Boston Scientific Recalls Some Heart Devices |
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Reuters Toni Clarke |
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June 26, 2006—Boston Scientific Corp. said on Monday it is recalling certain heart devices because of defects that could lead to a malfunction, sending its shares down more than 5 percent to their lowest point in nearly four years. The medical-device maker said the recall includes some lots of Insignia and Nexus pacemakers, Contak Renewal TR/TR2 cardiac resynchronization pacemakers and Ventak Prizm 2, Vitality, and Vitality 2 implantable cardioverter defibrillators or ICDs. The devices use electrical impulses to correct irregular heartbeats. They are implanted under the skin in the chest with wires leading to the heart. The recall is the latest in a series of blows to Boston Scientific, which earlier this year bought medical-device maker Guidant Corp. for $27 billion. The products being recalled come from the Guidant acquisition. Last year, Guidant was forced to recall several implantable pacemakers and devices because of potentially fatal electrical flaws, leading to a slew of liability lawsuits and government investigations. Analysts said the recall will likely contribute to sluggish growth in the multibillion dollar market for ICDs, which has been hurt by Guidant's recalls. ICDs treat overly rapid heart beats, while pacemakers stimulate hearts that beat too slowly. Cardiac resynchronization devices, such as the Contak Renewal, combine features of pacemakers and ICDs, and are used to treat patients with congestive heart failure. Banc of America analyst Glenn Novarro, in a note to clients, said he expects "another tough quarter" for stocks that make devices to manage abnormal heart rhythms. Boston Scientific competes in the space with Medtronic Inc. and St. Jude Medical Inc. He expects worldwide market growth of 5.5 percent in the second quarter, including U.S. growth of 2.4 percent, and full year 2006 growth of 10.5 percent, including U.S. growth of 7.9 percent. "We expect the ICD recovery to begin gaining traction in 2007 as patients and referring physicians forget about the recent recalls and accept the fact that device companies have become more vigilant in testing their devices and reporting any malfunctions that surface," Novarro said. Faulty ComponentNatick, Massachusetts-based Boston Scientific said it recently discovered that a faulty component may cause a malfunction in the devices being recalled, including premature battery depletion. It said five confirmed malfunctions have been reported out of about 27,200 implanted devices from the group. The company said no deaths have been reported. "Clearly Boston Scientific shareholders are going to be tested once again," said Tao Levy, an analyst at Deutsche Bank Securities Inc. "On the outset, this problem could be very significant given the scope of the potential devices affected and leaves us wondering what type of mess Boston Scientific is left to fix." Boston Scientific said it sent a letter to doctors alerting them to the issue. It said an engineering analysis was taking place and it will communicate further when it has additional information. The company said doctors were being asked to schedule follow-up visits with patients who have been implanted with the devices as soon as possible to check that they are functioning properly. The company's shares fell 90 cents, or 5 percent, to $17.36 in mid-morning trading on the New York Stock Exchange. |
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