Guidant moves to bolster market confidence
13 November 2005
Reeling from the safety warnings and product recalls for almost 200,000
pacemakers and 88,000 heart defibrillators, and numerous lawsuits, Guidant
announced the establishment of a Design for Reliability Team. The three team
members recently served as system safety experts examining the NASA space
The Team will perform an "independent and thorough assessment of the new
cardiac rhythm management product development process, with a focus on
recommending further improvements in design for future product generations".
The team will review the life cycle of product development, from initial
concept planning to full production release in the manufacturing phase.
The association with the NASA investigation, however, was labelled as one
of the five dumbest things on Wall Street last week by TheStreet.com.
Guidant last week also published an updated Cardiac Rythm Management
Product Performance Report that provides confirmed failure details by
product family. This includes descriptions of clinical manifestations and
causes for patterns of failures. Additionally, device failures are further
characterized to describe therapy availability. The Report can be found at
Meanwhile, opinion in the American press favours an out-of-court
settlement for Guidant's lawsuit against Johnson & Johnson to force the
takeover started last December. This is not least due to 83-year old federal
judge Robert W Sweet's tendency to persuade parties to settle matters before
going to court.
The Johnson & Johnson move to acquire a medical device manufacturing
capability is also seen as the beginning of a trend for pharmaceutical
companies to re-enter the medical device markets to bolster pharmaceutical
sales and to take advantage of drug-delivery technology.
This also means that, should the merger not go ahead, Guidant is unlikely
to have problems finding another buyer, though it is unlikely to be at last
December's $76 per Guidant share. Guidant's stock reached a low of around
$56 a week ago. But it was labelled a good buy by some analysts and
subsequently rose to $58.71 at Friday's close.