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Boston Scientific

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Boston Scientific is a Massachusetts-based company that manufactures products for various medical uses. It faces thousands of transvaginal mesh lawsuits.

John Abele and Pete Nicholas founded Boston Scientific in 1979 after merging their ideas on building a medical enterprise. Abele, a medical company employee, and Nicholas, his investing partner, created the company to bring low-cost, less-invasive options to patients with a wide spectrum of medical conditions.

Today Boston Scientific calls itself a leading innovator of medical solutions. It is a worldwide company that produces, markets and manufactures a large line of products for a diverse group of patients. The company specializes in solutions for heart surgery, digestive disorders, pulmonary disease treatment, vascular surgery, urology, chronic pain and women’s health.Boston Scientific, logo

Boston Scientific’s corporate headquarters is located in Natick, Mass., about 15 miles west of Boston. The business employs around 24,000 workers and operates 12 manufacturing facilities that market its products in 100 countries.

Despite nearly 30 years of growth through acquisitions and product development, Boston Scientific has seen its share of financial and legal drama in recent years. Business missteps and lawsuits began to plague the company at the beginning of the 21st century.

Profits came to a standstill in 2005 — one year after the company’s costly purchase of Guidant, a major heart defibrillator manufacturer. Boston Scientific also settled for millions years later over a U.S. Department of Justice lawsuit related to Guidant’s controversial sales of faulty defibrillators.

The company later found itself in a messy patent fight with OrbusNeich, another device maker. The situation was resolved in a settlement. Boston Scientific is currently staring down thousands of lawsuits from women who claim to have suffered injuries related to the company’s transvaginal mesh products, which are used to treat pelvic organ prolapse and incontinence issues.

Boston Scientific’s legal troubles and lack of financial growth prompted a 2011 “cost cutting” initiative that eliminated more than 1,000 jobs in 2012 and early 2013. By late 2013, the manufacturer attempted a turnaround, but then announced what it called a “reorganization” and “growth initiative” that involved an end-of-the-year departure for its chief financial officer and additional job cuts.

Fast Facts about Boston Scientific
Established: 1979
Founders: Pete Nicholas and John Abele
CEO: Michael Mahoney
Headquarters: Natick, Mass.
2014 Revenue: $7.3 billion

Litigation and Financial Woes

Boston Scientific had not posted a net annual profit between 2006 and 2013. Major legal and financial problems began to weigh the company down after making the largest acquisition in its history.

In 2006, Boston Scientific announced the purchase of Guidant, a manufacturer of implantable defibrillators. The $27 billion dollar acquisition came just before a massive controversy over some of Guidant’s products rocked the market.

A series of recalls for Guidant’s heart devices took a toll on the entire defibrillator industry. Boston Scientific’s purchase occurred as the U.S. Department of Justice investigated and filed a suit against Guidant, alleging that the company sold its defective Prizm 2 and Renewal 1 and 2 defibrillators to Medicare patients from 2002 to 2005 despite having knowledge of problems with the devices.

The devices were implanted in patients to correct an irregular heartbeat with electrical shocks, but they were known to short circuit and fail. In October 2013, Boston Scientific paid a $30 million dollar settlement over claims related to the devices.

In a 2010 patent infringement battle over heart stents, Boston Scientific agreed to pay drug maker Johnson & Johnson $1.73 billion. More recently, the company settled a year-long patent litigation with China-based manufacturer OrbusNeich.

The strange battle started when OrbusNeich filed injunctions against Boston Scientific for selling stents in certain markets. In one instance, OrbusNeich called police to Boston Scientific’s German headquarters to seize the products in question. The companies announced the end of their squabble in 2013 with a joint press release.

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    Transvaginal Mesh Complications and Lawsuits

    Boston Scientific is one of six major manufacturers named in lawsuits filed by more than 70,000 women injured by surgical mesh implants. Some of the mesh-related injuries mentioned in litigation include organ perforation, mesh erosion and nerve damage.

    Boston Scientific Transvaginal Mesh Products
    Prolapse Repair Devices Bladder Slings
    Pinnacle Pelvic Floor Repair Kit Advantage Transvaginal Mid-Urethral Sling System
    Uphold Vaginal Support System Prefyx PPS System
    Polyform Synthetic Mesh Obtryx Sling System
    Arise Vaginal Support System Lynx Suprapubic Mid-Urethral Sling System
    Advantage Fit Transvaginal Mid-Urethral Sling System
    Obtryx Transobturator Mid-Urethral Sling

    In summer 2011, Boston Scientific issued a Class II recall for the Pinnacle Pelvic Floor Repair Kit because of fears the needle may detach from the mesh during placement. This recall was unrelated to the reported side effects of transvaginal mesh, but occurred as the U.S. Food and Drug Administration (FDA) began raising concerns about the devices’ negative health consequences.

    Boston Scientific’s ProtoGen was the first mesh sling to be manufactured. Although the company pulled it from the market in 1999 over safety concerns, other manufacturers developed their own mesh products based on the ProtoGen’s design. The manufacturers of several of these products have since pulled their mesh products from the market.

    On March 10, 2014, the first of 16,700 lawsuits against Boston Scientific transvaginal mesh products were scheduled to go to trial. 

    Since then, the company has lost multi-million dollar jury verdicts, including $73.5 million for Martha Salazar in September 2014 and $100 million to Deborah Barba in May 2015. A California judge later reduced Barba’s compensation to $10 million.

    Boston Scientific went on to settle about 3,000 mesh cases for $119 million in 2015, but thousands are still pending.

    The Future of Boston Scientific

    After several years of sluggish sales and costly settlement payouts, Boston Scientific actively sought to turn around its fortune.  At the end of 2013, the company went through a self-described period of restructuring — its third restructuring in two years. Third-quarter numbers suggested improved performance and a possible turnaround, exceeding analyst expectations.

    Boston Scientific reported a $5 million loss in the third quarter of 2013 compared with a $664 million loss in the third quarter of the previous year. News of the improved numbers also came with the announcement of 1,100 to 1,500 job cuts worldwide for the fourth quarter. The company previously cut 1,000 jobs in 2011 and another 900 to 1,000 positions in early 2013.

    The third round of layoffs was thought to be a cost-cutting tactic to speed up the company’s improving performance, saving them $150 to $200 million in operating costs.  In October 2013, Boston Scientific’s CFO, Jeffrey Capello, announced he’d be resigning at the end of the year after a disappointing fourth-quarter sales forecast. His position was filled by senior vice president and controller Daniel Brennan, who was credited with helping steer Boston Scientific through the past five challenging years.

    The company planned on expanding distribution, infrastructure and clinical science in China and India in attempt to reach the growing markets.