Boston Scientific and the Road to Ruin

By Catherine Elton | Boston Magazine |

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.

  • 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.