Boston Scientific Looking To Gain In Gynecological Device Market With IoGyn Acquisition

Medical device maker Boston Scientific (NYSE:BSX) recently acquired IoGyn Inc, a California-based startup specializing in products for gynecology surgery. Boston Scientific already owned a 28% share of the pre-commercial stage company and, as part of the latest deal, will pay $65 million in cash for the remaining 72% stake and repay all of its outstanding debt. Although IoGyn has yet to start commercial operations, it has FDA approval for its Symphion device, an alternative to power morcellator devices to remove non-cancerous but painful fibroid tissue from the uterine wall. ^[1]

Boston Scientific’s acquisition of IoGyn and the Symphion device comes just weeks after the FDA issued a warning against the use of power morcellators in laparoscopic procedures. The FDA warned the medical community that these devices could increase the risk of cancer in women. Although the FDA stopped short of banning the device, it advised surgeons not to use the device until further information was available. After the warning was issued, Johnson & Johnson (NYSE:JNJ) suspended global sales of its laparoscopic power morcellators and surgical robot maker Intuitive Surgical (NASDAQ:ISRG) cut its annual projections for gynecological procedure growth. ^[2] ((J&J Suspends Power Morcellator Sales Over Cancer Risk, Medscape, April 30 2014)) ^[3]

With this acquisition, Boston Scientific aims to gain share in the fast growing hysteroscopic (uterus related) surgery market. It could be easier for the company to enter this market with its non-traditional treatment approach now that the commonly-used methods (power morcellators) are coming under fire. We currently have a price estimate of $13 for Boston Scientific, which is roughly in line with the current market price.

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IoGyn Could Help Drive Share In The Global Women’s Health Market

Gynecological procedures and related devices are part of Boston Scientific’s urology & women’s health division. This division reported sales of over $500 million in 2013 and contributes just over 7% of the company’s value, according to our estimates. The business started 2014 on a very positive note, with operational sales growing 8% year-over-year to $125 million in the first quarter, its fastest  quarterly growth in the past five years. The company attributed the growth to strong international sales, improved physician training efforts and growing acceptance of new products. ((Boston Scientific Corporation’s CEO Discusses Q1 2014 Results – Earnings Call Transcript, Seeking Alpha, April 29 2014))

The acquisition of IoGyn could further help drive sales in the urology & women’s health business. Boston Scientific estimates that the global hysteroscopic market is valued at about $80 million presently and is expected to grow to over $200 million by 2020. If the medical device maker can capitalize on its newly acquired Symphion device by providing a safe and effective alternative to power morcellators, it could help improve its declining share in the worldwide urology/women’s health market.

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1. Boston Scientific To Acquire IoGyn, Inc., Boston Scientific, May 6 2014 [↩]
2. FDA Warns Against Procedure for Uterine Fibroids, WebMD, April 17 2014 [↩]
3. FDA’s Cancer Warning: Bad News for Surgical Robots, WSJ, April 23, 2014 [↩]