Boston Scientific Halts Defibrillator Sale

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Medical device maker Boston Scientific said Monday it is suspending sales of its heart-shocking defibrillator implants after uncovering a documentation error with the manufacture of the top-selling devices.

The Natick, Mass.-based company said it will also retrieve all inventory of the devices, which were not produced in compliance with Food and Drug Administration regulations.

The company said in a statement it has "identified two instances of changes that, while successfully validated, were not submitted to the FDA."

"The company has no indication that the manufacturing process changes pose any risk to patient safety," Boston Scientific said.

Medical device makers are required to alert regulators of significant changes to the manufacture of life-sustaining devices, like pacemakers and defibrillators.

Shares of Boston Scientific plunged more than 97 cents, or 12.5 percent, to $6.82 in morning trading. Earlier shares traded at a 52-week low of $6.33.

Monday's announcement was the latest in a string of problems for Boston Scientific's defibrillator business, which was acquired through the 2006 buyout of Guidant for a hefty $27 billion price tag.

That same year the company received a rare corporate-wide warning letter from the FDA, which temporarily halted approval of all new products. Over the next two years the company issued multiple safety recalls on its devices.

Defibrillators are surgically implanted in the upper chest, where they monitor the heart for deadly irregular heartbeats and use electrical jolts to shock it back to a normal rhythm.

The devices make up 15 percent of total company revenue.

Boston Scientific accounts for about a quarter of the global defibrillator market, and analysts had expected the company to expand that share with the help of updated products.

However, Bernstein Research analyst Derrick Sung said in a research note the sales suspension will likely deal a major blow to the company's brand.

"We believe this latest 'implantable cardiac defibrillator' action could have tremendous negative impact to Boston Scientific's business both from an acute and longer-term perspective, with St. Jude Medical and Medtronic both benefiting," wrote Sung.

Minneapolis-based Medtronic is the world's largest device maker and accounts for 45 percent of the defibrillator market, while St. Jude makes up 23 percent.

Sung estimated Boston Scientific will lose $5 million per day during the sales suspension.

The company said it is working with the FDA to resolve the situation as quickly as possible.

Pacemakers and defibrillators, collectively termed "cardiac rhythm management" devices, are Boston Scientific's largest franchise. In the fourth quarter, the company reported $645 million in sales for the devices.