November 2016: Boston Scientific

FDI of the Month | Wed 7 Dec | Author – Business & Finance tom mangan
Tom Mangan, managing director, Boston Scientific

November brought positive news for Boston Scientific’s Cork manufacturing facility as the manufacturer of medical devices picked up the 2016 Shingo Prize for Excellence in Manufacturing.

Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties.

Founded in 1979 and headquartered in Massachusetts, USA, Boston Scientific is a public company listed on the NYSE. The company employs 25,000 people and is a global leader in the development of less-invasive medical devices.

Established in 1998 as part of the company’s manufacturing expansion plans, the Cork site produces a diversified portfolio of products that serve several divisions of the corporation.

The site combines leading edge manufacturing technologies with the capability to quickly commercialise new products for its division customers.

First established in Ireland in 1994, with the support of IDA, the company has grown to be the largest medical device employer in Ireland. Through its three Irish sites – located in Clonmel, Cork, and Galway – the company exports approximately 10 million medical devices worldwide annually, including stents, balloons, platinum coils, catheters, inflation devices, pacemakers and ICDs.

The Clonmel operation was established in Ireland in 1998 by Guidant Corporation and was acquired by Boston Scientific in April 2006.

Established in 1994 as a manufacturing and R&D facility, the Galway site uses over 50 leading edge manufacturing technologies and the site has expanded its capability in the last decade to include areas such as new product development, regulatory affairs, and analytical laboratory testing.

It is one of the company’s centres of excellence for the development of drug-eluting stent products and has also played a central role in developing products to treat endovascular and gastroenterological diseases.

CULTURE OF IMPROVEMENT

In November the Cork manufacturing facility received the Shingo Prize for Excellence in Manufacturing from the Shingo Institute, part of the Jon M Huntsman School of Business at Utah State University. The Shingo Prize is based on a thorough assessment of organisational culture and operations.

“The Shingo Prize is our most prestigious honour to recognise companies that demonstrate broad application of lean principles across core business processes and a leadership commitment to build and sustain a culture of continuous improvement,” said Ken Snyder, executive director at the Shingo Institute. “We congratulate Boston Scientific for establishing a strong culture anchored on these principles and for empowering all employees to play a role in driving business success.”

The Cork facility (which manufactures products that treat conditions in the cardiac and peripheral vasculature and gastrointestinal and urinary tracts) has  an annual output of more than 5 million medical device units per year.

The site reports that it has reduced quality incidents and plant cycle times while increasing productivity, and is a zero landfill plant with 84% direct recycling – factors which contributed to their reputation for operational excellence which earned them the Shingo Prize.

The Shingo Prize is our most prestigious honour to recognise companies that demonstrate broad application of lean principles across core business processes

ECONOMIC INFLUENCES

Cardiovascular is the Boston Scientific’s largest business, with sales of €2.8bn and 9% growth last year.

In recent times, investors are warming to the company and early this year, its share reached a 10-year high at $24 per share. They currently trade at $21 – a long distance from $5 a share four years ago. The company has a heightened price/earnings multiple of 28, with a market value of $29bn.

However, the political, economic and regulatory influences continue to impact the healthcare industry, Boston Scientific included. Governments and large purchase groups are demanding competitive prices and better payment terms.

In addition, the US government and certain US states have enacted laws aimed at ‘transparency’ between pharma and medical device companies and healthcare professionals (HCPs). This requires the companies to report payments or other benefits given to HCPs. Despite these obstacles the company continues to perform well, both in Ireland and internationally.