In search of excellence

INTERVIEW OF THE WEEK: DOMINIC COYLEtalks to William H Kucheman, senior vice-president of  Boston Scientific.

THE PRESENCE of Hank Kucheman in Galway this week was affirmation, if any were needed, of the success of IDA Ireland’s strategy of creating clusters of expertise in different technologies around the State.

The head of cardiovascular business for medical device giant Boston Scientific was on hand to announce a major €91 million investment in the Galway operation – now the largest unit in the Boston Scientific group.

In terms of jobs, the 45 posts likely to be created as part of the investment may not sound much in the context of Ireland’s current employment situation – and in the Galway plant’s 3,000 strong workforce.

But it is the nature of those jobs that will give cause for celebration. Boston Scientific has specifically targeted the money at research, development and innovation – the very areas where the Government and the State enterprise agencies are looking to position Ireland as our cost base increasingly rules us out of lower margin manufacturing and services businesses.

And the catalyst for the investment is also likely to be heralded at the IDA’s Dublin headquarters. Towards the end of last year, Boston Scientific acquired a company called Labcoat for a figure later stated in its accounts to be about $17 million (€12 million).

When Labcoat was founded in 2000 by Israeli Ascher Shmulewitz and American Art Rosenthal, Boston Scientific was already a major employer in Galway. The new company, which was developing new approaches to the drug coating that was starting to appear on coronary stents – wire mesh inserted in arteries to stop them closing up after angioplastry procedures – chose to base itself in the city.

Now the technology it developed, and which has been acquired by Boston Scientific, is behind this significant investment in the company. For the IDA, it is proof of the worth of the cluster concept, with various players – multinational and indigenous – drawing mutual benefit from each other.

The Labcoat deal also illustrated the other payoff from such clusters – the acquisition of skills by workers who can then go on to develop their own businesses. Dr Rosenthal, one of the two founders of Labcoat, was formerly chief scientific officer with Boston Scientific.

Galway is now Boston Scientific’s largest plant worldwide, employing about 3,000 people and producing a range of products for coronary, vascular, urology and endosurgery procedures.

Coming at a time when the Government is anxiously assessing the reaction of Ireland’s key multinational sector to efforts by US President Barack Obama to persuade US companies to concentrate their investment and labour resources on the domestic market, the Boston Scientific announcement gives cause for optimism.

Kucheman is clear that Galway has secured the latest investment on merit, largely on the performance of its workforce which is recognised at group headquarters in Massachusetts as a key element of the company’s success in Ireland and the broader global market.

“When we first came here 15 years ago, we were attracted by a multitude of factors,” says Kucheman. “We were looking for a European location that would allow us access to European markets and supplies. Ireland also offered a positive business environment, a low cost base and an educated and flexible workforce.

“Most of these are still in place.”

He jokingly suggests he would like to clone the Galway workforce for some of the group’s other operations. “The technical acumen and competency of the people in Galway, as well as their attention to detail and commitment to quality, their passion, this is what makes it special. They get it right first time.”

Galway was at the forefront of the development of the Taxus stent, Boston Scientific’s first foray into the market for drug eluting stents – stents coated in drugs and polymers to prevent cleared arteries from getting blocked up again. It is currently involved in developing and manufacturing the fourth generation of such stents which Boston Scientific expects to have on the market in Europe towards the end of the current year.

But what really excites Kucheman now is the potential in the Labcoat technology. “What they have done is develop a very novel technology involving the use of precisely metered droplets of biodegradable coating for stents,” he says. Unlike existing drug-coated stents, this will allow stents to be coated only on that external frame that comes into contact with the vessel walls. That should improve the speed of healing in people receiving the stents.

Of course, more targeted and sparing use of drugs in coating the stents will presumably also have cost benefits for Boston Scientific itself.

Kucheman sees the development of Labcoat and of Boston Scientific in Ireland as vindication of the Government policy of creating centres of excellence. “What we like and really appreciate is the strategy in place in Ireland to create innovative centres of excellence. It is a very cogent strategy and industry is attracted to that.”

The son of a US air force general, Kucheman got his first position in the US Air Force Academy Hospital after attending his father’s alma mater of Virginia Tech.

Marketing and sales have been the focus for much of his career. However, it was his time with medical devices group SciMed that saw him come into contact with Boston Scientific. SciMed was a specialist development of catheters in the late 1980s and early 1990s. From the outside, Boston Scientific was impressed with its expertise in the area of coronary catheter technology – devices that allowed surgeons to look at blood vessels in and around the heart in a way that avoided invasive surgery. Minimally invasive coronary surgery was a major growth area at the time and one in which Boston Scientific was looking to develop a position.

Since floating in 1992, Boston Scientific had expanded in part by an aggressive acquisitions policy. In 1994, it swooped on SciMed, bringing its technology, and Kucheman, on board in an all-stock deal.

Now Kucheman oversees a €2.88 billion interventional cardiology division. It is the largest single element of Boston Scientific’s business and the company remains the biggest player in the global market for stents.

However, the market has become more challenging in recent years. Back in 2006, Boston Scientific and Johnson Johnson’s Cordis division were the only players in stents. Now Medtronic and Abbott are providing increased competition in the global market.

In addition, the market itself has proved volatile in recent times with conflicting signals from studies on the efficacy and safety of drug-coated stents. Adverse reports suggesting the drug and polymer coatings on drug eluting stents were contributing to higher rates of coronary thrombosis (blockage of the coronary arteries) than the use of earlier generation bare metal stents hit demand, particularly in the key US market.

More recent studies have backed the use of drug-coated stents but the company is still recovering some of the lost ground. Galway, however, maintains its position at the core of Boston Scientific. The company’s first drug-coated stent, the Taxus, was developed there and the plant is currently working on a new generation Element stent that is expected to come on the market – initially in Europe – by the end of this year.

This week’s announcement of further resources for RD in Galway ensures it will continue to be a centre of excellence for stent development.

Even if it can no longer boast the cost competitiveness of the pre-Celtic Tiger era, Kucheman insists that Ireland is still “an attractive proposition” for international companies looking for a European base. “Ultimately, it is the people who give Ireland a distinct advantage.”

For now, amid the general economic gloom, Kuchenar’s vote of confidence in Ireland will encourage the Government to believe that the seeds of a recovery are being planted.

ON THE RECORD

Name:William H (Hank) Kucheman

Age:60

Position:Senior vice-president at Boston Scientific and president of interventional cardiology

Family:Married with two daughters

Why is he in the news:He was in Ireland this week to announce a $91 million investment in RD that will increase the profile of the company's Galway division, which employs about 3,000 people