THURSDAY, OCTOBER 03, 2002 10:00 AM
- Reuters U.S. Company News
In Oct. 1 story headlined "Medtronic vows to rebuild vascular business", please read in paragraph 9 ... "European regulatory approval of a new stent delivery system" ... instead of "U.S. Food and Drug Administration approval ..." (Corrects where system was approved for marketing). A corrected version follows.
By Julie Steenhuysen
CHICAGO, Oct 1 (Reuters) - Medtronic Inc. (MDT) , which has fallen far behind rival Johnson & Johnson (JNJ) in the race to develop a key treatment for diseased heart arteries, on Tuesday vowed to rebuild its ailing vascular business unit.
The world's largest medical device maker said it expects to have a drug-coated stent on the U.S. market by the end of 2004 or the beginning of 2005, and that it expects to capture 15 percent of the market by 2007.
The tiny wire mesh tubes -- or stents -- are coated with medicine to keep diseased arteries open and free of blockages. Doctors expect the devices to revolutionize the treatment of coronary artery disease by reducing the buildup of scar tissue that frequently grows around an artery treated with a bare metal stent.
"We have recently faced a number of challenges in the marketplace," Bill Hawkins, president of Medtronic's Vascular division, said at an annual investors' conference.
"Even though we may be on a downswing this year and perhaps the next year, we believe we can turn that around and see exceptional growth in the years to follow," Hawkins said.
The Minneapolis-based maker of insulin pumps, pacemakers and implantable cardiac defibrillators saw sales in the $900 million vascular division flatten out during most of 2002. That followed an unfavorable patent ruling last November that forced Medtronic to exit the popular rapid exchange stent delivery system in the United States.
Hawkins said Medtronic's challenges include developing a drug-eluting stent platform to compete with Johnson & Johnson, which is expected to receive marketing clearance for the device at the beginning of 2003.
"Our timing in drug-eluting stents will affect our short-term growth, but these challenges will not impede our process of rebuilding," Hawkins told investors at the meeting, which was broadcast over the Internet.
Medtronic last month received European regulatory approval of a new stent delivery system that will become part of the company's stent platform. Hawkins said Medtronic expects to begin a major U.S. clinical trial of its new coated stent next summer.
In the meantime, the company will rely on accelerating sales in its Cardiac Rhythm Management business, which accounts for about half of Medtronic's sales.
The unit had sales growth of 18 percent in the fiscal first quarter ended July 26, and the company projects a similar performance in the coming quarter.
Part of that growth has been driven by sales of devices to treat congestive heart failure, a new category of pacemakers that has seen rapid adoption in the past year, generating annualized sales of $450 million.
Medtronic also said it will benefit from new guidelines from three leading cardiology groups recommending expanded use of implantable defibrillators, which treat patients at risk of sudden cardiac death. The new indication could double the potential pool of patients needing a defibrillator to 600,000 a year.
Medtronic Chief Executive Art Collins said ICD sales in the first fiscal quarter rose 33 percent, and said sales in the second quarter will be at least that strong.
Collins said the company will continue to spend about $750 million a year on research and development to bolster its product pipeline. He said two-thirds of the revenue Medtronic generates comes from products launched in the past two years.
The company repeated financial guidance issued on Sept. 9, backing analysts' full-year consensus estimate of $1.41 and second-quarter earnings of 34 cents per share.
Medtronic shares ended 2.3 percent higher at $43.09 on the New York Stock Exchange on Tuesday. The shares have fallen about 16 percent since the beginning of the year, compared with a 19 percent drop in the Standard & Poor's Health Care Equipment index, which numbers Medtronic among its 11 components.
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