Boston Scientific's Taxus Looms Over Stent Market

When the Food and Drug Administration approves a new medical device from Boston Scientific(BSX Quote - Cramer on BSX - Stock Picks), it will solidify a dramatic shift in the treatment of heart disease and firmly place the company in the upper echelon of medical-equipment makers.

As early as this week, the FDA could approve the company's Taxus drug-coated stent, a tubular, mesh-like device inserted into arteries to keep blood flowing freely, prevent the reclogging of arteries and reduce the risk of heart attacks. The company and the regulatory agency are in the home stretch of negotiating the wording on the stent's label, a crucial factor in how the company can market the device.

Taxus will be the second drug-coated stent on the U.S. market. Johnson & Johnson(JNJ Quote - Cramer on JNJ - Stock Picks) got there first with its Cypher stent, which reached the U.S. market in late April. Cypher started the revolution, but if you believe many money managers on Wall Street and many heart specialists on Main Street, Taxus will help create a new medical and economic environment, at least until the next drug-coated stent is introduced.

Why Taxus Is Important

Boston Scientific predicts its stent sales could be $1.7 billion to $2.2 billion this year. The highest end of that estimate would mean Boston Scientific would have more drug-coated stent revenue this year than the entire U.S. market recorded last year.

If the company is correct, Taxus, which is already available in many foreign markets, will help propel total company sales this year to a range of $5.2 billion to $5.8 billion, up from $3.5 billion last year. In 2005, total sales could double from 2003, the company said Monday.

This forecast for stent sales -- and total sales -- for the next three years convinced Standard & Poor's to raise its outlook on the company to positive from stable. Commenting earlier this week, the ratings agency said that if it makes good on its predictions, Boston Scientific "could have considerably more financial flexibility" than S&P had figured.