New Spine Device from Medtronic - Analyst Blog
09 Outubro 2012 - 6:00AM
Zacks
To overcome the ongoing
difficulties and challenges in the spinal business, leading medical
device player Medtronic, Inc. (MDT) is currently
focusing on portfolio expansion. As part of this strategy, the
company recently initiated the U.S. launch of its ACD Instrument
Set that will be used to insert the company’s BRYAN Cervical Disc
in a simplified process compared to the original instrument
set.
The BRYAN disc, one of the two
clinically proven artificial cervical discs in Medtronic’s
portfolio, was first introduced in 2000. Since then the company has
sold 20,000 units of the same worldwide. This disc was approved by
the U.S. Food and Drug Administration in 2009 for the treatment of
single-level cervical disc disease (radiculopathy and/or
myelopathy), a common diagnosis for neck and arm pain.
Medtronic has been witnessing
disappointing performance from the spinal implants in the U.S.
market mainly due to pricing pressure and reduced procedure volume.
During the first quarter of fiscal 2013, this segment generated
$786 million in sales, down 5% y/y (down 3% at constant exchange
rate or CER). The company’s Biologics business suffered from
continuous declines in the sales of Infuse (following the
publication of articles in The Spine
Journal).Revenues from BMP[comprising Infuse bone
graft (InductOs in the European Union) sales] declined 19% year
over year (same as at CER) during the quarter with a 20% drop in
the U.S.
We are also concerned about the
persisting economic uncertainties across the world, leading to
reduction in healthcare budgets and increased pressure on
utilization. This results in fewer procedures, a trend that is
expected to continue in the near future and affect revenue growth
of the company. These headwinds have also adversely affected the
company’s peers including St Jude Medical (STJ)
and Boston Scientific (BSX).
However, we are encouraged with
Medtronic’s portfolio expansion strategies, although we believe
contributions from new products are not significant yet to drive
top-line growth. The company is currently focusing on the emerging
markets, especially China, primarily to offset the hindrances it
faces in two of its largest markets – US defibrillators and US
spinal implants. Earlier in September, Medtronic decided to acquire
China Kanghui Holdings (KH), which is in sync with
its focus on globalization due to the opportunity rife in
international destinations.
We have a ‘Neutral’ recommendation
on Medtronic. The stock retains a Zacks #3 Rank (Hold) in the short
term.
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
CHINA KANGH-ADR (KH): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
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