Boston Scientific’s mission is transform lives through innovative medical solutions that improve the health of patients around the world.
Boston Scientific is a provider of medical devices. The firm operates seven reportable business segments: Interventional Cardiology (27% of sales), Cardiac Rhythm Management (24% of sales), Endoscopy (18% of sales), Peripheral Interventions (12% of sales), Urology and Pelvic Health (9% of sales), Neuromodulation (7% of sales), and Electrophysiology (3% of sales).
In the late 1960s medical device salesman John Abele acquired an equity interest in Medi-Tech, an R&D company that developed surgery alternatives. In 1968 he met Itzak Bentov, who had invented a steerable catheter that could be used for minimally invasive surgical processes. Abele obtained an investment from Cooper Laboratories that enabled him to market the catheter through Medi-Tech.
During the next decade, Abele met Peter Nicholas, an employee of pharmaceutical firm Eli Lilly. They wanted to start a company with the express purpose of acquiring Medi-Tech. So they obtained $500,000 in bank financing, using it to launch Boston Scientific in 1979, which then made the purchase. Nicholas was interested in management, while Abele would focus on the technical side.
Boston Scientific’s first offerings were catheters for gall bladder surgery. Within its first year it generated $2 million in revenues. The 1980s saw significant product development and organizational growth, with the firm diversifying its devices to include heart, respiratory, gastrointestinal, and other applications. In 1992 Boston Scientific filed an initial public offering, raising $400 million in capital.
Boston Scientific has a niche market business model, with a specialized customer segment. The company targets its offerings at healthcare providers, including hospitals, outpatient facilities, clinics, and medical offices.
Boston Scientific offers four primary value propositions: accessibility, innovation, risk reduction, and brand/status.
The company creates accessibility by providing a wide variety of options. Its products are used in a broad range of medical specialties, including interventional cardiology, interventional radiology, neurovascular intervention, neuromodulation, peripheral interventions, vascular surgery, cardiac surgery, electrophysiology, oncology, endoscopy, gynecology, and urology. Its portfolio is vast largely because it has acquired numerous companies since its founding. Between 1994 and 1999 alone, it bought nine manufacturers of niche products, including Meadox Medicals, Heart Technology, Target Therapeutics, and Schneider Worldwide, its largest purchase up to that date.
The company has embraced innovation from the beginning. Its breakthroughs include the Taxus Stent, a drug-eluting stent used to open clogged arteries, and the WATCHMAN LAA Closure Device, the first alternative to blood thinners for reducing stroke risk in indicated non-vascular AFib patients.
The company reduces risk by maintaining high quality standards. All of its manufacturing facilities, as well as its U.S. and European distribution centers, have received certification through the ISO13485 quality system standard, implemented by the International Standards Organization. The standard evaluates component quality, product design, supplier control, and manufacturing operations.
The company has established a powerful brand due to its success. It markets its products in 115 countries worldwide, selling them to 30,000 hospitals, outpatient facilities, clinics, and medical offices. It maintains offices in 40 countries in six continents, employing 25,000 staff members. Its portfolio features 13,000 products, and in 2015 it generated $8 billion in revenues and reached 22 million patients. Lastly, it has won many honors, including the following:
Recognition as one of the World’s Most Admired Companies by Fortune (2016)
Recognition as one of America’s Best Large Employers by Forbes (2016)
Recognition as one of the Most Meaningful Companies to Work For by Business Insider(2015)
Recognition as one of the 10 Most Reputable Companiesin Healthcare by the Reputation Institute (2015)
The Manufacturing Leadership Award from Frost & Sullivan (2015)
Silver Edison Awards for its WATCHMAN device (2016) and its Lotuw Valve System (2015)
Boston Scientific’s main channel is its direct sales team. It also sells its products through a network of distributors and dealers. The company promotes its offering through its website, social media pages, and participation in conferences.
Boston Scientific’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website features “Support” sections for patients, caregivers, and healthcare professionals that include product information and answers to frequently asked questions. It also features GuidePoint, a section with various resources providing information aboutreimbursement for its products and procedures. Furthermore, the company offers the free Product Details Scan App, which enables users to scan its products‘ packaging on their mobile devices in order to obtain information about the product.
Despite this orientation, there is a personal assistance component. Boston Scientific offers EDUCARE, a suite of training and education programs that support professionals in their delivery of patient care. The programs are hands-on, multidisciplinary, and developed jointly with global thought leaders. They are delivered through nine centers operated by the company’s Institute for Advancing Science.
There is also a co-creation element. Boston Scientific invites customers to submit ideas for new products or improvements to existing ones through its website for consideration. The ideas are assessed by its internal experts and the submitters are contacted if there is strong interest.
Boston Scientific’s business model entails designing, developing, manufacturing, and distributing its products for customers.
Boston Scientific’s key partners are the suppliers who provide the raw materials and components it uses for the manufacture of its products. It also relies on the network of distributors and dealers who assist in promoting and selling its products.
The company also forms partnerships through its Investigator-Sponsored Research (ISR) Program. This initiative offers support to researchers who want to advance scientific knowledge about its products and produce promising medical interventions. Specific areas of consideration are Cardiovascular, Rhythm & Electrophysiology, Endoscopy/Pulmonary, Urology and Women's Health, and Neuromodulation.
Boston Scientific’s main resources are its physical resources, which include 12 manufacturing and technology centers located in Fremont, CA; San Jose, CA; Valencia, CA; Spencer, IN; St. Paul, MN; Maple Grove, MN; Costa Rica; Puerto Rico; and Ireland. The company also places a high priority on its intellectual property, which includes 16,000 issued patents and 6,500 patent applications pending.
Boston Scientific has a value-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is cost of products sold. Other major drivers are in the areas of sales/marketing, administration, and research/development expenses, all fixed costs.
Boston Scientific has one revenue stream: revenues it generates through sales of its products to customers. They are often sold through long-term contracts.
Chairman and CEO
info: Michael Mahoney earned a B.B.A. in Finance at the University of Iowa and an MBA at Wake Forest University. He previously served as Chairman of Medical Device & Diagnostics at Johnson & Johnson and as President and CEO of Global Healthcare Exchange.
EVP and Chief Financial Officer
info: Daniel Brennan earned a B.S. in Finance and Investments and an MBA at Babson College. He previously held a number of senior roles at Boston Scientific, including SVP, Corporate Controller and VP Worldwide Financial & Strategic Planning.
EVP and Chief Medical Officer
info: Keith Dawkins earned a degree in Pathology at London University and Guy's Hospital and trained in Cardiology at Oxford University. He previously served as Chief Medical Officer of Boston Scientific’s Cardiology, Rhythm, and Vascular Group.
EVP, Chief Administrative Officer, General Counsel, and Secretary
info: Tim Pratt earned a Bachelor of Arts degree at Tarkio College and a law degree at Drake University Law School. He previously served as a partner and trial attorney at Shook, Hardy, & Bacon.
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