Johnson & Johnson/Cordis is betting that its drug-eluting stent marketing alliance with Guidant will allow it to match Boston Scientific's sales presence in U.S. cath labs.

Guidant's endovascular device sales force will market Cordis' Cypher sirolimus-eluting stent under the agreement, announced Feb. 24.

The deal nearly doubles the number of sales and marketing personnel selling Cypher in the U.S. - from roughly 200 to 400 - approximately the same figure Boston Scientific is deploying to support launch of the Taxus paclitaxel-eluting stent (see ¹ Also see "Divide And Conquer: Boston Scientific Plots Strategy To Segment DES Market" - Medtech Insight, 1 March, 2004.).

Cordis already has reps in virtually every cath lab (about 1,000 in the U.S.), but the addition of Guidant's team will increase Cypher's exposure within each account in a bid to crowd out Taxus wherever possible.

Heightened lab presence is critical, according to Guidant, because the more frequently a company rep participates in a stent procedure at a given site, the more stents the manufacturer can sell to that center.

The worldwide DES market is expected to grow from $3 bil. in 2004 to $6 bil. in 2006. In the U.S., Cordis currently claims 100% of the DES market and 80% of the overall stent market. Cypher became the first FDA-approved drug-eluting stent in April 2003.

DES accounted for about 55% of U.S. stent procedures in 2003, and could grow to 70% of all procedures in 2004, Boston Scientific and Guidant both estimate (² Also see "Boston Scientific Taxus Inventory Of 150,000 Planned For U.S. Launch" - Medtech Insight, 9 February, 2004. p. 20).

FDA likely will approve Taxus by the week of March 1, Boston Scientific reported during its annual investor call Feb. 23. The firm outlined a plan to capture 70% of the U.S. drug-eluting stent market and 61% of the total stent market in 2004.

Following the Cordis/Guidant announcement, Boston Scientific reiterated confidence in Taxus' potential for dominance. "This alliance is the ultimate compliment to the Taxus technology," the firm said in a statement. "Boston Scientific has a better stent, a better delivery system, a better polymer, a better drug and better clinical trial results."

Several analysts agree with Boston Scientific. Some suggest, moreover, that Cordis will not benefit significantly from the deal.

"Doctors will view this as an indication that Cypher is a sub-standard stent and that J&J is trying to compensate by broadening its sales capability," CIBC World Markets' John Calcagnini stated in a Feb. 24 report.

Other analysts observe that although Taxus likely will lead the market, the Cordis/Guidant deal will slightly impede Boston Scientific's sales and earnings expectations.

"Share in-roads will be more difficult with both J&J and Guidant selling Cypher," Merrill Lynch analyst Dan Lemaitre noted Feb. 24. "[Market] share expectations above 60% may have to be throttled back, and some of the upside in [Boston Scientific's] earnings will be truncated by this deal."

Boston Scientific is preparing for rapid adoption of Taxus immediately following U.S. launch, expected to begin one week after approval.

To support its claim that Taxus will capture half of the U.S. drug-eluting stent market within six weeks of its launch, Boston Scientific cites internal research showing that most European interventionalists prefer Taxus because it is easier to deploy. The DES has been available in Europe since January 2003.

The firm's ambitious sales campaign is backed by 1,200 new Taxus-related hires in 2003, including a doubling of its coronary device sales force.

Boston Scientific now has 135 field sales reps supported by 59 clinical specialists and over 200 other marketing and research support personnel. Sales reps will spend two to five days with each account in the first eight weeks after Taxus is launched.

"We'll focus on in-service and on-sight support," Boston Scientific Cardiovascular Group President Paul LaViolette said. "This is something that was not available in the [Cypher] launch in the U.S. It was something that was really lacking."

LaViolette reinforced the importance of having company reps on site for stent procedures. "I believe our coronary sales reps spend more time scrubbing into [procedures]. This is something that's a strong advantage for us," he opined.

In addition to the sales and marketing effort, Boston Scientific has ramped up manufacturing to meet anticipated demand. By March 1, nearly 250,000 Taxus units - produced mainly at its new Maple Grove, Minn. factory - will be ready for shipping.

