Medtronic CEO Omar Ishrak suggested that the long, dark night of the implantable cardioverter defibrillator market may be over as signs of growth and a better financial picture emerges.
In hosting the company’s third fiscal-quarter earnings call with analysts on Tuesday, Ishrak said that Medtronic is currently “seeing year-over-year implant volume growth for the first time in over a year.” He added that the decline in ICD prices in the U.S. in the fiscal third quarter has also been slower than in the same quarter the year before.
Medtronic (NYSE:MDT) believes these two changes represent the light at the end of the tunnel. Medical device manufacturers in the U.S. have been battling a declining implantable cardioverter defibrillator market caused by the recession, a negative medical journal article last year and a Justice Department investigation.
But the company believes that the drop in ICD revenue in the U.S. from its second fiscal quarter ($423 million) to its third fiscal quarter ($396 million) is rather the result of “hospital de-stocking” Ishrak said, and not any other reason.
He added that even in such difficult times, Medtronic gained a percentage point in market share over the past year despite new product launches by competitors. That comment is probably a subtle dig at St. Jude Medical’s Unify Quadra cardiac resynchronization therapy defibrillator and Quartet Left Ventricular Quadripolar pacing lead.
“Given the fact that the market is showing signs of sequential stability, we are cautiously optimistic that the year-over-year declines in the U.S. ICD market should lessen over the coming quarters,” Ishrak declared.
And Ishrak knows how important that is to Medtronic’s overall health and prospects in the future, noting that if Medtronic could stanch the bleeding so that year-over-year ICD revenue in the U.S. was flat, “this alone would add a point and a half to Medtronic’s overall growth.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Medtronic shareholders likely want that and more. Such positive financial news could shift the focus away from uncomplimentary coverage on Medtronic’s ICD business practices and the fallout from the Sprint Fidelis lead recalls.
[Photo Credit: Sura Nualpradid]
