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Monday, October 23, 2006

Boston Scientific And The Heart Stent Problem (BSX)(JNJ)

Sometimes the daily paper tells investors more about company prospects that all the mad scientists on Wall St. The New York Times recently made the point that doctors are shying away from using stents to treat people with heart illness.

In 2002, a little over 1.2 million stents were sold. All of them were made with metal. The next year, the industry came out with “drug coated” stents. These contain chemicals that keep blood clots from forming around the device. In 2006, over 1.5 million stents will be sold and almost all will be drug coated. It is now a $6 billion business for companies like Boston Scientific and Johnson & Johnson.

And, that is the problem. As the business got bigger, so did, apparently, the risk to patients. The FDA is now looking at issuing safety guidelines for stents, and the question has even been raised whether they are more effective that drugs that can be prescribed for patents with arterial problems.

Doctors are now more and more concerned about using stents for treating narrowing arteries. The number of fatal clots that may be caused by stents appears to be rising. And, that can mean only on things. Court. Lawsuits.

Doctors are at risk, but so are Boston Scientific and Johnson & Johnson. Both says their sales of stents are down. But, that may not be as big, nearly as big, as the kind of suits that have come the way of tobacco companies and big pharma operations like Merck, which had well-publicized problems with its Vioxx anti-inflammatory that has been shown to cause heart disease.

Boston Scientific has already received letters from the FDA that are critical of quality control at the company. The company’s stock traded at $45 in spring 2005. It now fetches about $16. And, that could get worse.

At least, according to the newspapers.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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