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St. Jude takes over Medtronic’s CRM deal with hospital GPO

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Novation

The latest group purchasing organization deal for Upper Midwest Consolidated Services Center thumbs a nose at Medtronic’s (NYSE:MDT) controversial decision to cut several GPO deals earlier this year by replacing a Medtronic contract with a St. Jude Medical (NYSE:STJ) deal.

Irving, Texas-based UMCSC announced a one-year contract for cardiac rhythm management products with St. Jude this week, complementing an existing agreement with Boston Scientific Corp. (NYSE:BSX) and replacing an agreement with Medtronic.

"The 33 members of the Upper Midwest Consolidated Services Center (UMCSC) spend more than $110 million annually on CRM devices including pacemakers, implantable cardioverter defibrillators, heart failure devices, leads and related accessories," according to the press release.

UMCSC relies on fellow Lone Star State company Novation and the suppliers its collaborates with to shape its product portfolio, company officials said.

Medtronic made headlines — and pleased Wall Street — when it canceled several contracts for its cardiovascular and orthopedic products with Novation worth an estimated $2 billion a year. A few weeks later the Fridley, Minn.-based medical device giant spiked a deal with Premier Inc. for some of its spine products.

At the time, J.P. Morgan Chase & Co. analyst Michael Weinstein told the Wall Street Journal that spiking the Novation deal represented "a watershed moment" that could send ripples through the entire industry, positing that Medtronic would ditch other GPO deals as well.

But those ripples never materialized, as MDT rivals rushed to fill the vacancies left by the Fridley, Minn.-based firm.

Novation announced new partnerships of its own, adding electrosurgical and advanced cutting and coagulation products to its supply that it estimates will save $4.1 million for its members annually, according to a press release. Deals were struck with Covidien plc (NYSE:COV) , DeRoyal, Megadyne, Xodus, Buffalo Filter, Medline and Unimed, the company reported.

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