Johnson & Johnson subsidiary Cordis has decided to stop making drug-coated stents by the end of the year, which is more bad news for Eden Prairie, MN-based drug-delivery company SurModics--the company that licenses its polymer technology to J&J to make the Cypher brand of heart stents. J&J is responding to declining revenue from its Cypher stents due to competition from companies such as Abbott Laboratories, Boston Scientific and Medtronic. SurModics, for its part, says that while it's disappointed in J&J's decision, it was not an unexpected one.
"Despite today's announcement, J&J remains an important customer, as our hydrophilic coating technology is used on a broad array of products across the Cordis franchise," Gary Maharaj, SurModics' president and CEO said in a statement. "Importantly, today's development reinforces and validates our long-term strategic plan of focusing on our core hydrophilic technology and in vitro diagnostics businesses."
Maharaj was recently named to lead the company after activist investment firm Ramius purchased a 12 percent stake in the company and set out to make changes in the money-losing business. SurModics responded by appointing Maharaj and announcing that it will likely sell off its pharmaceuticals unit to dedicate more resources in its medical device and in vitro diagnostics businesses. The pharmaceutical subsidiary includes microparticle and biodegradable implant drug delivery technologies.
The Associated Press reports that the stock market responded negatively to J&J's announcement, with shares of SurModics dropping 17 percent, or $2.29, to close at $11.01, when the news broke late last week.
- read a report by The Associated Press
- and SurModics' response to the news
- here's more background on SurModics' recent troubles