Boston Scientific Needs to Win Doctors' Hearts

If you're a practicing cardiologist, expect a call -- probably several -- from sell-side analysts or money managers in the next few days, inquiring about your confidence in Boston Scientific's (BSX Quote) Taxus drug-coated stent.

The opinions of these heart doctors and whether they'll stick with Taxus or favor the rival Cypher stent from Johnson & Johnson (JNJ Quote) remain the important unanswered questions after Friday's announcement from Boston Scientific that it's recalling 85,000 Taxus stent units and another 11,000 Express (uncoated) stents because of a manufacturing defect.

Boston Scientific is being forced to pull the stents from hospital shelves because of a problem with the catheter delivery system that doctors use to insert the stent in a patient's artery. It's the same problem that forced Boston Scientific to recall 200 Taxus stents on July 5. At that time, Boston Scientific executives said there wouldn't be additional recalls.

Obviously, they were wrong.

Boston Scientific shares traded for only the last 15 minutes of Friday's session, falling $3.09, or 7.6%, to $37.40. In the early premarket Monday, the stock was down 90 cents, or 2.4%, to $36.50.

Regaining Confidence

On a Friday night conference call with investors, Boston Scientific executives expressed confidence that this latest, broad recall -- coupled with manufacturing and quality inspection changes already made -- would eliminate the problem once and for all.

"This a speed bump," said Boston Scientific CEO Jim Tobin. "We see no long-term impact with our customers."

But at the same time, company officials acknowledged that it would take some work to convince doctors to share in the company's confidence. Earlier Friday, Boston's Brigham & Women's Hospital said it had stopped using the Taxus stent until it receives additional information and assurances from Boston Scientific. Other hospitals are likely to do the same.

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