07.22.14
$5.50 Billion
KEY EXECUTIVES:
Daniel J. Starks, Chairman, President & CEO
John C. Heinmiller, Exec. VP
Michael T. Rousseau, Chief Operating Officer
Eric S. Fain, Group President
Joel D. Becker, President, Americas Division
Denis M. Gestin, President, International Division
Scott P. Thome, VP, Global Operations and Supply Chain
Jeffry A. Fecho, VP, Global Quality
Mark W. Murphy, VP of Information Technology & Chief Information Officer
NO. OF EMPLOYEES: 16,000
GLOBAL HEADQUARTERS: St. Paul, Minn.
The news was surprising, to say the least. Yoshinori, 58, seemed to be in excellent health: Fit and trim, he exercised regularly and watched his diet. Hence, the Wakayama, Japan, resident was caught off-guard by his diagnosis of coronary artery disease, the narrowing of small blood vessels that supply blood and oxygen to the heart. The condition affected 105,551 Japanese residents in 2011 and accounted for 11.7 percent of all deaths, World Health Organization data show.
After determining its severity, cardiac surgeons treated Yoshinori’s blockage with a stent, using the Ilumien Optis PCI Optimization System from St. Jude Medical Inc. to guide it into place. The imaging system—launched in Japan in March 2013—employs fractional flow reserve (FFR) to measure intra-arterial pressure and 3-D optical coherence tomography (OCT) to capture panoramic views of the affected artery. It also uses the company’s PressureWire guidewire for FFR measurement and the Dragonfly Duo catheter for scanning the clogged vessel’s walls with a near-infrared laser to create the 3-D image.
“The Ilumien Optis system enables a higher-image resolution, and thus makes it possible for us to analyze difficult anatomical structures, allowing us to focus on diagnostic and treatment strategies,” said Takashi Akasaka, M.D., of Wakayama Medical University, the likely choice of Yoshinori’s treatment and recovery. “This new analytical tool is helpful for sizing and placing the stent. This technology has become increasingly important to help efficiently diagnose and treat patients.”
The Ilumien technology was equally as crucial to St. Jude’s bottom line last year, helping the 38-year-old medtech manufacturer rebound from a 3 percent sales slide in Q1. The system also was a central part of the company’s ongoing strategy to profit through innovation.
“Medical device companies cannot keep doing the same things and expect to keep up with the burdens facing healthcare today,” Chairman/President/CEO Daniel J. Starks told shareholders in the company’s 2013 annual report. “Our success depends on our ability to invent medical devices that help improve patient outcomes and reduce the cost of healthcare. In each disease state where St. Jude Medical is focused, we haven’t just developed a product, but have developed innovative, comprehensive solutions to costly and complex problems. This commitment to investing in innovation helped return our business to growth during 2013.”
The homecoming was quite muted, though. While the company’s adjusted earnings per share swelled 12 percent on a constant currency basis (diluted net earnings rose 4.1 percent to $2.49), net sales remained flat at $5.5 billion and operating profit fell 4.5 percent to $1 billion, annual report data indicate. Gross profit was down as well, slipping 1 percent to $3.9 billion compared with 2012. U.S. sales remained flat at $2.5 billion, and Japanese revenue was off 14.7 percent.
Still, St. Jude managed to boost its stock price 76 percent and increase its dividend by 9 percent for the second consecutive year. Starks attributed the growth to product approvals/launches (16 total), acquisitions, and a departmental restructuring in 2012 that reportedly saved the company more than $100 million.
The realignment, which consequently impacted 2013 net earnings by $1.34 per diluted share, reorganized St. Jude’s product segments into two new operating units: the Implantable Electronic Systems Division (IESD), comprising the former Cardiac Rhythm Management and former Neuromodulation units; and the Cardiovascular and Ablation Technologies Division (CATD), constituting the former Atrial Fibrillation and former Cardiovascular segments.
