chief executive Nov. 1, said the company’s Marlborough-based endoscopy, women’s health, and urology divisions will be “stable if not growing’’ in coming years as they expand their product offerings.

Overall, the company has about 2,000 employees in Massachusetts.

In addition to their product introductions, the Boston Scientific executives estimated that ongoing cost-cutting moves, including the divestiture of some business units, will boost earnings by $650 million to $750 million by next year despite continued pricing pressure and a new federal tax on medical devices.

One growth opportunity they cited was in the Asia-Pacific region, where Boston Scientific’s market share is less than 10 percent in most product markets, compared with more than 25 percent in the United States and Europe. But in those markets, it will have to compete with device makers in China and India. To help in that effort, Boston Scientific last year said it was building a $150 million training and manufacturing plant in China.

The company last summer repurchased about 5 percent of its outstanding shares in a $1.3 billion buyback, a sign that executives believe it is undervalued.

“Boston Scientific quite candidly is better positioned than it has been in several years to achieve our aspirational goals,’’ Kucheman told investors yesterday.