Interview – No St. Jude deal, but Abbott could still buy big

With the pivotal Japanese data for Abbott Laboratories’ dissolving scaffold Absorb in and looking good, attention now turns to the forthcoming pivotal US results, expected in the autumn. But significant as this is for Abbott, there could be even more important news coming. The rumour that the group intended to buy St. Jude Medical turned out to be just that, but another large acquisition in the cardiovascular area could well be forthcoming.

“We’re looking at all sizes – large, medium and small,” Deepak Nath, president of Abbott Vascular, tells EP Vantage. “It depends on a whole host of factors, but we’re not limiting ourselves to a particular size of acquisition.”

The vascular area is a good hunting ground for new technologies to buy, Mr Nath says. “The disease burden is very high, the economic burden to healthcare systems is very high. Combining the potential to impact patients’ lives and to impact healthcare budgets and resources – that’s the sweet spot to be in.”

Belt and braces

The group’s most recent acquisition bears this out: it bought the transcatheter mitral valve company Tendyne a month ago (Mitral valve space heats up with Abbott deals, July 31, 2015). Previously Abbott was known for valve repair rather than replacement thanks to its MitraClip device and lack of catheter-mounted aortic valve products.

Abbott is almost alone among the big cardiovascular companies not to have a transcatheter aortic valve; Medtronic, Boston Scientific, St Jude and of course Edwards Lifesciences have all staked a claim. It has got into the mitral replacement space in part so it can offer a wider range of treatment approaches including replacement as well as repair, Mr Nath says.

This is not a case of consolidation so that Abbott can address all of a hospital’s needs, Mr Nath says – or at least, not yet.

“That’s not where the space is today – physicians will go to the best technology for the condition regardless of which company offers it. But over time, as the space matures, there’s certainly value to having a broad offering where a physician or hospital is likely to turn to one company with the broadest portfolio.”

The Tendyne valve is not yet CE marked, so it will be a good few years before Abbott begins to see the kind of sales that its peer group is seeing from their aortic valves. But another of its vascular technologies could be about to start paying out big time.

Revolution

The Absorb vascular scaffold – essentially a drug-coated stent made of a similar polymer to dissolving stitches – was CE marked in 2011 but will need to reach beyond Europe to start bringing in the big money. It is quite possibly on the cusp of approval in Japan after its pivotal trial hit, as disclosed yesterday at the ESC meeting (ESC – Abbott Absorbs more good news for dissolving stent, September 1, 2015).

With the pivotal US study designed along very similar lines – both are non-inferiority trials with a one year endpoint, though Mr Nath says there are “nuances that are different” – US approval looks likelier than ever.

If and when it comes, it could be very meaningful for the company. Absorb is forecast to have sales of $189m this year (see table below), most of which comes from Europe. But the US, Japan and China combined make up 50% of the world’s heart stent procedure population, and Absorb could be approved in all three countries next year.

Moreover, the company expects better uptake there than in Europe, with Mr Nath saying that in Japan and perhaps also the US there could be a high level of interest in the technology and a faster conversion.

Sales of Absorb should grow at an annual rate of 38% to hit $825m in 2020, according to Evaluate MedTech’s consensus forecasts. And Mr Nath believes that ultimately Absorb and technologies like it could supplant metallic drug-eluting stents (DESs) in the same way DESs have all but annihilated uncoated metal stents.

“It will be a revolution, though I think it will take a little more time for it to get adopted – it won’t be an overnight switch of Absorb relative to DESs.”

Looking

Abbott's vascular efforts seem to be ticking over nicely, but management has been very open about interest in buying in new technologies, or even in conducting larger mergers that could transform the business.

When it comes to smaller bolt-on deals, Mr Nath says the marketplace rewards technology that confers demonstrable benefits on patients and that does so in an economically effective manner. He adds that the vascular area has many of those opportunities, “which is why we’re interested”.

But there is a rationale for something more transformative. “As technologies mature in a particular category, the value of breadth becomes more important. In certain parts of the cardiovascular space we are starting to see the imperative for consolidation.”

Mr Nath agrees that Edwards Lifesciences has been spoken about by many as a takeover target for some time, though this is just a for-instance and far from a statement of intent.

“We are looking. But we are not telegraphing what we’re looking at,” he says.

Sales forecasts for Abbott's DES and vascular scaffolds
WW Annual Sales($m)
Device 2013 2014 2015 2016 2017 2018 2019 2020 CAGR
Absorb 89 142 189 325 497 647 759 825 +38%
Xience  1,474 1,321 1,181 1,051 902 780 697 660 -11%
Source: EvaluateMedTech

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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