Medtronic Inc, the world's biggest maker of pacemakers, may capture at least 10 per cent of the US$5 billion market for drug-coated heart stents, cutting into profit growth at Boston Scientific Corp and Johnson & Johnson.

Medtronic plans to sell its Endeavor stent in Europe this year and in the United States in 2007. The stent will cost about US$1,900, or 20 per cent less than stents made by Boston Scientific and Johnson & Johnson, according to Chris Cooley, a Cleveland-based analyst at FTN Midwest.

"It's scary for the leaders to see competition coming and worry not only about having to divide up the pie, but also is there something out there that can surpass them?" Piper Jaffray analyst Thomas Gunderson said in a February 23 interview. "What will change the market is price."

A study to be released tomorrow at an American College of Cardiology conference may help the Minneapolis-based company win regulatory approval for the stent. In Europe, Medtronic will likely capture 10 per cent to 15 per cent of stent sales, Morgan Stanley analyst Glenn Reicin wrote in a March 1 note to clients. Medtronic may win 10 per cent of the US market, Michael Weinstein, an analyst at JP Morgan, estimated.

Stents are tiny mesh tubes that prop open arteries after they have been cleared of obstructions. In the two years since New Brunswick, New Jersey-based J&J unveiled the first drug-coated stent, they have come to account for almost 90 per cent of the US market. Natick, Massachusetts-based Boston Scientific began selling its stent in March 2004.

The competition between J&J and Boston Scientific has reduced prices, according to Cooley, who has compiled sample prices by surveying catheterization laboratories at 50 hospitals. Boston Scientific has sold its Taxus stents for less than US$2,000 to some hospitals, down from the US$2,400 it charges most customers, Cooley said.

Samin Sharma, director of interventional cardiology at Mt Sinai Hospital in New York, said hospitals would take advantage of the competition to reduce costs. Johnson & Johnson's Cypher stent sold for about US$2,800 before Boston Scientific's Taxus stent arrived, Sharma said, then plunged as low as US$2,300.

"If the cost comes down, then you can become a little more liberal with using two or three kinds of stents," he said.

Doctors may use more multiple drug-coated stents in a patient as the cost of devices comes down, said John Douglas, director of interventional cardiology at Emory University Hospital in Atlanta.

"The price affects the ability to treat patients," said Douglas, who did the first coronary stent procedure in the United States in 1987. "In some cases, the cost can be prohibitive."

Boston Scientific is counting on a new version of its stent to put distance between Medtronic and other newcomers, such as Abbott Laboratories and Conor Medsystems Inc, which also are developing drug-coated stents.

By the time rivals' new products reach the market, "we'll be selling our third- or fourth-generation product, and it won't have any vulnerability to Medtronic's stent platform," said Paul LaViolette, Boston Scientific's chief operating officer, on March 1. "I'd say that's an extraordinarily favourable setup."

Johnson & Johnson, also working on new versions, may get a boost by using the drug from its own Cypher model with a different kind of stent developed by Guidant Corp. J&J agreed in December to buy device-maker Guidant for US$25.4 billion.

Brian Firth, vice-president for medical affairs at J&J's Cordis unit, declined to discuss pricing or Medtronic's prospects. "We'll have to see the results of their study and how the doctors respond to it," Firth said.

Boston Scientific revenue jumped 62 per cent last year to US$5.62 billion from US$3.48 billion on coronary stent sales of US$2.4 billion, a more than fourfold increase for the devices.

(China Daily 03/07/2005 page12)