The company is producing about 25,000 units per week, enough to supply 85% of the U.S. market, without compromising European sales, according to LaViolette.

By comparison, Boston Scientific notes that Cordis had only 55,000 units ready when Cypher was launched in 2003 and could meet only 70% of demand in the first two months (³ Also see "3.5 mm Cypher Availability To Reduce Problems With Over-Expansion – Cordis" - Medtech Insight, 14 July, 2003., p. 9).

Boston Scientific plans to use Taxus revenue to support trials exploring further indications for DES. Taxus proceeds also will be invested in new products, some of which may derive from acquisitions.

For instance, the company recently signaled its intent to compete in the cardiac rhythm management market with an investment in Cameron Health, developer of a "leadless" ICD.

The prospect of Boston Scientific entering the U.S. CRM market - where Guidant is the number-two player - offers Guidant further incentive to compete with Taxus (⁴ Also see "Boston Scientific’s Pulse Races At Thought Of CRM Prospects" - Medtech Insight, 23 February, 2004., p. 22).

J&J and Guidant also announced Feb. 24 they have settled all outstanding intellectual property disputes, including stent-related suits over the Lau and Fischel patents. "This limits IP exposure of both firms, and allows us to collectively focus on developing and marketing, best-in-class drug-eluting stent technology," Guidant CEO Ron Dollens said in a same-day call.

Guidant also recently settled its remaining IP suits with Boston Scientific by agreeing to cross-license certain unnamed catheter and stent technologies. The company says the agreement is unrelated to the Cypher deal (⁵ 'The Gray Sheet' Feb. 23, 2004, In Brief).

Under the co-marketing agreement, Guidant will immediately begin selling Cypherin the U.S. for commissions calculated as a percentage of total revenue from all Cypher sales, regardless which company's rep makes the sale. The commission percentage will be tied to the total number of units sold by Guidant reps. Specific terms of the deal are undisclosed, but Calcagnini estimates Guidant will receive approximately 1% of all Cypher revenue.

The co-marketing deal also covers future versions of Cypher until 2011, or whenever Guidant starts marketing its Champion everolimus-eluting stent in the U.S.Guidant currently expects to launch Champion in Europe in early 2005 and in the U.S. in Q1 2006. Guidant will co-market Cypher in Japan until one of its own drug-eluting stents is approved in that country.

Besides improving its marketing reach, Cordis plans to mitigate perceived deliverability problems with Cypher by combining the technology with Guidant's Multi-Link Vision stent delivery system. Once the integrated system is approved, Cordis will market it, paying Guidant a transfer price for each Multi-Link Vision unit sold.

Over the next several months, Guidant and J&J will release a projected timeline for approval of the Cypher/Multi-Link Vision system. Engineers from both companies have begun collaboration, including bench and animal testing. The firms have met with FDA to discuss data requirements to support a regulatory submission, Guidant says.

In the early tests, Multi-Link Vision "significantly enhanced performance [of Cypher], and we believe will make it a very competitive product," Guidant Vascular Intervention President Dana Mead observed during the conference call. "It's not just one plus one equals two, there will be a little bit of a turbo effect."

To prove advantages to clinicians, Cordis is conducting the 500-patient REALITY trial, a direct "head-to-head" comparison of Cypher versus Taxus in all major patient types. One-year follow-up results are expected by year-end (⁶ Also see "Is Taxus Ready To Face REALITY? Cordis Primes The Pump On Late Loss" - Medtech Insight, 16 June, 2003., p. 24).

Dollens believes selling Cypher will help to prepare Guidant for the launch of Champion. Inclusion of Cypher in Guidant's product portfolio will help reps maintain important relationships with potential future Champion customers, he said. "We'll be a more competitive organization because of this [deal]."

Cordis staff will train Guidant reps on Cypher, a process expected to take about a week. The decision to pitch DES is a reversal of Guidant's previous messages to customers; in the past, the firm has tried to support bare-metal stent sales by convincing physicians to use DES only for the most difficult patients.

The alliance also gives Cordis the option to co-market Guidant's bioabsorbable stent, which uses polymer technology acquired from MediVas.

Cordis Recruits Guidant To Block Taxus, Develop Combined Delivery System

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