Boston Scientific said on Thursday it was recalling a range of heart devices made at its Galway plant, sending the company's shares down sharply.
The move by the US medical device giant follows reports of problems with the Lotus range of heart valve replacement products, specifically with a locking mechanism. The company said the issue was caused by excess tension in the pin mechanism introduced during the manufacturing process.
A spokeswoman said it expected to have the device back on European markets by the fourth quarter of this year. The Lotus range is not yet approved for use in the United States. She said the company needed to implement a minor process change at its Galway manufacturing plant. It would also put in place a new final inspection process.
Shares in Boston Scientific slid more than 9 per cent in pre-market trade and were 7.3 per cent weaker as US markets opened following the announcement. They later recovered roughly half those losses, trading at $24.25 (€22.90) at 11am US time, down 3.5 per cent.
Trish Backes, senior communications manager at Boston Scientific's cardiovascular and rhythm management businesses, said there was no problem for patients who already had the device implanted. The problem manifests itself when surgeons are trying to fix the device in place during minimally invasive transcatheter aortic valve replacement (TAVR) procedures.
The surgery is undertaken to replace a narrowed aortic valve that fails to open properly.
Boston Scientific had suspended implants of its next-generation Lotus Edge device in Europe last October over similar concerns, but last month said it had found a fix for the issue.
Manufacturing plant
While some parts of the device are made elsewhere, Galway is the central manufacturing plant for the Lotus device.
The company has pushed the submission of its marketing application for the device in the United States to the fourth quarter, and expects to launch it in mid-2018. This should give longer-term holders the confidence that this is a solvable issue and that Boston Scientific is taking a very conservative approach (as suggested by the timeline delay) in getting this right, Evercore ISI's Vijay Kumar said.
In January, the company had said it expected to make the submission in May and launch by the end of 2017.
While the delay is no doubt disappointing, the technology continues be a meaningful opportunity over the medium term, Mr Kumar said.
The company is not updating its full-year outlook as a result, but has slightly lowered its structural heart revenue forecast, which translates into a two US cent impact on its earnings per share, he added.
The TAVR market could potentially exceed $5 billion by 2021, and grow 10 to 15 per cent for the foreseeable future, Leerink analysts said in a note on Thursday.
Shares of Boston Scientific’s two main competitors rose on the announcement. Edwards Lifesciences was up 8.4 per cent at $99.99, while Medtronic inched up about 1 per cent to $80.41.
(Additional reporting, Reuters)
