Boston Scientific gets OK for stent in Europe: Promus Element is a higher-profit item

Natick, Mass.-based Boston Scientific makes drug-coated stents -- metal mesh tubes used to prop open heart arteries -- at a division based in Maple Grove that employs about 3,000 people in the Twin Cities. Boston Scientific estimated in August that stents will generate about $5 billion industrywide in sales this year.

The Promus Element represents a "third generation" in drug-coated stent technology, Boston Scientific says. It's also a possible return to the way the company once profited from stent sales.

Over the past two years, Boston Scientific has seen the market share for its Taxus stent diminish because of the growing popularity among heart doctors for a newer product from Illinois-based Abbott Laboratories called Xience V.

The migration of customers to Xience hasn't been all bad for Boston Scientific, since the company sells a private label version of the product called Promus. But Boston Scientific receives only a distributor's margin on the product, which analysts say is about half what the company makes when selling a Taxus stent.

With Promus Element sales, Boston Scientific won't have to share profits with Abbott, said Jeff Mirviss, vice president of marketing with Boston Scientific.

"And this is a device that we feel is better," Mirviss added,

noting that the stent is made of an alloy of platinum and chromium that he described as the "next-generation metal" for stents.

Another positive for Boston Scientific in this announcement: The company's distributor agreement with Abbott is set to expire this month in Europe. So the Promus Element launch guarantees that Boston Scientific will have a stent to sell in Europe that is coated with the drug used on the Promus and Xience stents.

"This is an important psychological and financial positive for the company and the stock," wrote Rick Wise, an analyst with Leerink Swann, in a note to investors Monday. "Many investors had been anxious about Boston Scientific's ability to deliver an on-time approval for Promus Element before the Abbott distribution agreement expired on Nov. 21."

Promus Element is not approved for use in the U.S. Boston Scientific will continue to sell Promus here, though it faces a similar deadline down the road for launching Promus Element -- June 2012.

Christopher Snowbeck can be reached at 651-228-5479.

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