Guidant - Harvard business study

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In late 1994, five medical device companies, namely, Advanced Cardiovascular Systems, Inc., Devices for Vascular Intervention, Inc., Cardiac Rhythm management Business, Heart Rhythm Technologies, Inc., and Origin Medsystems, Inc., has been combined to form Guidant Corporation. Formerly a part of Eli Lilly and Company, these companies as a group were split off by Lilly to capitalize on common customers, markets, and competencies in three areas: Vascular Intervention, Cardiac Rhythm Management and Minimally Invasive Systems. Cardisc Rhythm Management Business (CRMB), part of Guidant's cardiac management group, developed, manufactured, and marketed two major product lines: implantable cardioverter defibrillator (Tachy) systems and pacemaker (Brady) systems.

The Tachy system were small device placed under the skin and connected to "leads" inserted through a major vein directly into the heart. When the device detected an unusually fast heart rate, it would give an electrical jolt to the heart. The Tachy market grown 22% per year and was to expect to grow to over $1 billion in 1999.

Therapy advances, particular in size, ease of use, and battery life, were important to hospitals, doctors, and patients. Further, the ability to pace both chambers of the heart was of substantial clinical value to patients with severely diseased hearts. Product life cycles continued to shorten and new product development was key to business success.

The Brady system was a more mature technology than ICDs, and all major manufacturers were producing units of acceptable quality. Therefore, service, price, and ease-of-use were primary market drivers in the Brady segment. Because the pacemaker market was larger, more established, and technology more stable, there were more competitors in that field, CRNB had made advances in its Brady product line, but in 1997 CRMB held only the fourth market share position. If they did not continue to innovate and create leading...