By Thomas Lee
SAN FRANCISCO, California — His company faces millions of dollars in new taxes, stingier payers, Congressional conflict-of-interest investigations and a more aggressive Food and Drug Administration.
But Medtronic (NYSE:MDT) CEO Bill Hawkins seemed downright cheerful when discussing the company’s prospects at the annual JP Morgan Health Care Conference Monday.
While only briefly acknowledging “some of the most turbulent [times] over the past couple of years," Hawkins sounded like a kid pushing an oversized shopping cart through a toy store. From MRI-friendly pacemakers to artificial heart valves, Medtronic is poised to release a dizzying array of new products over the next two years.
“I honestly can’t remember a time when our product pipeline has been so robust,” Hawkins said.
Investors seem to agree. Since March 2009, Medtronic stock is up nearly 88 percent, despite the problems list above and the worst economic recession since the Great Depression.
A quick look at Medtronic’s product lines tells me two things: One, the company seeks to protect its market share in its slower-growing core cardiovascular device business by fixing flaws in pacemakers and implantable cardioverter defibrillators; and two, it will seek new growth markets through homespun innovations and the millions of dollars worth of acquisitions it has made over the past year or two:
- EnRhythm MRI SureScan Pacemakers
Launch: First half of fiscal year 2011
Estimated market size: $3.8 billion
Comment: EnRhythm seeks to fix what has been a long knock on pacemakers: Energy emitted by MRI machines can cause the popular heart devices to go trippy. EnRhythm’s “SureScan” technology can limit the impact of MRI-generated electrical noise by temporarily shutting down the pacemaker’s data-collection and monitoring functions.
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Protecta TSR ICDs
Launch: First half of fiscal year 2011
Estimated market size: $6.5 billion
Comment: The ICDs are programmed with improved algorithms designed to limit errant electrical shocks to the heart, a common problem with these devices. Of course, equipping the ICD with wires that don’t fall apart might help, too.
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Restore Sensor
Launch: First quarter of fiscal year 2012
Estimated market size: $1 billion
Comment: Medtronic makes devices that treat chronic back pain by shooting electricity into the spine. The Restore sensor helps adjust the electricity depending on the patient’s position (walking, standing, lying down).
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Atrial Fibrillation catheters
Launch: First half of fiscal year 2011
Estimated market size: $2 billion
Comment: Atrial fibrillation means the upper chambers of the heart quiver instead of regularly contracting. In 2008, Medtronic acquired CryoCath Technologies Inc. for about $380 million. The Canadian company makes catheters (tubes) that can deliver subzero temperatures to the heart. The technology restores normal electric signals by freezing the tissue or pathways behind the irregular quivering.
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Artificial heart valves
Launch: Second half of fiscal year 2014
Estimated market size: $1 billion to $2 billion
Comment: Last year, Medtronic spent more than $1 billion to acquire CoreValve Inc. of Irvine, Calif., and Ventor Technologies in Israel. Both companies are developing ways to implant replacement heart valves through catheters snaked up the groin instead of cracking open the chest in major surgery.
