The cardiac rhythm management market is half-full, according to officials at Medtronic’s (NYSE:MDT). It’s a stark contrast from the bleak forecasts offered by rival medical device makers St. Jude Medical (NYSE:STJ) and Boston Scientific (NYSE:BSX).
During a conference call with investors, Medtronic CEO Omar Ishrak said the U.S. CRM market is stabilizing, despite sliding 4% during the quarter. Ishrak said that 4% drop was the best the medical device behemoth has seen in 6 quarters.
"The overall market is down in the U.S., but we do see that implant volume is growing," Ishrak said. "We were pleased to see relative sequential stability in the market."
The comments sang a different tune than heard from Medtronic’s cross-town rival St. Jude Medical (NYSE:STJ) during its conference call last month.
"If you ask me for a level of proof that the CRM market is near point of stabilization, I can’t give it to you. We have regularly been overly optimistic," Starks told investors in July. "Because we have not been able to predict the bottom of the market on a frequent basis, we’re determined to be conservative in outlook."
Boston Scientific, which reported its 2nd-quarter earnings on July 26, saw its CRM business drop 10% in Q1.
Minneapolis, Minn.-based Medtronic’s ICD unit was down about 3% for the quarter, a slight improvement over the market. Implant volumes were up 4%, but that was offset by hospitals cutting down on bulk purchases, which are at their lowest level in 4 years, Ishrak said.
"The hospital destocking is a real factor. I think hospitals are working to reduce their inventories and reduce their level of bulk purchases," he told investors. "This reduction in bulk purchases is a trend we have seen over the last 4 quarters."
The troubling trend hasn’t got the company too down, however. Executive vice president & cardiac and vascular group president Michael Coyle predicted some positive turns for U.S. ICDs.
"For the U.S. market, we are seeing modest low single-digit improvement in the implant growth rates for the market," Coyle said during today’s call. "Pricing continues to be obviously a drag on the market, but still low single digit sort of pricing pressure. So as you could see, we’re encouraged, going forward, that we’re going to continue to see implants growth rates."
Medtronic’s also got some tricks up its sleeve to win more share in that arena with the upcoming product release cycle for the company’s Viva and Brava that recently won European regulatory approval as well as the Evera product line coming in the 4th quarter. ICD shares in Europe are at the highest they’ve been in about 2 years, Coyle added
"I think, generally speaking, we feel like we’re seeing a nice return in terms of stabilization of the market implant rates for ICDs," he said. "And we’re also obviously seeing some very nice share trends for us."
Those trends apparently weren’t felt by across town. St. Jude trimmed its earnings outlook for 2012 and cited several factors, including an "across-the-board" slowdown in recession-ravaged Europe and "signs of softness" in all of its major markets, for the lowered forecast.
"Some people might have thought we would talk about the [CRM] market having bottomed out in second quarter," Starks said. "I can’t say we’ve seen the bottom yet."
