14. St. Jude
$5.2 Billion
KEY EXECUTIVES:
Daniel Starks, Chairman, President & CEO
John Heinmiller, Exec. VP & Chief Financial Officer
Thomas Northenscold, VP of Information Technology and Chief Information Officer
NO. OF EMPLOYEES: 15,000
GLOBAL HEADQUARTERS: St. Paul, Minn.
If St. Jude Medical President, CEO and Chairman Daniel J. Starks had a difficult time delivering news to shareholders at the end of 2009, he might have relished the job at the end of fiscal 2010. While 2009 was “not without its challenges,” 2010 “was a highly successful year.”
Indeed it was. The device company’s net sales amounted to almost $5.2 billion, a 10 percent increase over the previous year (the same on a currency neutral basis). Foreign currency translation comparisons increased fiscal year 2010 sales by about $23 million.
St. Jude attributed most of its growth to implantable cardioverter defibrillator (ICD) and atrial fibrillation products.
Actually, St. Jude saw significant increases in each of its segments. Cardiac Rhythm Management sales totaled $3 billion, also a 10 percent increase over FY09. The growth was the same on a currency-neutral basis. ICD sales increased 16 percent in the fourth quarter, bringing the total sales for 2010 to $1.8 billion. Pacemaker sales were more consistent with 2009, totaling $1.2 billion, a 2 percent increase.
Sales for the segment perhaps were bolstered by the temporary elimination in March 2010 of competing Boston Scientific ICD products in the United States. “Although Boston Scientific resumed sales in mid-April 2010, we experienced an incremental ICD net sales benefit in the range of approximately $35 million to $40 million,” St. Jude stated in the 2010 financial report.
The Cardiac Rhythm Management division launched several new products for various platforms, including U.S. implants of its Unify cardiac resynchronization therapy defibrillator and the Fortify ICD. The devices feature advanced battery technology and circuitry that allow for the smallest device footprint in the industry and rapid charge times without compromising longevity or power. The year also saw the U.S. launch of the Wireless USB Adaptor for the Merlin@home transmitter, which allows patient data to be downloaded from an implantable cardiac device and transmitted through cellular networks.
“This technology improves patient care by providing an efficient remote monitoring system when the use of a landline is inconvienent or unavailable,” said Eric S. Fain, M.D., president of the Cardiac Rhythm Management division. “The Wireless USB Adaptor is another addition to our innovative product portfolio and demonstrates the strength of our connectivity platform.”
In addition, the segment announced the European launch of the Promote Quadra, the first quadripolar pacing system, which offers physicians the ability to address pacing complications without needing to surgically reposition a lead.
While FY10 didn’t see any launches in the Atrial Fibrillation segment, sales increased an impressive 13 percent, to $708 million. On a constant currency basis, Atrial Fibrillation sales increased 12 percent.
Neuromodulation product sales totaled $380 million, a 15 percent increase over the prior year. On a constant currency basis, sales increased 16 percent. Fiscal year 2010 marked the approval of the segment’s Eon Mini spinal cord stimulation system—the first rechargeable neurostimulator for chronic pain management in Japan. The Eon Mini is also the smallest, longest-lasting rechargeable neurostimulator in the world, according to St. Jude.
“Neurostimulation offers chronic pain patients a therapy that can deliver sustainable relief,” said Chris Chavez, president of the Neuromodulation division. “The Japanese approval of the Eon Mini neurostimulator represents an important step toward broadening the availability of this therapy.”
Cardiovascular products brought in about $1 billion, which represented a 9 percent increase compared with 2009. On a constant currency basis, the increase was 8 percent. Vascular closure products represented the only decrease for the company, of 2 percent to $375 million. Heart valve products were up 4 percent, totaling $337 million.
The Cardiovascular segment also debuted a new line of Introducers which received both U.S. Food and Drug Administration and European CE Mark approval. The Engage family of Introducers are equipped with features intended to minimize trauma to the artery and set the stage for closure.
“St. Jude Medical is focused on developing products that reduce risk and improve physician control during procedures,” said Frank Callaghan, president of the Cardiovascular division. “The Engage Introducers were designed to provide physicians with reliable femoral and radial vascular access that can be easily repeated for any patient, no matter their individual anatomy or medical history.”
In addition to largely successful product sales, St. Jude benefitted from its fourth quarter, $1.3 billion acquisition of Plymouth, Minn.-based AGA Medical Holdings, Inc., which became part of the Cardiovascular division and brought in $25.2 million of incremental net sales. The acquisition was beneficial to St. Jude’s portfolio in four markets: left atrial appendage closure, patent foramen ovale, modification of abnormal peripheral vessels with vascular plugs, and repair of structural heart defects.
St. Jude previously added to its Cardiovascular segment in the prior quarter, when it acquired LightLab Imaging, Inc. The $90 million deal made St. Jude the first device company to offer both optical coherence tomography—a high-resolution diagnostic coronary imaging technology—and fractional flow reservetechnology. Following the acquisition, St. Jude filed a patent infringement lawsuit against San Diego, Calif.-based Volcano Corp., whichalready was embroiled in a legal battle with LightLab for allegedly interfering with LightLab’s relationship with Axsun Technologies Inc., a wholly-owned subsidiary of Volcano. LightLab claimed that Volcano engaged in wrongful use of LightLab’s confidential information and trade secrets; a jury ruled in favor of LightLab in February 2010.
Later, in July 2010, St. Jude alleged that several products distributed by Volcano infringed on five key patents for St. Jude’s Medical Pressure Wire Technology platform for guide wires, which were acquired from Radi Medical Systems AB.
“St. Jude Medical has made significant investments in the interventional cardiology space, including the coronary assessment and more recently the coronary imaging markets,” Callaghan said at the time of the filing. “From clinical research to important product advancements, Radi Medical Systems and now St. Jude Medical have contributed considerably to the success of this marketplace. As a company that values the innovations we bring to the marketplace, we intend to protect our intellectual property.”
Volcano countersued in September of 2010; a decision has yet to be reached.
Fiscal year 2010 also marked the end of St. Jude’s five-year struggle with an industry-wide review of post-market studies and registries initiated by the Boston office of the U.S. Department of Justice. As part of the settlement, St. Jude paid $16 million to the government, but stated that it was not admitting liability or wrongdoing by entering into the agreement. Instead, the agreement was reached in order to avoid the potential costs and risks associated with litigation. “The company maintains that its post-market studies and registries are legitimate clinical studies and registries designed to gather important scientific data,” a company statement read.