NAMSR News: Boston Scientific Reports Strong Q1 Sales On IC Turnaround // New Products

Global medical device maker Boston Scientific reported strong first quarter financial results. Other than Cardiac Rhythm Management, each of the company’s divisions contributed to sales growth.
 
 
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ARLINGTON, Va. - May 1, 2014 - PRLog -- Global medical device maker Boston Scientific reported strong first quarter financial results, growing 4% year-over-year to $1.77 billion. Although the company was able to meet its own guidance of $1.75 – $1.8 billion for the quarter, sales were $30 million short of the Reuters’ consensus estimate of $1.8 billion. The company’s stock dropped by about 6% in trading.

Other than Cardiac Rhythm Management, each of the company’s divisions contributed to the sales growth. The company’s largest division, Interventional Cardiology, reported low single-digit growth in the quarter, reflecting a significant improvement over its mid single-digit decline in the preceding quarters. Operational sales in the Neuromodulation business continued to grow in double-digits while other divisions such as Endoscopy, Peripheral Interventions, and Urology also reported consistent single-digit growth. The company also reported robust sales growth of 68% in Electrophysiology, primarily driven by the acquisition of C.R. Bard’s EP business in November of last year. On the cost side, gross margins improved by over 250 basis points to 69.73% as overall expenses declined over 30% from $1.5 billion at the end of Q1 2013 to about $1 billion by the end of Q1 2014.

Going forward, the company expects its operational sales to continue growing in the 3-5% range, driven by the turnaround of key businesses and growing acceptance of new products such as S-ICD (Subcutaneous-Implantable Cardioverter Defibrillators), Promus PREMIER stent, the anti-stroke Watchman device, and bronchial thermoplasty system Alair.

KEY BUSINESSES PROVIDE MIXED RESULTS

Interventional Cardiology and Cardiac Rhythm Management are two of the biggest divisions for Boston Scientific, contributing about 55% of the company’s value. While the IC division derives its revenues mainly from coronary stents and catheters, CRM’s primary products are pacemakers and defibrillators.

In the past few years, sales of both these divisions have declined rapidly owing to macroeconomic headwinds and increasing competition. However, both businesses are turning around on account of improving economic conditions and growing acceptance of new products. In the first quarter this year, IC sales grew by 1% on a constant currency basis, to about $500 million.

CRM sales declined by 2% on a constant currency basis to $466 million on the back of sluggish sales of its defibrillator systems in the U.S. Although the uptake of its S-ICD systems was ‘very positive’, the company faced headwinds for its CRT-D and ACUITY X4 QUAD Leads in several markets including the U.S., Japan and Australia. The company expects S-ICD systems to generate over $75 million in sales by the end of this year and we expect the systems to help Boston Scientific stabilize its declining CRM market share going forward.

NEW PRODUCTS & PRICING STRATEGY DRIVES SALES

For the past few years, Boston Scientific has been extremely focused on remodeling its product portfolio, demonstrated by the fact that the company introduced about 11 new products in the last two years. For the IC market, the company launched an innovative portfolio of drug-eluting stents including PROMUS Element, Promus PREMIER and SYNERGY. Primarily launched in established markets, where its premium price is more likely to be supported by customers, SYNERGY is a premium bio-absorbable stent product. On the other hand, the cheaper PROMUS stent is being targeted at price-sensitive emerging markets. This strategy to target specific IC products for particular geographies is starting to pay off with increased sales, and could help the company improve its IC market share in emerging markets as well. Boston Scientific’s overall operational sales grew 22% in emerging markets in the first quarter this year, taking the contribution of emerging markets in overall sales to 9%.

In the CRM market, Boston Scientific launched several promising products, including the S-ICD, ACUITY X4 QUAD Lead and the Watchman device for atrial fibrillation patients. The company recorded solid sales from the S-ICD in 2013 even though it was largely unavailable in the second and third quarters due to manufacturing problems. We expect sales of the S-ICD and ACUITY Lead to increase going forward as supply issues are resolved to match the sustained high demand. The S-ICD device presents a great opportunity for Boston Scientific as the product currently has no major competitors, and the company estimates that the market will grow to over $750 million worldwide by 2020. The S-ICD product is also a significant aspect of the company’s plans to improve CRM margins within the next three years.

CANDIDATES WHO WANT TO BREAK INTO MEDICAL SALES:

RMSR® Medical Sales Certification offered by the National Association of Medical Sales Representatives is designed for entry level medical device sales reps. The course covers a wide array of topics pertaining to industry knowledge that candidates need to acquire before applying to medical sales positions.

The course and training helps to develop the industry skills, maximizing the candidates’ potential and goals, as well as making them feel valued and stimulated in their role when communicating with members of the medical community. By an applicant acquiring medical sales training and a RMSR Certification, it puts him/her in a position of strength and qualifies them for medical sales jobs. Medical knowledge is key in this industry and when communicating with doctors, surgeons, and nurses etc. It is extremely important for representatives to use key terminology pertaining to the medical product he/she will be promoting. The only way to succeed in this industry is to garner actual sales. Doctors and Surgeons will not acknowledge a Sales Rep who is not proficient in essential medical terminology, knowledgeable of medical devices/equipment and the anatomy. For those lacking a solid sales background the RMSR course covers knowledge of medical selling techniques and regulation such as Effective Territory Management, Effective Networking, Medical Sales Ethical & Regulatory Guidelines and more.

The National Association of Medical Sales Representative™ (NAMSR) is the largest professional association in the world for Medical Sales Representatives. Through our numerous members, the NAMSR™ provides accredited training, continuing education, information about the industry, up-to-date news, programs to assist medical sales reps in their work, training programs to assist candidates who want to break into the industry and initiatives to improve communication with the medical sales field.

For more information on the NAMSR or the RMSR certification visit www.medicalsalescareer.com or call 800-313-9198

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Tags:Namsr
Industry:Biotech, Medical
Location:Arlington - Virginia - United States
Subject:Earnings
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