MN Cos. Affected as J&J Exits Stent Market
Johnson & Johnson intends to exit the drug-coated stent market by the end of this year-which could be good news for rivals like Fridley-based Medtronic, Inc., and Natick, Massachusetts-based Boston Scientific.
Cordis Corporation, a Bridgewater, New Jersey-based subsidiary of Johnson & Johnson, on Wednesday announced plans to discontinue the manufacturing of its drug-coated stent products by the end of this year and to focus its efforts on other cardiovascular therapies, where it sees “greater opportunities to benefit patients and grow our business.”
Stents are artificial tubes that are inserted in arteries to hold them open during surgery, and Johnson & Johnson was a leading maker of stents that are coated with drugs.
Tim Nelson, an analyst from Nuveen Asset Management, told the Pioneer Press that Boston Scientific-which employs about 2,500 people at its stent division in Maple Grove-might win about 40 percent of Johnson & Johnson's drug-coated stent sales, which accounted for about $627 million in revenue in 2010. Medtronic, meanwhile, could net about 20 percent of that business, he estimated.
But Johnson & Johnson's move isn't good news for all Minnesota companies. Gary Maharaj, president and CEO of Eden Prairie-based Surmodics, Inc., a supplier for Johnson & Johnson, said in a statement that his company is “disappointed” by the decision.
“Despite today's announcement, Johnson & Johnson remains an important customer, as our hydrophilic coating technology is used on a broad array of products across the Cordis franchise,” Maharaj said, adding that the development does not alter Surmodics' previously announced financial outlook for the year.
According to a regulatory filing, revenue from Johnson & Johnson accounted for roughly 17 percent of Surmodics' overall sales in 2010, which totaled $69.9 million. The filing indicates that Surmodics “derives a substantial amount of revenue from royalties and license fees and product sales attributable to Cordis,” and the company anticipated that royalties from the products would decrease in 2011.
Phil Ankeny, Surmodics' senior vice president and chief financial officer, told Twin Cities Business on Thursday that the majority of royalties that the company received from Johnson & Johnson were related to the products that will be discontinued, but not all.
Surmodics' stock price dove about 17 percent on Wednesday, closing at $11.01; meanwhile, Medtronic's stock slid about 1.25 percent to $37.92, and Boston Scientific's stock jumped about 3 percent to close at $6.93.