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How Acquisitions and Recalls May Impact Boston Scientific's 2017

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Part 3
How Acquisitions and Recalls May Impact Boston Scientific's 2017 PART 3 OF 6

How BSX’s Lotus Recall Developments Impacted Its Share Price

Lotus Valve device and recent recall

Lotus Valve systems are Boston Scientific’s (BSX) TAVR (transcatheter aortic valve replacement) range of devices. The device system is approved to be sold in Europe, whereas the company plans to submit the US PMA (premarket approval) application for its Lotus Edge valve in 4Q17.

How BSX’s Lotus Recall Developments Impacted Its Share Price

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However, in February 2017, Boston Scientific announced the recall of its Lotus Valve products due to reported faults with the device’s locking mechanism. Boston Scientific cited excess tension in the delivery pin mechanism, which was introduced during manufacturing, as the cause of the issue.

The announcement led to a fall of as much as 8% in the company’s stock in premarket trading on the day of the news. BSX’s competitor Edwards Lifesciences (EW) witnessed a rise of ~4% in its stock price on the day of the announcement due to its opportunity to gain a bigger market share.

Other potential competitors of Boston Scientific in the TAVR space include Medtronic (MDT) and Abbott Laboratories (ABT), which registered share price rises of ~1% and 0.9%, respectively, on the same day. Such developments could also affect healthcare ETFs such as the Health Care Select Sector SPDR ETF (XLV). XLV holds ~1.3% in BSX.

Similar developments in 2016

In September 2016, Boston Scientific received the CE Mark for its Lotus Edge device in Europe. However, the company suspended its sale of the device in October 2016 over similar manufacturing defect concerns. In January 2017, Boston Scientific said that it had found a fix and was working toward reintroducing the product in the European market following the implementation of those fixes.

Due to these issues, Boston Scientific has postponed the submission of its US PMA application for the device to 4Q17, compared to its earlier goal of May 2017.

In the next article, we’ll look at how the recall is expected to impact BSX’s 2017 performance.

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