Boston Scientific and the Road to Ruin

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

Elliott came in with plenty of swagger. He was the new boss in town, he told his executives on numerous occasions. He took public shots at his competitors. He improved Boston Scientific’s long-term prospects by acquiring one company that was developing an aortic valve device, and another that had already come up with a device for asthma. The turnaround at Boston Scientific had begun, he
announced at every opportunity.

He also made it clear that he wouldn’t put up with any nonsense from his employees. During a call with analysts last year, he announced that he had “exited” from the company a few sales reps who “repeatedly breached our healthcare professional code of conduct.” Some of those people wound up getting hired by St. Jude Medical, a medical device competitor. Elliott knew what tends to happen when sales reps switch companies: Their accounts go with them. But it was the principle that mattered, he told investors. Boston Scientific could easily lose $100 million in sales by canning the reps, but, “We are going to run the company properly, and if we’re a somewhat smaller company short term or long term, so be it.”

Elliott also shelled out a total of $2.4 billion to settle 17 patent infringement lawsuits with Johnson & Johnson. To help pay down Boston Scientific’s $6 billion in debt, Elliott shed the company’s neurovascular division. He also laid off more than 1,000 workers.

But doing the right thing didn’t end up doing Elliott much good. Boston Scientific’s sales and share price continued to fall. The executive eventually admitted to analysts that the mess he’d found after taking over was greater than he had anticipated. Last year, for example, the firm lost $300 million in sales when it was forced to hold shipment of some defibrillators because it had failed to file paperwork with the FDA — an amateur blunder that Morningstar analyst Debbie Wang says never should have occurred at a major medical device maker. It not only cost Boston Scientific money and slowed its climb out of the hole, but it also indicated that the company was still having operational difficulties. “Sometimes I feel like the right hand doesn’t know what the left hand is doing at Boston,” Wang says. Elliott says that the paperwork issue was part of a “bad system we’ve since corrected.”

 

  • 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.