In their first full year of operation, the two units counterbalanced each other, with the 3 percent hike in CATD net sales offsetting the 2 percent slide in IESD revenues. The latter division lost $38 million (1 percentage point) to foreign exchange rates but made up for the deficit by launching the Ellipse and SJM Assura portfolio of implantable cardioverter defibrillators and cardiac resynchronization therapy defibrillators; the Accent MRI Pacemaker; the Tendril MRI lead (approved in Japan in June) and the Allure Quadra Cardiac Resynchronization Therapy Pacemaker. IESD’s $3.2 billion sales gross also got a lift from distribution of the Axium Neurostimulator System, a targeted therapy for chronic pain. St. Jude gained rights to the system through its $40 million equity investment in Menlo Park, Calif.-based Spinal Modulation Inc., a privately held firm developing a next-generation spinal cord stimulator for chronic pain treatment. The venture gives St. Jude a 19 percent voting interest in the company and dibs on purchasing it at a later date for up to $300 million plus milestone payments.
IESD sales and operating profit, which fell 6 percent to $2.1 billion, ultimately were stonewalled by flat implantable cardiac defibrillator revenues ($1.7 billion) and a 6.2 percent decrease in pacemaker systems proceeds. Strong sales of the company’s Ellipse and Assura ICDs featuring DynamicTx Over-Current Detection Algorithm, which automatically adjusts shock configurations, kept revenues on par with 2012. The Ellipse and Assura’s popularity was strongest in the United States, where ICD proceeds climbed 1 percent to $1 billion compared with the previous year. The products did not fare as well internationally, however, as sales declined 2 percent to $714 million.
Pacemaker systems’ grand total ($1 billion) fell victim to overall price declines and foreign exchange rates in 2013, though the losses partially were offset with the Allure Quadra CRT-P, Accent MRI Pacemaker and Tendril MRI lead launches. The company also beefed up its portfolio with the Nanostim, a non-surgical leadless pacemaker that is less than 10 percent the size of a conventional device and is touted to be the least invasive technology currently available. The Nanostim debuted in Europe at the end of 2013, shortly after St. Jude purchased its parent company (Nanostim) for $121 million in cash.
Nanostim’s deft technology, however, failed to impress customers. U.S. and international pacemaker proceeds both tumbled 6 percent last year, dropping to $424 million and $618 million respectively.
Neuromodulation products proved to be the sole moneymakers for IESD (just barely), generating an additional 0.7 percent in sales ($426 million). Executives attributed the growth to St. Jude’s distribution agreement with Spinal Modulation as well as stonger demand for its deep brain stimulation products that treat Parkinson’s disease, tremors and/or dystonia.
Like its sister division, CATD was stung by volatile foreign exchange rates. But the unit overcame its $63 million, 3-percentage-points handicap to secure $2.2 billion in sales thanks to robust gains in atrial fibrillation (AF) and structural heart product revenues.
AF product sales jumped 7 percent to $957 million compared with 2012, according to the company’s annual report. Growth drivers included the EnSite Velocity System and related connectivity tools (EnSite Connect, EnSite Courier and EnSite Derexi modules) as well as St. Jude’s intracardiac echocardiography imaging product offerings, which provide doctors with a clear picture of the heart’s inner mechanism. The company also augmented its AF lineup with the $171 million purchase of Endosense SA, the Swiss developer of the TactiCath irrigated ablation catheter. CE Mark-approved for atrial fibrillation and supra ventricular tachycardia ablation, the TactiCath technology provides physicians with a real-time, objective measure of the force needed within the heart wall during a catheter ablation procedure.
While vascular revenue growth improved from 1 percent in the first half of 2013 to 3 percent in the second half (constant currency), net sales ended the year down 2 percent at $704 million. Executives blamed the poor performance on foreign exchange rates along with economic pressures and average sales price declines in Japan, which has prompted many third-party manufacturers to switch to a direct selling model with end customers. Those Far Eastern headwinds, however, were somewhat offset by strong sales of St. Jude’s FFR technology products and OCT imaging systems, as well as the late-summer European launch of the next-generation EnligHTN Renal Denervation System, a product designed tor treat patients with drug-resistant, uncontrollable hypertension.
