New Boston Scientific CEO has high hopes for company
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Boston Scientific, a major player in the Twin Cities medical device industry, is at a crossroads. The company has been been beset by product recalls, run-ins with federal regulators and a difficult merger in recent years. But a new CEO is talking the helm today and Boston Scientific may be leaving its troubles behind.
Boston Scientific is headquartered in Massachusetts, but the company has about 5,000 full-time employees, plus additional contract workers, in Minnesota. The Minnesota-based operations account for about three-fourths of Boston Scientific's roughly $8 billion in annual revenue.
Boston Scientific's new CEO is Ray Elliott, a 35-year medical device industry veteran, who most recently served as CEO at Zimmer Holdings. Zimmer makes orthopedic devices like hip replacements.
Elliot said Boston Scientific is poised for a strong rebound.
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"There's lots of wind at our back, not nearly as much wind in our face, as perhaps in the past," Elliot said.
Elliot, 60, hails from Canada and will replace retiring CEO Jim Tobin.
Elliot said Boston Scientific is bringing a lot of new products to market. Federal regulators had restricted the company's ability to introduce new products following a series of problems. Last year, the company received approval for more than a dozen new cardiac rhythm devices.
Sales are turning around, too, posting double-digit growth each quarter for the past year.
Elliot said the increase reflects declining concerns that drug-coated stents, a key product, helped promote blood clots.
Stents are metal mesh tubes that prop open once-clogged arteries.
"In general, drug eluting stents are better positioned now and with better growth opportunities than they have been in the last year or two," Elliot said.
Boston Scientific established its Minnesota presence by acquiring two companies prominent in the Twin Cities: Scimed Life Systems back in 1995 and Guidant in 2006.
Most of Boston Scientific's sales come from pacemakers and other medical devices designed and often manufactured in Minnesota.
As for the company's presence in Minnesota, Elliot said it's hard to imagine how the company's skilled workforce and R&D strength in the Twin Cities could be duplicated elsewhere.
"The technical skills and expertise there, I don't know how you would replace that," Elliot said.
Elliot said the former Guidant operations here in the Twin Cities are powering the company forward.
Boston Scientific's deal for Guidant has been widely panned as a $27 billion mistake. Critics say Boston Scientific paid too much for the company, and around the time of the deal, Guidant's operations were plagued by safety recalls and quality concerns that drew intense scrutiny from the U.S. Food and Drug Administration. Some Guidant defibrillators -- devices that shock a heart back to a normal rhythm -- had to be recalled after safety defects led to at least seven deaths.
But Elliot said he's glad the Guidant deal got done.
"How good a deal was it? The facts would tell you that it is now and will be --for as far out as we can see-- the growth engine for the company," Elliot said.
Elliot said the company has pretty much satisfied FDA concerns. He notes the company has been free to market new heart rhythm products since 2007.
"It's not all complete," he said. "But we've mastered most of it."
An FDA spokeswoman would only say the agency continues to work with the company to resolve all issues addressed in a past warning letter to the company.
Jan Wald, an analyst with the Noble Financial Group, said Boston Scientific also has some work to do with doctors.
"The challenges now are to win back the favor of the electrophysiologists they lost when the Guidant issue came about," Wald said.
Wald thinks the company has already improved its reputation greatly by putting the Guidant issues behind it.
Wall Street has generally welcomed Elliot's ascent to the CEO post, seeing him as a guy who'll drive up sales. Boston Scientific stock hit an eight-month high last month when Elliot's hiring was announced
