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Abbott Vascular

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Abbott Vascular is a division of Abbott Laboratories which specializes in medical devices. Approximately two years ago, a company named Guidant, who specialized in both coronary interventional products and electrophysiology/pacemaker products, was purchased by another company called Boston Scientific. Boston Scientific also has a large segment in coronary interventional products. Because of federal regulations, Boston Scientific was not allowed to retain both product segments of Guidant and was required to "spin off" the coronary interventional product division. In comes Abbott Laboratories who was looking to increase their medical device division, Abbott Vascular. Abbott Vascular paid Boston Scientific X Billion dollars for the coronary interventional line which formerly belonged to Guidant.

Where this acquisition becomes interesting is in the coronary stent product line. At the time of the acquisition, Boston Scientific had one of two 1st generation Drug Eluting Stents, called Taxus. Stents are tiny mesh cylinders used to keep coronary arteries propped open after plaque blockages have been cleared. The drug coatings reduce the risk of reclogging at the stent site. This reduces the risk that the procedure may need to be repeated, as is the case with older bare-metal stents. Drug eluting stents (DES) are a 6 Billion dollar a year market and is expected to increase as future generations of drug eluting stents become available. Guidant was developing a 2nd generation DES which used a completely different drug than Boston Scientific used on Taxus and their future drug eluting stents. In the agreement to sell the coronary interventional line to Abbott Vascular, it was agreed upon that BOTH Abbott Vascular and Boston Scientific would retain rights to sell the 2nd generation drug eluting stent. Guidant's 2nd generation drug eluting stent was called Xience V and that name would be retained by Abbott Vascular, while Boston Scientific would call the new DES Promus. Xience V and Promus are identical products sold under different names with different packaging.

Abbott Vascular Company Differences

After Abbott Vascular obtained Guidant's coronary interventional products, Abbott Vascular and Boston Scientific's product offerings were quite similar. The major necessary components of interventional coronary products include angioplasty balloons, stents, and interventional guide wires. Both companies offer all three major product lines. Differences are:

  • Boston Scientific has 1st generation DES as well as electrophysiology/pacemaker products, which Abbott Vascular cannot provide.
  • Abbott Vascular has a vessel closure division, which Boston Scientific does not have, but the vessel closure division is not nearly as large or significant as Boston Scientific's additional product offerings.
  • Abbott Vascular also has a significantly larger product line of interventional guide wires which holds approximately 60% market share including the first through fourth most used guide wire. It is believed that one cannot successfully perform all aspects of coronary angioplasty without some Abbott Vascular wires.
  • Boston Scientific does hold about 60% of the angioplasty balloon market, but the angioplasty balloon offerings of Boston Scientific and Abbott Vascular are not widely different.

In the agreement to sell the 2nd generation drug eluting stent, Boston Scientific must pay Abbott Vascular a royalty for every Promus stent sold. It has been reported that the royalty comes out to be a flat fee of approximately $300 for production costs plus 30% of the selling price. Currently 1st generation drug eluting stents sell for $2000 - $2500 dollars. The impact of 2nd generation drug eluting stents on price is not known.

European History of Abbott Vascular

Both the Xience V and Promus are currently available in Europe, and are expected to begin being sold in the United States in 2008. To combat the royalty fee it has been observed that Boston Scientific sold their 1st generation drug eluting stent (Taxus) at a price above market level and gave customers the Promus stent for free in Europe. We question whether or not this is legal, and if similar actions will be seen in the U.S.

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