BSX’s market mix and geographical profile
In 2012, Boston Scientific (BSX) generated about 50.0% of its sales from low-growth markets. More recently, the company has been shifting its focus away from low-growth markets and is trying to enter the high-growth adjacent markets. In 2016, Boston Scientific started generating around 60.0% of its sales from moderate and high-growth markets. The company plans to accelerate its initiatives to achieve its goal of generating around 75.0% of its sales from moderate and high-growth markets by 2020. The diagram below shows the company’s key growth strategies, including expansion across high-growth adjacencies.
According to Dan Brennan, BSX’s executive vice president and chief financial officer, “We are enhancing our long term outlook by diversifying into large high-growth markets with a differentiated portfolio and capabilities, as well as a focus on expanding outside the United States in both developed and emerging markets. We are executing well on our financial objectives for consistent revenue growth, adjusted operating margin expansion and top tier adjusted earnings growth.”
Emerging market growth
Boston Scientific has been registering double-digit growth from emerging markets for the last few quarters and growing consistently along these markets with locally relevant solutions. These markets are still largely untapped and provide a significant growth opportunity for the company. Boston Scientific has established commercial capabilities and new manufacturing facilities in recent years in these geographies, thus accelerating its strategy to grow in high-growth markets.
Emerging markets present potential growth opportunities for a large number of medical device players in the United States, including Medtronic (MDT), Stryker (SYK), and Edwards Lifesciences (EW). Investors who want to invest in Boston Scientific can consider the iShares S&P 500 Growth (IVW). BSX accounts for ~0.32% of IVW’s total holdings.