J & J stent story highlights need for innovation
This month’s news that J&J is abandoning its coronary stent business was sad but provided several lessons about poor product development execution and the need for constant innovation.
J&J created the coronary stent market, managing the first training and certification programs, paving the regulatory path for those that followed, and launching the first successful device. The Palmaz stent, named after its physician inventor, was the gold standard in the early years.
Delivering the first successful stent was no trivial feat since early use led to high rates of thrombosis (artery blood clotting around stent), stents falling off the catheter during delivery, bleeding at the groin during insertion of the catheter into the leg, and high restenosis (artery blocking due to scar tissue formation around stent) rates.
J&J had the deep pockets and vision to push through the challenges, and with some fortunate aid from innovative cardiologists such as Antonio Colombo, who realized that expanding the stent at very high pressures provided greater blood flow, and the advent of better anti-platelet drug regimens that reduced clotting, the stent took off.
Unfortunately, J&J failed to focus on constant innovation, choosing to rely on their major patent, which was thought broad enough to block any balloon expandable stent from the marketplace. With a lack of competition, the R&D group was slow to address calls for making the stent less rigid on the catheter for better navigation through the coronary branches. J&J also failed to refine the manufacturing of the stent and scale-up was poorly executed, leading to not only yield problems, but also a major FDA regulatory compliance fight and distraction.
Thus, it was no surprise to anyone, with the exception of J&J, that upon Guidant gaining FDA approval for their initial coronary stent and launching a competitive device, J&J went from 95 percent to 25 percent of the U.S. market in three months. Other competitors like Boston Scientific followed shortly after.
J&J fought back, leveraging its strengths. The company understood that the bare metal stent market was becoming a commodity and they could once again gain market leadership and premium pricing if they could solve the issue of restenosis. Hence, development of the drug-eluting stent. The company’s deep pockets and vision, once again, aided by their pharmaceutical infrastructure, propelled the Cypher drug-eluting stent into the market well before its competitors.
The drug-stent history unraveled like a replay of the initial stent rise and fall. Despite being first to market, again J&J did not respond to calls for further R&D innovation, relying on patents, regulatory barriers, and their sales/marketing/distribution machine. But, true to form, scaling up manufacturing and regulatory missteps became major distractions and R&D lost sight of the need to keep improving the metal structure scaffolding the drug.
In both the original stent and its drug-eluting offspring, J&J responded similarly, attempting to buy their way out of the hole they created. For the original device, it was a hostile acquisition of Cordis, and later with the drug-eluting stent it was the desperate act of buying Connor Medsystems for $1.4 billion despite incomplete clinical data.
The end of the J&J coronary stent business is unfortunate. With sales dropping from $2.62 billion in 2006 to $627 million last year, combined with an inability to launch a competitive next generation product, the end of a tumultuous 20-year run had arrived. Despite making billions of dollars and pushing the frontiers of cardiology, the J&J stent adventure was a rocky ride from the start that never gained sure footing. The take home message for me is that in competitive markets innovation is king and will win out in the end, regardless of being the most entrenched player.