Boston Scientific and the Road to Ruin
Despite the significance of the development, the auditorium remained eerily quiet. On Wall Street, though, analysts were gasping. “Very surprised,” “Shocked,” and “Gobstopped” typified the reactions. Shares of the company’s already beleaguered stock plummeted another 10 percent, to less than $7 by the close of the market.
Boston Scientific remains a giant. The company employs 25,000 people worldwide and has revenues of $8 billion. But Elliott’s departure came as the nadir in a long run of bad news. It reinforced the company’s image as the premier problem child in an industry with no shortage of problem children, and as the shareholders meeting came to an end, it left hanging in the air a couple of critical questions: How the hell could things at a company this great have gotten so bad? And could Boston Scientific possibly recover?
THE STORY OF BOSTON SCIENTIFIC began with a chance encounter in 1979 on the sidelines of a soccer match in Concord. John Abele, an unassuming technological visionary, and Pete Nicholas, an aggressive businessman, were watching their kids play and ended up talking. Nicholas was looking to build a new company. After that day the two kept talking, eventually raising the funds to create a holding company that purchased the firm where Abele worked, the catheter technology concern Medi-Tech. They settled on the name Boston Scientific.
Over the next decade, the yin-yang pair pursued the common goal of pioneering less-invasive medical technology. In 1990 they introduced a new device, a balloon to widen clogged aortic valves, that was a big enough success to lead the company to an initial public offering in 1992. In time, Boston Scientific would develop catheters and stents, which help restore the flow of blood through weakened or blocked arteries.
In the mid-1990s, Abele retreated from day-to-day operations and took a seat on the board of directors. Nicholas then brought on the brash dealmaker Larry Best to serve as chief financial officer (or, as one analyst later put it, to play Rasputin to Nicholas’s empress).
Starting in 1994, Boston Scientific acquired nine companies in 16 months and saw its market capitalization go from $1.5 billion to $8.5 billion in one year. In 1995, Nicholas bought the Minnesota-based coronary catheter maker Scimed, and overnight his company doubled in size. But Nicholas had even grander plans: He wanted Boston Scientific to become the biggest medical device firm in the world.
Pictured above, Jim Tobin and Pete Nicholas, photograph by Jonathan Wiggs/The Boston Globe via Getty Images.