Friday, February 12, 2010

Stenting competition 

Michelle Malkin notices that the stents received by President Bill Clinton are from Boston Scientific. She links to an October 2009 story in which Boston Scientific warns that Obamacare would lead to job losses at the company.

Actually, it's already happening. Announced earlier in the week, the company is cutting 1,300 jobs, with many likely to come from the Twin Cities.
Boston Scientific has been facing a lot of headwinds lately. They recently had to make a $1.7 billion payment to their competitor Johnson and Johnson over patent disputes and sales of key products are down. They include drug-coated stents, mesh tubes that prop open clogged arteries, and cardiac rhythm devices, which treat irregularly beating hearts.

CEO Ray Eliot joined the company last summer and said during a conference call Thursday that investors should be patient with his efforts to improve the company's results.

"This is a big ship," Eliot said. "I don't care how smart you are, you don't turn this around in a quarter or two, and it...has had some underlying issues that I think we've addressed well. "
It's not a great example for Malkin's narrow point about the company and stents, but in the broader sense it makes a very good point. These companies that produce valuable, life-extending medical devices -- just ask President Clinton, or my dad who has a few of those in him -- live in a profit-and-loss system, one that is quite competitive. The company does not run on a very large profit margin with competition from places like JNJ and Medtronics and St. Jude Medical, etc. To the extent that government regulation damages these firms we could see a loss of competition and higher prices for devices, leading to government price controls and non-price rationing. Not that ex-Presidents will ever go wanting for a stent, but for you and me that's not a pleasant prospect.

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