Boston Scientific in bid to take over Cameron Health

By Dr. Ananya Mandal, MDMar 12 2012

Boston Scientific Corp. will shortly buy Cameron Health Inc. for as much as $1.35 billion to add a new type of defibrillator to its armament.

Demand for defibrillators, Boston Scientific’s biggest products, has plunged since peaking in 2009 amid concerns about safety and overuse of the devices.

Boston Scientific, the second-biggest cardiac-device maker, will pay $150 million when the deal closes and another $150 million if Cameron’s technology called the S-ICD System wins U.S. Food and Drug Administration approval, the Natick, Massachusetts-based company said in a statement yesterday.

Cameron may receive as much as $1.05 billion more based on the revenue the device generates. Cameron’s defibrillator is implanted just below the skin and doesn’t attach to the heart or blood vessel with the thin, insulated wires that caused failures in other devices. “The weak link of defibrillator systems to date has been the lead that goes into the heart,” Ken Stein, chief medical officer for Boston Scientific’s cardiac rhythm management group, said today. “The heart beats approximately 100,000 times a day. That’s a lot of mechanical stress. If you are a young patient, you may need that wire to function normally for 30 years.” The S-ICD system is approved in Europe and sold in several countries around the world, with more than 1,000 patients getting the devices. Closely held Cameron, based in San Clemente, California, applied for U.S. approval in December.

“This is probably the most major advance in the field in the last decade,” said Chief Executive Officer Hank Kucheman in a telephone interview today. “It has the potential to expand the reach of ICD technology as we know it today,” said Kucheman, who plans to use the device to increase the $6.2 billion market and take sales from competitors.

The Cameron defibrillator “represents a new category of rhythm management devices that is unlike anything available today,” Kenneth Ellenbogen, director of the electrophysiology Laboratory at the Medical College of Virginia in Richmond, said in the statement. “This system provides physicians with a new alternative in the treatment of patients at risk for sudden cardiac arrest and should become first-line therapy for patients who may benefit from not having a lead in the heart.”

Boston Scientific plans to pay for the acquisition, which may close in the second or third quarter of 2012, from current cash flow. The purchase will reduce earnings per share by about 1 cent a share on an adjusted basis in 2012 and will break even in 2013, the year Boston Scientific expects the technology to win U.S. approval, the company said.

Boston Scientific rose less than 1 percent to $5.95 at the close of New York trading. The device maker’s shares have fallen 24 percent in the past 12 months. Boston Scientific has made 13 acquisitions in the last 5 years, with an average disclosed size of $81.5 million, according to data compiled by Bloomberg. The largest during this period was its 2010 purchase of Asthmatx Inc. for $193.5 million, the data show.