2nd UPDATE: St Jude Looks To Pipeline To Support Sales Goals

St. Jude Medical Inc. (STJ) said Friday it expects market-share gains in existing businesses and new medical devices coming through its pipeline to fuel ongoing, double-digit sales growth.

The St. Paul, Minn., company disclosed during an investor conference that it is working on technology aimed at potentially important emerging markets, including lower-impact procedures for repairing certain heart valves and device-based treatment of hypertension. Such developments are still years away from generating sales, but St. Jude also highlighted new products it expects will bolster existing businesses.

Chief Executive Daniel Starks, speaking after nearly eight hours of presentations and questions from analysts, also said he didn't see any reason St. Jude couldn't grow earnings at a sustained, double-digit rate.

The company gets most of its sales from pacemakers and defibrillators. While those markets face growth challenges these days, St. Jude has bolstered its sales by taking business from rivals and expects to continue, Starks said. The company competes against Medtronic Inc. (MDT) and Boston Scientific Corp. (BSX).

The U.S. defibrillator market may have contracted slightly last year, but St. Jude picked up three percentage points of share gains, Starks estimated. Looking ahead, the company believes its U.S. defibrillator business can add four points of market share in the next four to six years as patients return for replacement devices.

While St. Jude has about 25% domestic share, its share is higher among newly treated patients. Since manufacturers tend to keep business when patients need replacement devices, this "means we have a tailwind coming four to six years later from the replacement market dynamics," Starks said during the conference.

The overall global market for pacemakers and defibrillators is worth about $12 billion. Defibrillators, which provide shocks when needed to stop potentially deadly rhythm disruptions, are watched most closely because the devices are more expensive and that market was a fast grower before slowing in recent years. Manufacturers have struggled to recharge growth amid ongoing pressure on product prices.

A key new St. Jude product is its new "quadripolar" lead, or cable, that connects devices to the heart. The lead has more electrodes than today's typical lead and are used with more expensive defibrillators that also steadily coordinate beating in heart chambers. The company said it anticipates a U.S. launch in mid-2011 and that it will have a long lead over competitors.

It also talked up developments elsewhere, including those within its neuromodulation business that involve pacemaker-like systems for treating various problems. The company is targeting treatment of patients with migraine headaches, Parkinson's disease and severe depression.

On the cardiovascular front, St. Jude disclosed an internal program for a catheter-based system for repairing faulty mitral valves within the heart. This implies a lower-impact procedure, in contrast to open-heart surgery procedures, for fixing valves. This market could be as big as the high-profile emerging market for installing new aortic heart valves with catheters, where St. Jude also has a development-stage program, Starks said.

St. Jude is working on three different catheter-based approaches for mitral valves, Frank Callaghan, president of St. Jude's cardiovascular business, added during the conference. The company isn't disclosing much more for intellectual property reasons, he said. But St. Jude anticipates launching this system in Europe in late 2013 or early 2014. U.S. introduction typically takes longer due to more detailed study requirements.

The company also said it's working on technology to burn tissue in renal arteries to disrupt nerves linked to high blood pressure. Medtronic recently bought a start-up company that already has European approval for this approach. Starks said St. Jude took a look at that company, but has "winning technology" from an internal program. Callaghan added that the company has a proprietary catheter and generator, and "a very easy-to-perform procedure." It sees European market entry before the end of 2013.

St. Jude shares were recently up three cents at $42.00. The company last week set 2011 earnings guidance mostly below Wall Street expectations amid plans to boost research and development spending. Starks on Friday noted that St. Jude topped its earnings guidance last year.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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