Guidant Corp. is expected to lose its position as the nation's top maker of heart stents after a bigger rival won government approval this week for the first next-generation stent coated with drugs.

The Food and Drug Administration on Thursday approved sales of Johnson & Johnson's Cypher stent. Cardiologists are expected to quickly begin using the device in many of the 800,000 Americans who undergo artery-clearing angioplasties every year.

Guidant, an Indianapolis-based medical device maker spun off from Eli Lilly & Co. in 1994, has for five years been the market leader for bare-metal stents and holds 42 percent of the U.S. market. The metal-mesh tubes are inserted into coronary arteries to prop them open after surgery.

Johnson & Johnson has now become the first to win U.S. approval for a stent coated with drugs that are released slowly to prevent scar tissue from forming new artery blockages.

Guidant's stents are expected to quickly fall out of favor.

"Guidant's U.S. bare-metal stent sales could be all but eliminated" over the next 18 months, said David J. Lothson, an analyst for the investment firm UBS Warburg, in a report to investors.

In anticipation of declining stent sales, Guidant has rapidly expanded its St. Paul, Minn.-based pacemaker and defibrillator business and other lines.

U.S. stent sales made up 15 percent, or $134 million, of Guidant's first-quarter sales of $885 million, compared with 22 percent a year ago.

UBS Warburg foresees Guidant's earnings per share dropping from $2.23 in 2002 to $1.92 this year and $1.63 in 2004.

Guidant officials are heartened by success in defending their European market share in the face of drug-coated stent competition there, and by the company's reduced reliance on stents.

"This is not a cliff Guidant is facing. It may even be a positive," Guidant President Ronald W. Dollens said last week.

Another Guidant competitor, Boston Scientific Corp., is expected to win approval late this year for its own drug-coated stent.

Guidant's first two attempts to develop a drug-coated stent failed, and its third device is not expected to reach the market before 2005.

In January, the 10,000-employee company and another Indiana medical technology company, Bloomington-based Cook Group Inc., abandoned their planned $3 billion merger. The companies cited disappointing results from a clinical trial involving a drug-coated stent they hoped to bring to market.