Cordis Corp., one of the most powerful players in coronary stents and the first to bring a drug-eluting stent to market is getting out of the business. The Johnson & Johnson (NYSE:JNJ) subsidiary, announced this morning that it will drop its stent business entirely, including work on novel DES designs.
Since news of the announcement hit The Street, shares of rival Boston Scientific Corp.’s (NYSE:BSX) shot up 4.9 percent in midday trading before closing at $6.93, a 2.8 percent bump from yesterday’s closing price of $6.74.
BSX and Cordis have had rich history of legal battles over the years, including most recently in a patent lawsuit centered around BSX’s Promus stent, a private-label version of Abbott’s Xience V stent and a direct rival of the Cordis Cypher stent.
The case closed in favor of BSX earlier this month with a judge’s ruling that four JNJ patents were invalid.
The Cypher was the first drug-eluting stent to out-do bare-metal stents in clinical trials for reducing restenosis, Heartwire reported, but it lost its market dominance to the Xience/Promus drug-eluting devices. Cordis will stop selling the Cypher device by the end of this year.
“Due to evolving market dynamics in the drug-eluting stent business, we see greater opportunities to benefit patients and grow our business in other areas of the cardiovascular device market,” Cordis group chair and worldwide chairman Seth Fischer said in prepared remarks.
Frederick Wise, an analyst for the investment bank Leerink Swann wrote in a note to investors that “all three remaining DES players benefit from JNJ/Cordis’ exit,” including BoSci, and rivals Medtronic and Abbott.
In a separate release, J&J said it expects to log $500 million to $600 million in after-tax charges as a result of the plan, which will also mean layoffs for up to 1,000 workers.
Global revenue from JNJ’s Cypher stent has been on the decline since 2006, as has its market share, the Associated Press reports. The company made $2.6 billion from Cypher in 2006 but sales sank to $627 million by 2010.