For Boston Scientific Corp. to have any chance of reviving its ailing peripheral vascular business, it must rely on a 46-year-old executive who used to sell Budweiser and Bud Light for a living.
Beer and stents may seem worlds apart, but Joe Fitzgerald says his time at Anheuser-Busch Cos. taught him how to nurture a venerable brand in a fiercely competitive, shifting industry.
“I learned the importance of brand management for very, very long life cycles,” said Fitzgerald, a senior vice president who heads Boston Scientific’s recently reorganized endovascular unit. “It doesn’t get more competitive than beer. You quickly learn you were only as good as your last productive day.”
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Boston Scientific will need every ounce of Fitzgerald’s sales and marketing know-how. Distracted by its troubled acquisition of Guidant Corp., the company has been struggling to play catch-up in the heated race to treat peripheral vascular (PV) diseases.
It’s not just a matter of pride (the company pioneered innovations like the peripheral polyethylene dilation balloon in the late 1970s) but the PV market, blood vessel disorders below the waist, is growing about 10 percent to 12 percent a year, compared to just zero to two percent for coronary (heart) diseases. The competition has been particularly intense with everyone from major device makers like Johnson & Johnson and Medtronic Inc. to smaller companies like Cook Medical, C.R. Bard and ev3 Inc. in Plymouth, Minn. rolling out products.
“I don’t know if anyone can dominate the market,” said Tom Gunderson, an analyst with Piper Jaffray. “I don’t see anyone with a show-stopping [product] that can significantly capture market share in the next 12 to 16 months.”
Said Fitzgerald: “It’s a much more crowded market than normal. We see it as a major part of our growth strategy.”
A St. Louis native, Fitzgerald studied at Indiana University and Southern Illinois University, where he received his MBA. Fitzgerald then worked several years with sales and marketing teams at Anheuser-Busch. In the early 1990s, Boston Scientific, impressed with the beer giant’s ability to develop managerial talent, recruited Fitzgerald to work in the company’s peripheral business. At the time, Boston Scientific generated 80 percent of its $100 million annual sales from its PV products.
However, over the past decade, Boston Scientific aggressively pursued drug-eluting stents and pacemakers, and implantable cardioverter defibrillators, culminating in its troubled $27 billion purchase of Guidant Corp in 2006.
But with sales of heart-related devices stalling, the company has shifted its focus back to the PV market. It recruited Fitzgerald, a fast-rising executive who has since helped oversee Boston Scientific’s $1 billion acquisition of Target Therapeutics and run its electrophysiology business, to revitalize his original division.
Boston Scientific’s neglect of PV was apparent. In fiscal 2009, the company’s peripheral interventions unit generated $661 million in sales, a drop of 3 percent from the previous year. By contrast, ev3, strengthened by its $780 million purchase of FoxHollow Technologies, said PV sales totaled nearly $280 million last year, a 4 percent gain from 2008. PV sales in the fourth quarter alone jumped 8 percent.
Fitzgerald, who was recently promoted to Boston Scientific’s Executive Committee, said the company was not introducing any new products, partly because it didn’t possess any employees–engineers, sales people, marketers, regulatory affairs specialists–working solely on the business. He has since built dedicated PV teams to develop a more robust product line.
Over the 15 months, the Food and Drug Administration has granted the company three PV-related pre-market approvals (PMAs) including its Sterling ES and Sterling SL stents, and Express LD Iliac stent, the first FDA approved pre-mounted balloon expandable stent designed to treat atherosclerotic iliac disease (plaque builds within the arteries that supply blood to the legs, causing poor blood flow and leg pain).
The company is also conducting a major clinical study on a stent for the superficial femoral artery (SFA). Bard is currently the only company to sell a FDA-approved SFA stent in the United States. With 10 product launches scheduled for 2010, Fitzgerald said he expects Boston Scientific to match market growth rates this year and exceed them in 2011.
The market is very much up for grabs, Gunderson of Piper Jaffray said. Doctors are frustrated with the lack of durable, simple to use PV stents, he said.
Part of the problem is that medical device firms are largely not selling stents specifically designed and approved for peripheral diseases. Fitzgerald says Boston Scientific’s experience and global market leadership of stents should give it an advantage.
Venkat Rajan, an analyst with market research firm Frost & Sullivan, agrees.
A company with a broad product portfolio that can produce strong clinical evidence supporting FDA approval of PV-specific devices will win market share, he said. Boston Scientific has considerable resources to ease products into market and enjoys a strong familiarity with stenting technology, Rajan said.
