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ARDEN HILLS and MAPLE GROVE, Minnesota — Boston Scientific Corp.’s decision Wednesday to combine its two heart-related businesses, both based in Minnesota, was not just another corporate effort to save a few (hundreds of millions of) bucks.
It also signaled that the medical device maker, based in Natick, Mass., was finally ready to put the ghosts of its troubled $27 billion acquisition of Guidant Corp. to rest.
It’s no secret that digesting Guidant proved long and taxing for Boston Scientific. Aside from near universal consensus that Boston Scientific wildly overpaid for Guidant in 2006, mostly to keep the company from falling into rival Johnson & Johnson’s hands, Guidant’s legal and regulatory woes hobbled its new owner.
First there was continued fallout from Guidant’s decision in 2005 to recall 300,000 pacemakers and defibrillators after the death of a Minnesota man whose pacemaker short circuited and failed to shock his heart back into rhythm. The recall helped launch intense scrutiny of industry marketing practices and how the Food and Drug Administration regulated the industry, scrutiny that continues today.
Last year, Boston Scientific agreed to pay $22 million to settle a U.S. Justice Department investigation into allegations that the company paid kickbacks to doctors to recommend the faulty devices. It also paid $296 million and pleaded guilty to two misdemeanor counts of not providing property safety information to the FDA.
Still, Guidant continued to loom large over the company. It’s pretty telling that a separate Guidant press release link continues to occupy Boston Scientific’s Web page for the news media.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Boston Scientific’s latest restructuring effort helps the company to move forward in two ways. Through its inheritance of Guidant’s manufacturing plant for pacemakers and defibrillators, the company based cardiac rhythm management operations in Arden Hills. Meanwhile, Boston Scientific’s cardiovascular businesses is based a few miles away in Maple Grove.
Since both towns boast expensive manufacturing facilities, it’s unlikely Boston Scientific will shut either one down. Nevertheless, combining the two divisions into a new Cardiology, Rhythm and Vascular Group, headed by newly promoted Executive Vice President Hank Kucheman, will take Wall Street’s focus away from sagging sales of Guidant pacemakers and ICDs, and better promote Boston Scientific’s fast growing non-heart related technologies, including peripheral solutions, neuromodulation and imaging.
It should come as no surprise that the company promoted Joe Fitzgerald, an up-and-coming executive who ran peripheral solutions, to run endovascular, a new unit within the group, as senior vice president and executive committee member.
The new division will be “a stronger and more competitive organization that will deliver better value to hospitals, better solutions to physicians and better outcomes to patients,” according to a Boston Scientific statement. ” This combined organization will also position the company to respond more efficiently and effectively to rapidly accelerating changes in the procurement, reimbursement and regulatory environments, and to other changes in the delivery of health care globally.”
Rest in peace, Guidant.
