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How BSX Plans to Accelerate Its Neuromodulation Market Position

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Key growth areas

The neuromodulation market is an attractive growth opportunity for Boston Scientific (BSX). The neuromodulation business is part of Boston Scientific’s Medsurg segment.

The neuromodulation business registered 12% YoY (year-over-year) growth in 2Q16, compared to its growth of around 8% in 1Q16. The above graph shows the neuromodulation business’s contributions to the company’s Medsurg segment’s sales and growth.

Having grown in the mid-teens, the US SCS (spinal cord stimulators) market is a key growth area for Boston Scientific’s neuromodulation business, and the company has a leading position in this market with its product Precision Spectra System.

Also, with the recent launch of the full body MRI (magnetic resonance imaging) SCS system, customers now have access to SCS technology with MRI capabilities.

Another potential market for the neuromodulation business is the DBS (deep brain stimulation) market. DBS systems are used for performing surgical procedures for the treatment of neurological symptoms such as tremors, epilepsy, and Parkinson’s disease.

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Boston Scientific has a strong DBS business in Europe and is expected to be in the United States market by 1Q18. The company expects the US DBS market to be around $400 million–$500 million. Medtronic (MDT) and St. Jude Medical (STJ) are Boston Scientific’s major competitors in the DBS market. St. Jude Medical is being acquired by Abbott Laboratories (ABT), as announced by Abbott in April 2016.

Cosman Medical acquisition

On July 27, 2016, Boston Scientific announced its acquisition of Cosman Medical, a privately held company that manufactures radiofrequency ablation (or RFA) systems.

Cosman Medical has a strong product portfolio of SCS for chronic pain patients and DBS systems. Thus, Boston Scientific expects to strengthen its current product offerings and expand its capabilities, enabling it to gain a neuromodulation market share.

Investors can get diversified exposure to Boston Scientific by investing in the iShares Core S&P 500 ETF (IVV). IVV has ~0.17% of its total holdings in BSX.

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