The DES market: What's life after Cordis like?
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Venkat Rajan, industry manager for medical devices at market research firm Frost & Sullivan, called the move “surprising,” speculating that Cordis may have exited the market because other device markets have a larger growth potential. In fact, the coronary intervention market has already decreased 35 to 50 percent in recent years and a recent Frost & Sullivan outlook reported that the endovascular intervention market increased threefold in the last five years.
“Cordis essentially innovated the stent market, introducing the first drug-eluting stent in the early 2000s,” Rajan told Cardiovascular Business. “Cordis had full control over the market except for some strong back and forth with Boston Scientific until newer products began entering the market in 2008.”
Another reason for the company's move could be largely due to the fact that Cordis is no longer the market leader, having dropped to third or fourth position in recent years. Rajan estimated that the company holds only 10 to 15 percent of the market share. “Cordis has had some issues building a pipeline for the next generation of stents,” Rajan offered. Cordis' reign began to shift after the CoStar stent failed to prove clinical superiority over Boston Scientific's Taxus stent in a head-to-head comparison. As a result, the company pulled the stent from the market.
Additionally, Rajan said that the Abbott's everolimus-eluting Xience V and Boston Scientific's everolimus-eluting Promus stents--both of which share the same platform--have been dominating the DES market for the last couple of years. “This [market shift] has definitely affected Cordis’ position and the reason for their decision."
While the stent market is still a multibillion dollar market and Cordis is still generating millions from its stent portfolio, Rajan hypothesized that J&J may have realized that its upcoming stent pipeline didn't stack up to what other companies are planning to introduce onto the market. For example, Abbott’s new BVS bioabsorbable stent that earned a CE mark in the Europe last year could "reinvent the market," he said. A DES that dissolves over time alleviates the risk of stent thrombosis and will have deep implications for the metal stent market if approved in the U.S., Rajan speculated.
Bridgewater, N.J.-based Cordis said that it will continue to focus on cardiovascular care through its Biosense Webster sector, a unit focused on treating atrial fibrillation (AF) with cardiac ablation technology. While the coronary market is declining, Rajan said that this market is growing by 16 percent. Biosense Webster is a market leader in the catheter ablation market with the only system approved to treat AF, the most common arrhythmia. Rajan said that Cordis is also poised to focus on endovascular techniques to treat peripheral interventions.
Rajan said that he and others were surprised that Cordis decided to quickly exit the stent market rather than letting their market share dwindle. The decision will force Cordis to close two manufacturing facilities and cut 900 to 1,000 positions.
However, he added that that the coronary stent market grew too fast due to inappropriate and unnecessary use. “Cardiologists were placing more stents in per procedure than necessary,” Rajan offered, "As a result, the adoption rate grew too fast and now we are adjusting to it.”
Despite the fact that the stent market has begun to flat line, Rajan noted that due to the lofty number of patients with heart disease or those who are obese, there will be a continued need for device technology. He concluded that newer technologies such as those that treat smaller vessels as well as bioabsorbable and reabsorbable stents, will be “promising areas that will have a future impact on the coronary market.”
Cordis said that it expects to record an after-tax restructuring charge in the range of $500 million to $600 million in the second quarter of 2011 after the company restructuring plan takes place.