Boston Scientific Needs to Win Doctors' Hearts

There have been no problems associated with Boston Scientific's Taxus stent itself, only with the tiny balloon attached to the delivery catheter. In some cases, this balloon has failed to deflate fully, requiring surgery to remove it. The company said it has received reports of one death and 18 serious injuries related to the Taxus stent, and two deaths and 25 serious injuries related to the Express stent.

On its Friday night conference call, Boston Scientific executives said there would be approximately a one-week supply interruption in the U.S. and four to six weeks in Europe as the recalled stents are removed from hospital shelves and replaced with newer models.

Boston Scientific is blessed with a hefty manufacturing capacity that can handle the recall and replacement with relative ease and minimal financial impact. Winning back the confidence of doctors is a more difficult task.

"In our opinion, the key concern following the recall of the Taxus stent is gauging the reaction from the physician community. Specifically, physicians are likely to need reassurances that the manufacturing change and the added inspection have corrected the balloon non-deflation issue," said Goldman Sachs analyst Lawrence Keusch in a research note. "Although there will clearly be some physicians that will use the recall as a reason to switch back to J&J's [Johnson & Johnson's] Cypher stent, we suspect that the majority of physicians will look upon the recall as the appropriate action and be supportive of the company's efforts."

Keusch said the recall will have limited negative impact on Boston Scientific because doctors will not stop using drug-coated stents, and Johnson & Johnson continues to have problems with limited manufacturing capacity for its Cypher stent, which limits the company's ability to take advantage of the situation. Keusch maintained his outperform rating on Boston Scientific; his firm has a banking relationship with the company.