Abbott Laboratories ABT

While Abbott just received Food and Drug Administration approval on its Portico transcatheter aortic valve replacement device, we continue to hold tempered expectations for the product and are leaving our fair value estimate unchanged. As the fourth entrant to the lucrative U.S. TAVR market, where Edwards Lifesciences and Medtronic dominate the category, narrow-moat Abbott faces a steep uphill battle to carve out a space for itself. Boston Scientific, which was the third entrant more than two years ago, had abruptly exited the U.S. market after it failed to resolve manufacturing issues with the Lotus delivery system. Based on the solid clinical data on Lotus and the device’s distinctive repositioning feature, we thought Boston had a credible chance of penetrating the existing duopoly (though we failed to appreciate the difficulty of scaling up manufacturing). In contrast, Abbott’s Portico offers little over the Edwards Sapien and Medtronic CoreValve franchises. Instead, Portico's record on post-implant paravalvular leakage is significantly worse.