Boston Sci buys valve firm for $386 million

In a bid to capture a piece of one of medical technology's hottest markets, Boston Scientific Corp. said Friday that it has agreed to acquire a California company developing a new kind of heart valve that doesn't require open-heart surgery.

The pricetag for Sadra Medical Inc. could be as much as $386 million.

Natick, Mass.-based Boston Scientific, which employs about 5,000 people in the Twin Cities, already owns a 14 percent stake in Sadra Medical, of Los Gatos, Calif. The company is developing a type of aortic valve that is snaked through an artery in the groin to the heart in a minimally invasive procedure.

Sadra Medical's Lotus Valve System is not yet available in the United States, but it has been studied in Europe. The business will become part of Boston Scientific's Cardiology, Rhythm and Vascular Group, which is based in Arden Hills and Maple Grove.

Now valued at $400 million, the market for these "transcatheter valves" is expected to increase to $2 billion by 2016.

Boston Scientific is entering an increasingly crowded global valve market now dominated by Edwards Lifesciences Corp. and Fridley-based Medtronic Inc., which have products in clinical trials. Abbott Laboratories and Johnson & Johnson reportedly are sniffing out deals to enter the market, as well.

Boston Scientific said it will pay $193 million upfront for Sadra Medical, with additional payments of as much as $193 million if certain milestones are reached. The company's current stake in Sadra reduces the deal's cost from a potential $450 million.

The five-hour investors meeting in New York was the first one held by the company in four years.

Elliott told investors the company's "priority growth initiatives" will include products targeting asthma, diabetes, obesity and "structural heart" therapies, such as the Sadra product.

Boston Scientific faces an industry-wide slowdown in its two biggest markets, heart-rhythm devices such as pacemakers and heart defibrillators, and cardiac stents used to open clogged arteries.

Elliott said the company will overhaul its current product line, cut costs and attempt to improve profitability over the next three years, with hopes of doubling annual sales growth to 6 percent to 8 percent within five years.

In addition, Boston Scientific has 150 new products in its research pipeline, said Elliott, who sees "huge opportunity" to expand sales in emerging markets, including China and India.