Abbott Laboratories, moving to bolster its presence in a fast-growing medical-device sector, agreed to pay $234.5 million to acquire the coronary stent business of Britain’s Biocompatibles PLC.
For the past several months, Abbott has served as U.S. distributor of stents made by London-based Biocompatibles. But under the all-cash deal announced Monday, Abbott will now acquire the British company’s stent business outright. The acquisition is part of a strategy by which the North Chicago medical-product giant is trying to position itself as a player in the potentially lucrative market for a new generation of better-performing stents.
Stents are tiny tubes made of ultra-fine mesh which physicians install in heart patients’ arteries to keep them from closing. Typically inserted at the end of the artery-unclogging procedure known as angioplasty, coronary stents have grown into a $2.2 billion market in the eight years since they were introduced.
Stents “represent one of the most successful product launches in the history of the medical products industry,” says Health Research International, a Cleveland provider of medical-market data. Indeed, says the research organization, the stent market is poised for a second growth spurt that will see U.S. sales more than double to $5.3 billion by 2006.
Despite the popularity of the product, leading stentmakers such as Johnson & Johnson, Guidant Corp. and Medtronic Inc. are racing to bring out a next-generation product because the current crop of offerings suffers from one serious drawback: In up to 30 percent of the about 900,000 angioplasties performed annually in the U.S., the inserted metal coils provoke the growth of scar tissue that re-closes the artery, requiring a repeat of the costly angioplasty procedure–often within a matter of months.
Scientists at Abbott and other companies think coating the stents with drugs will minimize such “restenosis,” or re-clogging. Such “drug-eluding” devices, while none have yet been approved for U.S. marketing, are expected to displace the current lineup once they begin coming to market next year.
While Johnson & Johnson’s product has shown consistently strong human-trial results, and is expected to receive Food and Drug Administration clearance sometime early next year, stent-industry leader Guidant Corp. and others have recently suffered setbacks when human trials provided disappointing results.
Biocompatibles, in fact, is among the stent companies that have encountered such turbulence. Biocompatibles’ stents currently have a polymer coating designed to minimize the body’s response. But earlier this month, the company’s shares lost half their value in one day after Biocompatibles disclosed that it had suspended trials on a stent coated with a drug made by a UK company.
Abbott doesn’t make a stent of its own. But its researchers have developed a drug coating for stents the company thinks will be effective. Abbott has been distributing Biocompatibles’ plastic-coated stents since last summer, and it is now buying the stent business, primarily because it is interested in using the stent as a platform for Abbott’s proprietary–and still developmental–coating product.
Abbott isn’t concerned about the disappointing results Biocompatibles experienced in its recent test with another company’s drug, said spokeswoman Stacey Eisen. Company officials think the recent test failures show that “only a select number of drugs are going to be viable for this application,” she explained, adding that the company thinks its ABT-578 product “is one of them.”