Boston Scientific and the Road to Ruin

How greed, incompetence, and arrogance brought the world’s leading medical device company to its knees.

This spring, Boston Scientific cofounder Pete Nicholas took to the stage at the end of a shareholders meeting to deliver “a few words.” Nicholas began his remarks by reminiscing about 2004, the 25th anniversary of the Natick-based medical device powerhouse. Back then, he said, Boston Scientific was the “unambiguous leader” in its industry, universally acclaimed for its phenomenal success and place “among the top 100 most valuable companies on the New York Stock Exchange.”

The 50 or so suits scattered in the largely empty downtown Boston auditorium remembered the time well: The company’s stock that year hit an all-time high of $45 a share.  

But then Nicholas recalled the years that followed: the company getting sanctioned by the FDA; seeing the market for its devices stall; and making what has since been dubbed the second-worst acquisition in the history of corporate America. Along the way, Boston Scientific’s stock price slid into single digits.
 
Nicholas’s comments were direct and honest, but it would have been difficult for any executive to put into words just how severe the turn in the company’s fortunes had been. Boston Scientific prided itself on being an innovative force that pushed the possibilities of medical technology. But that ambition also fostered a culture that on too many occasions had pushed beyond legal, ethical, and financial boundaries. Fed by hubris, testosterone, ego, and greed, the company slogged through a now-legendary string of operational and strategic blunders, quality-control problems, and allegations of outright corruption. “What’s next?” a Wall Street analyst had asked in the middle of it all. “Locusts?”

Actually, with respect to Nicholas’s attempts to revitalize the company’s battered image, a plague might have been preferable to what he was about to announce. Standing behind Nicholas, listening to a speech that had quickly turned gloomy, was Boston Scientific’s president and CEO, Ray Elliott. Renowned as a turnaround artist who could resuscitate struggling organizations, Elliott had, to much fanfare, agreed in 2009 to come out of retirement and staunch the bleeding at Boston Scientific.

But now even he was bailing. “I heard from Ray about a week ago that he would like to now step down,” Nicholas said. “We reluctantly accepted his wishes.”

  • craig

    I worked for Sci Med until it was acquired in 1995. I was fired by dumb assed engineers who were given titles called ‘manager’, who were full of themselves, had no knowledge of the functions of a manager (I had an undergrad. in management, five years’ experience prior to Sci Med, plus a degree in electronic technolgy). Firms that are almost entirely engaged in engineering make the mistake of promoting their ‘own kind’ – that is, engineers, who while they are essential in the engineering function, are absolutely CLUELESS when it comes to maximizing human resources. Hubris, group-think, discrimination against people with other world views, prima donnas, all create a culture of fear among those who love their jobs more than being courageous and speaking truth to neanderthals. Hubris, arrogance CAN KILL!!!! This is how faulty devices find their way into victims and ultimately why B.S., Medtronic etc, are doomed to oblivion UNLESS the culture fosters true managers/coaches who are actually interested in the development of talent who have spent years and tons of their money acquiring the skills. How much talent is sent packing by a dumb-assed engineer who can’t even spell or…

  • Ruben

    I’m a former international employee that was fired when I was the responsible to run the business in a country that was one of the largest market opportunities in the world for BSC.
    Fired in retaliation because through the use the Channel that was included at the Code of Ethic made a formal complaint about many operators “BSC is used to call them Managers” that were using “cold sales” to reach quote that allows them to gain bonus.
    Those fictitious sales were later considered to be part of the annual “write off” at company balance-sheet. As an example, I found ($130K) value equipment (IVUS), seated at a distributor since two year without any action from “BSC Managers” no payment – no return, just an Invoice to gain the bonus for “managers” that of course was paid.
    I made a claim for retaliation at Boston court, that was rejected because the The Sarbanes-Oxley doesn’t protect a citizen of a foreign country. While it was created to protect the investors from any risk, that in a global company can come from international business also. The last CEO “improves” his salary from 600K to 32.4M per year using the same strategy of “bonus…

  • sandy

    confused and saddened that in a time of economic hardship state-wide, and nationally… a local magazine would choose to disparage a locally headquartered company that employs thousands in this state.

  • chris

    I worked at NSC for 2 years in clinical sciences. The place was toxic and leadership was non existent. What goes around comes around. Mr manager was a moron, she is highlr paid, no degree, no morals, and was inappropriate as she bullied any one she wanted to and leadership let her get away with it, no balls to confront her. The ship has sunk.

  • BH

    The article was a clear demonstration of cowardice on the part of the author and the “unnamed analyst”. It’s easy to post negative comments if there is no accountability. In addition, the unprofessionalism demonstrated in publishing unnameed vulgar assessments is inexcusable. Would expect more objective (at least more balanced) “reporting” from a local magazine in writing about a local company that develops life saving medical devices that reduce healthcare costs and help physicians treat patients needs.

  • Martin

    This women signing this article is obviously a crazy feminist writing this coments like;
    “Fed by hubris, testosterone, ego, and greed”.
    Former executives describe what ensued as an all-out testosterone fest.
    Its showing us that testosterone *(men hormon) is responsible for all problems here… Now we should just say that this lady wrote this article estrogenicly stupid and unbalanced and unsure??? Its simple discriminating men and blame them for all here ;p

  • Joel

    This company gets whatever it deserves and folks in the comment section defending them are simply pathetic. I worked for them as a manager for several years and their just the typical old school, east coast good ole boys squeezing every ounce of blood out of their workers and then throwing them away to stay profitable.