Revenues from Medtronic‘s (NYSE:MDT) bread-and-butter cardiac rhythm management and spine segments were down during its fiscal 3rd quarter, suggesting that the world’s largest pure-play medical device maker lost share to its rivals during the quarter.
Although their fiscal periods don’t match up (Medtronic’s fiscal Q3 covers the 3 months ended Jan. 24), the numbers suggest that Boston Scientific (NYSE:BSX) and St. Jude Medical (NYSE:STJ) gained ground on their larger peer.
Medtronic’s overall cardiac rhythm management revenues came in at $1.18 billion for the quarter, a 1.1% gain over fiscal Q3 2013. But in the U.S., CRM revenues were down 0.2% to $594 million. Defibrillator sales were up a scant 0.2% overall, to $655 million, but down 2.9% in the U.S. at $372 million. Pacemaker sales were down 4.4% overall, to $439 million, with U.S. pacing sales down 6.0% to $171 million.
For cross-town rival St. Jude, overall CRM sales came in at $705 million, up 3.4% for the 3 months ended Dec. 31, 2013, compared with Q4 2012. Revenues from St. Jude’s U.S. CRM rose 2.9% to $349 million. Defibrillator sales rose 4.7% overall, to $442 million, and gained 5.5% in to U.S., climbing to $249 million. On the pacemaker side, overall sales were $263 million, up 1.2%, and $100 million in the U.S., down -2.9%.
By comparison, Boston Scientific posted overall Q4 CRM sales of $468 million, for a 2.4% over the same period in 2012. U.S. CRM sales were 269 million for BSX, a 1.5% gain. Defibrillator sales grew 0.9% to $333 million overall and were flat in the U.S. at $204 million; pacing sales gained 6.3%, rising to $135 million overall, and were up 6.6% in the U.S., to $65 million.
Leerink Partners analyst Danielle Antalffy estimated that Medtronic lost about 100 basis points of CRM market share, "potentially viewed negatively given better-than-expected results in the quarter from competitors," according to a note Antalffy sent to investors yesterday.
Medtronic CEO Omar Ishrak told analysts during a conference call that 2014 is not the 1st year in which January came up softer than the preceding months.
"We’ve seen this pattern, realizing actually over multiple years, and this year it was not that different. There could be many reasons. The introduction of the [Affordable Care Act], obviously we don’t know the precise details of all the causes and effects. Certainly it brings a level of change that we hadn’t experienced before. So we are not really sure as to all the reasoning, but we do know that January was a little softer than November and December, and in fact we’ve seen this pattern over the past couple of years," Ishrak said.
The introduction of Medtronic’s Micra leadless pacemaker could help turn things around, he added.
"The key about that product is that its insertion mechanism is much easier and it’s much more targeted as a therapy. We think that, from an overall procedure basis, this will lead to greater efficiency in the system and probably expand access, because especially outside the U.S., where a greater number of physicians can probably do the procedure, where there’s an issue of the availability of such solutions. So we see that as a fairly fundamental change in the way pacing will be done in the future over the long term," Ishrak said.
"The ability with the leadless pacemaker to basically eliminate the need of pacing is a very safe invention, most of the complications are due to the creation of the pocket and the running of the lead," added cardiac & vascular group president Michael Coyle.