Health firms vie for piece of growing heart devices market

Friday, December 9th 2005, 12:44 pm
By: News On 6

BOSTON (AP) _ Johnson & Johnson and Boston Scientific Corp. are dueling to pay more than $20 billion to buy Guidant Corp., a medical device maker struggling to repair its reputation amid product recalls and liability lawsuits.

The reason? J&J and Boston Scientific both want Guidant's piece of the hot $9 billion-a-year market for implantable heart defibrillators and pacemakers. Boston Scientific raised the stakes Monday with a surprise $25 billion bid to counter J&J's lower offer.

Despite product recalls and high failure rates, the cardiac rhythm market is booming because recent studies indicate defibrillators could help far more people than previously thought. The findings have led to expanded insurance coverage. And it doesn't hurt that the devices are getting smaller and more effective, or that the population is aging.

The technology's lifesaving potential counts most for Diana Enders, a 33-year-old accountant from Melrose Park, Ill. Enders had a pacemaker implanted in June after she suffered a heart attack during an after-dinner walk with her boyfriend. Tests revealed a cardiac disorder that had gone undetected. Enders, who used to work out four times a week, is slowly recovering, taking walks and doing sit-ups.

``I try to live a normal life,'' Enders said. ``I have to slow down, and I can't just get up and run like I used to. It's a period of adjustment. But I'm going to live a long life.''

Sales of implantable defibrillators and pacemakers will hit $9.3 billion this year and $10.4 billion in 2006, up from $5 billion in 2001, according to a forecast by brokerage Natexis Bleichroeder.

Use of implantable defibrillators has grown from about 21,000 in 1995 to between 250,000 and 300,000 this year, according to the Heart Rhythm Society, a nonprofit group of cardiac care specialists.

``I think everyone who was in this field has recognized the importance of this therapy, and realized that it was just a matter of time before it would take off,'' said Dr. William Maisel, a cardiologist at Boston's Beth Israel Deaconess Medical Center who consults with the U.S. Food and Drug Administration on cardiac devices.

About 450,000 people die in the United States each year from sudden cardiac arrest, with 5 million suffering some degree of heart failure.

Defibrillators _ stopwatch-sized devices which help detect and electrically correct dangerous irregularities in heart rhythm _ became commonly used starting in the mid-1990s. They are becoming increasingly sophisticated and smaller, allowing for less-invasive surgery that does not involve cracking the chest open to implant the device near the heart.

Pacemakers, which emerged in the 1960s, use a mild electrical current to speed a slow heartbeat.

The cardiac rhythm market is expanding with the growing number of older people.

``People are living longer now, and with defibrillators they're remaining alive whether they've had a heard attack or have an irregular heart beat,'' said Dr. Samin Sharma, a cardiologist at Mt. Sinai Medical Center in New York.

The market also is increasingly lucrative because insurance coverage for defibrillators is no longer limited to heart attack survivors. The Medicare program in January agreed to expand coverage because of a government-funded survey that showed the technology significantly reduced deaths in patients with even mild heart disease, which also led to expanded coverage by private insurers. The findings indicated the devices could save lives in people at risk of potentially fatal heart fluttering, called ventricular fibrillation.

Recent research also demonstrates benefits for those with weak hearts who receive newer defibrillators that resynchronize the heart's pumping action for greater efficiency.

``Now, the devices can make you feel better every day, and also protect your life,'' Maisel said.

But at a time of rising health care costs, the devices aren't cheap.

Excluding surgical and other expenses, defibrillators can cost more than $25,000, and pacemakers more than $5,000.

Cost isn't the only problem. The U.S. Food and Drug Administration said in September that an agency-sponsored study found about 20 of every 1,000 defibrillators malfunctioning, leading to 31 deaths from 1990 to 2002. While the deaths represented only a fraction of the more than 400,000 defibrillators implanted in those years, it was enough to prompt the FDA to say it needs to improve regulation of the devices.

``The devices are complicated, and they're not perfect,'' Maisel said. ``But the chance that it will save your life is about 1,000 times greater than the chance of it failing when you need it.''

Guidant's product troubles have received more attention than its rivals' because of multiple recalls and warnings this year involving its devices. The problems led New Brunswick, N.J.-based J&J to convince Guidant last month to accept a bid about $4 billion less than it offered a year ago.

In announcing their bid for Guidant on Monday, officials with Natick, Mass.-based Boston Scientific cited strong growth prospects in a market they called ``under-penetrated,'' with room for more competition.

``It's clear the market for implantable defibrillators is far from saturated,'' Maisel said. ``There has been exponential growth for a number of years, and there's every reason to believe it will continue.''

While pacemakers have posted only modest growth in recent years, sales of implantable defibrillators rose 24 percent last year, with expectations for 20 percent increases the next two years, according to Natexis Bleichroeder.

Three American companies dominate the global market: industry leader Medtronic Inc. of Fridley, Minn.; Indianapolis-based Guidant; and St. Jude Medical Inc. of Little Canada, Minn.

Boston Scientific and J&J are already strong in markets such as drug-coated heart stents. But cardiac rhythm is a field that's difficult to enter because of the years it takes to bring a product to market, and the technical support device makers must offer doctors.

``It's hard for another company to just come in and start making defibrillators and succeed,'' Maisel said.