Medtronic (NYSE:MDT) may be the leader in the treatment of uncontrolled hypertension using electric stimulation, but now the question is for how long.
The Minnesota medical device company was the first to commercialize this innovative therapy when it bought Ardian and its Symplicity Catheter Renal Denervation System in 2010 for an upfront $800 million. The product has launched in Europe and is expected to get U.S. regulatory approval in fiscal 2015, said the company’s CFO Gary Ellis, in a conference call to discuss the company’s quarterly results Tuesday.
But last week at the EuroPCR conference in Paris, “everyone and their mother,” as one analyst described it, showed off renal denervation products. Another analyst called it a “renal denervation deluge.” Competitors are St. Jude Medical, Covidien and Boston Scientific, along with smaller startups.
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That led Bruce Nudell, an analyst with Credit Suisse, to ask for Medtronic’s response to the suggestion forwarded at EuroPCR that the Symplicity Catheter System may be “obsolete.”
Ellis gave the stock answer that the company is comfortable with its competitive position and the strength of its intellectual property. But he made two additional comments that were interesting.
“I think it’s fair to assume that (Symplicity is) not going to be our only generation. We are looking for enhancements to the product as we go forward ….”
That should not come as a surprise.
Many believe that competitors’ renal denervation products have benefited from Medtronic’s know how by helping them create more nimble products. In fact, one analyst speculated that Medtronic will likely have to make another acquisition in renal denervation to retain its edge over the second-generation products being developed by competitors. And Ellis’ frank admission Tuesday confirms that speculation.
While Medtronic may have already lost its first-to-market advantage, the competition may yield one important benefit.
“The reality is that as we try to get reimbursement set up, having a few more competitors helping us with that burden is not a bad thing,” Ellis said.
[Photo Credit: Medtronic]
