2nd UPDATE: St Jude Looks To Pipeline To Support Sales Goals
February 04 2011 - 4:24PM
Dow Jones News
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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