$3.6 Billion
No. of Employees: 12,000

This is the last time Guidant will be part of Medical Product Outsourcing’s report on the top medical device companies, which is no surprise to most in the industry. Soon the Guidant name will fade away, now that the company has been acquired by Boston Scientific after one of the most heated battles the device industry has seen in its history.

To recap the well-publicized battle for Guidant, in April 2005, Guidant had agreed to a $25 billion acquisition by Johnson & Johnson. Once news of Guidant’s recall-related problems emerged, however (more to follow on that), J&J reneged on the deal and offered billions of dollars less to complete the transaction. While Guidant was in the midst of accepting a $24 billion offer from J&J this past January, in a shocking move, Natick, MA-based Boston Scientific swooped in with its own aggressive bid to take over the struggling company and was victorious, purchasing Guidant for a record $27 billion.

With the deal complete, Boston Scientific recently announced it will phase out the use of Guidant on all its products in the next year—this is widely viewed as a measure to distance itself from Guidant’s lengthy amount of bad press stemming from the defibrillator problems. In addition, Guidant’s executive in charge of the cardiac rhythm device unit was replaced before the acquisition was even complete.

With all the problems generated by recalls and other myriad problems, Guidant’s overall revenue had sharply declined last year by 6%. ICD sales were particularly hurt, with a 12% decrease in the United States and 6% worldwide. US pacemaker sales were also down 19%, with global sales also dwindling by 13%. Even the company’s stent and angioplasty system sales took a hit. The only noteworthy positive development was that global sales for cardiac surgery and peripheral markets (including carotid and biliary systems) increased a healthy 28% to $373 million.

Preliminary first-quarter 2006 sales weren’t looking much better, though they were sprinkled with some reason for optimism (for Boston Scientific, Guidant’s new owner). Double-digit sales decreases in defibrillator sales persisted for the company, and overall sales were down 6% when compared with last year’s first quarter. However, the bigger picture shows that sales actually increased 8% since the fourth quarter of 2005, marking a trend of recovery.

On a larger scale, Guidant’s woes have helped spur some significant changes in the cardiac device industry. After Guidant’s well-publicized recalls of tens of thousands of defibrillators due to electrical problems, the FDA has paid more attention to strengthening its monitoring of medical devices in general. The recalled devices had been implanted in at least 50,000 people worldwide; several people implanted with the faulty units died. The defibrillators included products from the following product lines: Prizm 2 DR; Contak Renewal and Contak Renewal 2; Ventak Prizm AVT; Vitality AVT; and Renewal 3 AVT and Renewal 4 AVT. (Note: Some of the newer Contak products were approved and released to market last summer.)

In addition to the defibrillator problems, Guidant announced recalls of some of its pacemakers—Insignia and Nexus models—in September after faulty sealant (ie, leak) problems surfaced. This announcement came after previous warnings were released in July for about 28,000 pacemakers from various product lines of the following brands: Pulsar, Discovery, Meridian, Virtus, Intelis and Contak.

Along with the defibrillator and pacemaker issues, in March 2006 (before the acquisition was complete) the company announced plans to temporarily suspend sales of some of its XIENCE V drug-eluting stent system after manufacturing issues surfaced due to quality issues. This suspension is expected to affect 2006 first-quarter sales and delay the product’s European launch to the third quarter this year.

With all these recalls and affected individuals, the Guidant name will remain in the news long after the brand is banished, since the company will be mired in legal woes, including those filed by affected patients. One major development just emerged in June, when newly released company documents showed that Guidant executives had drafted a document in early 2005 to inform doctors of problems with its defibrillators after reports surfaced in 2004; the document was never released to the public. This is significant because executives had defended their decision later last year to not tell doctors about the problems, citing concerns that revealing these problems could lead to unnecessary replacements of implanted devices. Since the letter was never sent by Guidant, patients continued receiving faulty devices, in spite of the company’s knowledge they could be problematic. Legal experts have noted that the federal inquiry into this and other developments could eventually result in civil and criminal charges.

Guidant did receive some much-needed good news in March after an appeals court upheld a 2005 ruling that Guidant and Boston Scientific had not infringed on Medtronic cardiac stent patents. In addition, the court upheld a decision that disclaimed an assertion by Medtronic of theft of trade secrets.

Another beneficial development for the company resulted earlier, in September, when the FDA approved the Latitude Communicator, a secure data storage system that is a component of the Latitude Patient Management system (which can be used with the Contak ICD and Zoom Latitude Programmer). Furthermore, that month also saw approval for the Vitality HE defibrillator.

In March this year, the RX Herculink Elite Biliary Stent System was launched in the United States and, around the same time, the company announced it was expanding its facilities in Temecula, CA.

Also earlier this year, Abbott Laboratories acquired Guidant’s vascular business. This was connected with Boston Scientific’s acquisition of Guidant.