Just over a year after he was recruited from a major competitor, Michael F. Mahoney formally took the reins as Boston Scientific Corp.’s chief executive Thursday, promising to revitalize the long-struggling Natick medical device maker.
“I plan to take the company back to growth,” said Mahoney, 47. “The company has a wonderful legacy, but we haven’t grown [it] for years. I hope to provide some management stability, and I see a lot of opportunity” for boosting sales.
Mahoney, who grew up in the Chicago area, said he would focus on turning around Boston Scientific through innovation, overseas expansion, and making operations more efficient.
The official promotion was delayed by a series of chessboard moves necessitated by a noncompete clause in his contract with health care products giant Johnson & Johnson. Mahoney had been chairman of the New Jersey’s company’s medical device and diagnostics group.
After Ray Elliott unexpectedly left as Boston Scientific’s chief executive in May 2011, Mahoney was tapped as president while executive vice president Hank Kucheman was promoted to interim chief executive. The understanding was that Mahoney would move to the corner office on Nov. 1, 2012, when a one-year prohibition against heading a J&J competitor expired.
Kucheman pressed an effort to broaden Boston Scientific’s product line, but two of its largest markets, stents and cardiac rhythm management devices, have suffered from discount pricing in a slow economy.
Boston Scientific posted a loss of $725 million in the third quarter, compared with a profit of $142 million a year earlier, while sales fell to $1.7 billion from $1.8 billion in the third quarter of 2011. The company has warned of ongoing weakness in the fourth quarter.
Boston Scientific shares advanced 9 cents to $5.24 on Mahoney’s first day on the job Thursday, an increase of 1.95 percent.
Debbie S. Wang, senior stock analyst for the investment research firm Morningstar Inc., said Mahoney faces challenges, including the depressed cardiac rhythm management and stent businesses and a research and development pipeline at Boston Scientific that has fallen behind rivals in emerging product niches such as transcatheter aortic heart valves.
“From my standpoint, the jury’s out,” Wang said. “I need to see what he’ll do in the next year. The company has already cut costs, and it’s not clear there’s much more to do. They're late to the party in many of the new technologies. The biggest question is how is he [Mahoney] going to get that company out from behind the eight ball, which is where they’ve been.”
Mahoney on Thursday cited the importance of new Boston Scientific products, such as the Synergy drug-eluting stent approved for sale in the European Union this week and the S-ICD, the first defibrillator that can be implanted under the skin instead of connecting directly into the heart, which was OK’d by the Food and Drug Administration in September.
He also said there is substantial room for Boston Scientific to increase international sales, noting they now make up 45 percent of the company’s revenue.
In particular, he said, the company is working to sell more to China, India, Brazil, and Russia.
“We’re growing in the Chinese market, and all the emerging markets,” he said.
Mahoney, who takes over Kucheman’s seat on the Boston Scientific board of directors, said Kuchemen will serve as a senior adviser to the company going forward.