Guidant Brand Already is Fading

By Jeff Swiatek, The Indianapolis Star

May 23–As Boston Scientific Corp. begins expunging the Guidant name from public view after acquiring the Indianapolis medical device maker last month, branding experts say it makes sense to quickly remove a corporate moniker that’s tarnished.

“This is a no-brainer, I would think,” said Scott White, president of Brand Identity Guru, of the decision to move swiftly to drop the Guidant name. “I bet they didn’t think twice about that.”

Boston Scientific, based in Massachusetts, paid $27 billion in a bidding war to buy Guidant, despite its highly publicized recalls last year to fix defects in many of its implantable heart defibrillators and pacemakers. Guidant came under withering criticism from doctors and patients when it turned out the company knew about some of the defects for up to three years but didn’t disclose them to patients or their doctors.

The phase-out of the Guidant name, prominent on the Indianapolis business scene for the past 12 years, began this month at a convention for heart specialists in Boston.

Boston Scientific’s marketing booth at the show displayed its name on the outside, with the Guidant name appearing only on promotional brochures and other materials being handed out inside the booth, said company spokesman Paul Donovan.

The Guidant name has been around since it was spun out as a new public company from Indianapolis drug maker Eli Lilly and Co. in 1994.

Under Boston Scientific, the Guidant name likely was slated for the corporate dustbin even if it didn’t give off negative vibes. In 2001, Boston Scientific decided to start using its name as a “master brand” on all companies it acquired.

Through the rest of this year, the Guidant name will disappear gradually from its buildings, stationery, employee business cards, phone listings and products, Donovan said. Removing the name from packaging and patient information may take several years because of regulatory restrictions on changing wording, he said. The product names Guidant gave to its defibrillators and pacemakers won’t change, although new models will get new names.

In Indianapolis, Guidant maintained only its headquarters. The company was in leased space in the Chase Tower Downtown. Part of that space will be retained for use as a regional office for about a dozen people, Donovan said. He said it’s still unknown how many of the 90 people who worked at the headquarters at the time of the takeover will take jobs at Boston Scientific permanently.

Boston Scientific didn’t sell defibrillators or pacemakers, so it will have to start from scratch to establish its corporate name among heart doctors and hospitals. The expensive, battery-powered devices are used to give an electronic boost to failing hearts.

“They bought a company that has a lot to offer them, and they assessed the PR liability that was associated with the brand. Choosing not to go forward with it, I think, makes a lot of sense,” said Nan L. Budinger, principal of Metaphor Name Consultants in San Francisco.

Along with promoting its own name instead of Guidant’s, Boston Scientific’s challenge now is to “communicate that they’ve taken care of the problem” with the defective heart devices, she said.

Donovan said Boston Scientific intends to do just that, in part by carrying out the recommendations of an independent expert panel formed by Guidant to analyze the way it handled the 2005 crisis with its heart rhythm devices. Suggestions from the 12-member panel include hiring an in-house physician whose primary job is patient safety, and developing better ways to identify and act on cases of rare product defects that are linked to serious injury or death in patients.

“There is work to be done on the (Guidant) brand with respect to communications and openness. I think it can be repaired and repaired completely,” Donovan said.

“There definitely is a lot of negative sentiment toward the Guidant name,” said Scott Thoma, a health-care analyst for the St. Louis investment firm Edward Jones.

By ditching the Guidant name, Boston Scientific “is trying to put some of those issues behind them,” he said. “The bigger issue’s going to be how much Boston’s going to have to spend to get things back on track” with Guidant’s defibrillator and pacemaker business, which saw sales drop after the recalls, Thoma said.

Thoma estimated Boston Scientific could end up spending hundreds of millions of dollars to fix problems at Guidant, which faces lawsuits from more than 2,000 patients who allege they were harmed by its defective heart-pacing devices.

Settling those lawsuits “is definitely not going to be cheap,” Thoma said.

White agreed that Boston Scientific needs to do much more than just drop the Guidant name.

“It sounds like a smart move for Boston Scientific, but only if they solve the product problems” with the Guidant devices, he said. “If they don’t, those negative features will transfer over to their current brand.”

Dr. Bradley Knight, a University of Chicago Hospitals specialist who implants defibrillators and pacemakers, said, “I think people would be surprised if they didn’t eliminate the Guidant name, because it would be awkward to keep both names. But they will also lose out a little bit, because despite what you read in the press, the Guidant brand is still highly regarded by many electrophysiologists and cardiologists.”

Associated Press contributed to this report.

SHOULD IT STAY OR GO?

Companies often wrestle with whether to keep corporate names that have become damaged goods. Other examples besides Boston Scientific’s decision to drop the Guidant name:

–Zimmer Holdings of Indiana in 2003 bought Centerpulse, which had sold joint implants with serious defects. Decision: Centerpulse name was dropped.

–ValuJet of Florida, which had one of its passenger planes crash in 1996, bought AirTran in 1997. Decision: ValuJet name was dropped in favor of AirTran.

–Global Crossing, a Bermuda computer networking services firm, went bankrupt in 2002 after its high- flying stock lost most of its value. Singapore Technologies Telemedia bought majority control in 2003. Decision: Global Crossing name was kept.

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