Medical Device Daily
For a decade Jim Tobin has been at the helm of Boston Scientific (Natick, Massachusetts). Throughout his tenure, he's faced unique situations and challenges, such as the med-tech industry's meteoric rise following the bursting of the dot.com bubble, and Boston Sci's highly controversial commitment of $27 billion to buy Guidant (Indianapolis).
Tobin, who is just two months shy from his 65th birthday, said on Thursday that he was retiring from the company and that the board of directors has appointed Ray Elliott, former CEO of orthopedics powerhouse Zimmer Holdings (Warsaw, Indiana), to take the posts of CEO/president of the interventional technologies company, effective July 13.
"From my point of view I have been here now for 10 years and that's enough," Tobin said during a teleconference to investors and media. "I believe and have always believed that 10 years is sort of a natural limit as to how long a CEO can expect to be effective and I've reached that. Beyond that personally, it's the right thing to do too."
Questions regarding the quick transition, which is poised to happen in about three weeks, prompted speculation on Tobin's health, which he denied was an issue.
"This has actually been in process since last November," Tobin said of his retirement. "I asked that there be as short a period between the announcement and when the transition occurred to minimize the period of time when it would seem as if I was a lame duck in the position. So three weeks is about right, from my point of view."
He added, "This place is like a video game you know, there's something happening practically everyday, the shorter period of time there is someone running it in a lame duck status, the better off everybody's going to be. So that's what it is. There are no health problems or that sort of thing."
Tobin gave Elliott a stamp of approval and added that he was leaving the company in more-than-capable hands.
Elliott, 59, has more than 35 years of experience leading healthcare and consumer products companies. He led Zimmer for 10 years, joining the company as president and later adding the titles of chairman and CEO.
Prior to joining Zimmer, he served as president/CEO of Cybex International (Medway, Massachusetts), a medical rehabilitation and cardiovascular products company.
Elliott began his career in the healthcare industry with American Hospital Supply, now Baxter International (Deerfield, Illinois), where he served for 15 years in sales, marketing, operations, business development and general management positions, leading to his appointment as president of all the Far East divisions, based in Tokyo.
He also has served on a number of boards, including the Advanced Medical Technology Association (AdvaMed; Washington), where he was chair of its orthopedics sector. He was a member of the Boston Scientific board of directors from 2007 until earlier this year. In addition to serving as president/CEO of Boston Sci, he will rejoin the board.
"Included in that is his International experience, which for Boston Scientific is crucial because we're more or less 40% non U.S. and that number is only going to increase as the years go by," Tobin said. "On top of that, [Elliott] has extensive knowledge in the cardiovascular industry which at this point is where at least 80% of our sales are concentrating. So 25 years with two of the world's leading healthcare companies, international experience, broad experience in leadership roles. That adds up to the right guy from my point of view."
One of Elliott's first priorities will be to help the company tackle the warning letter it received from the FDA back in 2006, which prevents Boston Sci from winning approvals of new products (Medical Device Daily, Jan. 30, 2006). The company received the letter one day after it emerged victorious in its bid to snag Guidant, beating out industry colossus Johnson & Johnson (New Brunswick, New Jersey).
The FDA cited Boston Sci's management for not properly tracking complaints over certain products, including its wildly popular Taxus stent, as well as Vaxcel catheters, Leveen needle electrodes and the Enteryx device used in surgery to treat acid reflux.
"We must complete the work and satisfy ourselves without a doubt that we are ready to take on and maintain the final actions required to lift the corporate warning letter," Elliott said. "It goes without saying that these actions need to meet the FDA's view of the goal, but in any event that's one problem that needs to go away and stay away."
Elliott added that there were other conditions that Boston Scientific would face and that would create challenges for the company in the future.
"The financial crisis has had some limited impact on us cash is more scarce and we do have some obligations coming due but not until 2010 and 2011," he said. "As we continue to integrate prior acquisitions, including Guidant, it's tough to take on more complexity and more debt. Our current stock is certainly underappreciated, depressed and less valuable as currency to attract new businesses."
But the hope remains in the company's strong product portfolio and news such as this week's release of initial results from the MADIT-CRT (Multicenter Automatic Defibrillator Implantation Trial with Cardiac Resynchronization Therapy) (MDD, June 24, 2009) helps, promising to give a boost to the ICD market, where Boston Scientific has a strong stake.
Elliott said that the company needed to look to developing its other businesses beyond drug-eluting stents and the cardiac-rhythm management market.
"The first order of business for me each day at 7 a.m. is to review sales from around the world and begin the process of asking why or why not," he said.
Elliott comes to the company at a time when its stock price is about 56% lower than it was a decade ago. At one point stock for the company traded more than $60-per-share. Those shares have dipped as low as $5.41, but were around the $10 mark yesterday.
Tobin will serve as a senior advisor the company and to Elliott until Nov. 30. The outgoing CEO will receive his current base salary of $994,000 and will be eligible for a bonus of up to 120% of his base pay.