Case
Supplementary Resources
Abstract
In 1995, Boston Scientific, a medical device company, needed to get into the highly profitable stent business fast. And Medinol, a startup research and development concern, needed a way to market its new NIR flexible design stent. The two companies sought a mutually beneficial alliance, signing a ten-year agreement that Boston Scientific would distribute and market Medinol's stents.
But the alliance quickly deteriorated. Before the parties would finally reach a court settlement in 2005, there would be layoffs and recalls, suits and countersuits, threats to cut off manufacturing, and the construction of a secret factory in Ireland. How did a business relationship that was created to provide life-saving technology to heart patients go so bad?
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
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Resource
Exhibit 1: Boston Scientific Financial Data
| Consolidated Statements of Income for Boston Scientific Corporation and Subsidiaries (In thousands, except per share data) | |||
|---|---|---|---|
Year Ended December 31, | 1996 | 1995 | 1994 |
Net sales | $1,462,043 | $1,129,185 | $888,572 |
Cost of products sold | 400,966 | 325,063 | 279,772 |
———– | ———– | ———– | |
Gross profit | 1,061,077 | 804,122 | 608,800 |
Selling, general and administrative expenses | 491,813 | 373,390 | 299,292 |
Royalties | 15,130 | 24,874 | 25,682 |
Research and development expenses | 116,295 | 93,843 | 76,692 |
Purchased research and development | 96,000 | 32,646 | |
Special charges | 32,341 | 204,448 | |
———– | ———– | ———– | |
751,579 | 729,201 | 401,666 | |
———– | ———– | ———– | |
Operating income | 309,498 | 74,921 | 207,134 |
Other income (expense): | |||
Interest and dividend income | 4,475 | 14,638 | 13,408 |
Interest expense | (11,184) | (9,591) | (8,378) |
Other, net | (5,818) | 3,837 | (3,306) |
Income before income taxes | 296,971 | 83,805 | 208,858 |
Income taxes | 129,865 | 77,365 | 73,551 |
———– | ———– | ———– | |
Net income | $167,106 | $6,440 | $135,307 |
======= | ======= | ======= | |
Net income per common share | $0.92 | $0.04 | $0.78 |
======= | ======= | ======= | |
Primary weighted average number of common shares | 181,293 | 177,534 | 174,197 |
Source: SEC 10-K filing for 1997
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2025 Sage Publications, Inc. All Rights Reserved