Structural heart revenue increased 3.1 percent (12 percent on a constant currency basis) to $631 million, with gains coming primarily from tissue heart valves and left atrial appendage closure devices, both of which grew at double-digit rates.
KEY EXECUTIVES:
Daniel J. Starks, Chairman, President & CEO
John C. Heinmiller, Exec. VP
Michael T. Rousseau, Chief Operating Officer
Eric S. Fain, Group President
Joel D. Becker, President, Americas Division
Denis M. Gestin, President, International Division
Scott P. Thome, VP, Global Operations and Supply Chain
Jeffry A. Fecho, VP, Global Quality
Mark W. Murphy, VP of Information Technology & Chief Information Officer
NO. OF EMPLOYEES: 16,000
GLOBAL HEADQUARTERS: St. Paul, Minn.
The news was surprising, to say the least. Yoshinori, 58, seemed to be in excellent health: Fit and trim, he exercised regularly and watched his diet. Hence, the Wakayama, Japan, resident was caught off-guard by his diagnosis of coronary artery disease, the narrowing of small blood vessels that supply blood and oxygen to the heart. The condition affected 105,551 Japanese residents in 2011 and accounted for 11.7 percent of all deaths, World Health Organization data show.
After determining its severity, cardiac surgeons treated Yoshinori’s blockage with a stent, using the Ilumien Optis PCI Optimization System from St. Jude Medical Inc. to guide it into place. The imaging system—launched in Japan in March 2013—employs fractional flow reserve (FFR) to measure intra-arterial pressure and 3-D optical coherence tomography (OCT) to capture panoramic views of the affected artery. It also uses the company’s PressureWire guidewire for FFR measurement and the Dragonfly Duo catheter for scanning the clogged vessel’s walls with a near-infrared laser to create the 3-D image.
“The Ilumien Optis system enables a higher-image resolution, and thus makes it possible for us to analyze difficult anatomical structures, allowing us to focus on diagnostic and treatment strategies,” said Takashi Akasaka, M.D., of Wakayama Medical University, the likely choice of Yoshinori’s treatment and recovery. “This new analytical tool is helpful for sizing and placing the stent. This technology has become increasingly important to help efficiently diagnose and treat patients.”
The Ilumien technology was equally as crucial to St. Jude’s bottom line last year, helping the 38-year-old medtech manufacturer rebound from a 3 percent sales slide in Q1. The system also was a central part of the company’s ongoing strategy to profit through innovation.
“Medical device companies cannot keep doing the same things and expect to keep up with the burdens facing healthcare today,” Chairman/President/CEO Daniel J. Starks told shareholders in the company’s 2013 annual report. “Our success depends on our ability to invent medical devices that help improve patient outcomes and reduce the cost of healthcare. In each disease state where St. Jude Medical is focused, we haven’t just developed a product, but have developed innovative, comprehensive solutions to costly and complex problems. This commitment to investing in innovation helped return our business to growth during 2013.”
The homecoming was quite muted, though. While the company’s adjusted earnings per share swelled 12 percent on a constant currency basis (diluted net earnings rose 4.1 percent to $2.49), net sales remained flat at $5.5 billion and operating profit fell 4.5 percent to $1 billion, annual report data indicate. Gross profit was down as well, slipping 1 percent to $3.9 billion compared with 2012. U.S. sales remained flat at $2.5 billion, and Japanese revenue was off 14.7 percent.
Still, St. Jude managed to boost its stock price 76 percent and increase its dividend by 9 percent for the second consecutive year. Starks attributed the growth to product approvals/launches (16 total), acquisitions, and a departmental restructuring in 2012 that reportedly saved the company more than $100 million.
The realignment, which consequently impacted 2013 net earnings by $1.34 per diluted share, reorganized St. Jude’s product segments into two new operating units: the Implantable Electronic Systems Division (IESD), comprising the former Cardiac Rhythm Management and former Neuromodulation units; and the Cardiovascular and Ablation Technologies Division (CATD), constituting the former Atrial Fibrillation and former Cardiovascular segments.
In their first full year of operation, the two units counterbalanced each other, with the 3 percent hike in CATD net sales offsetting the 2 percent slide in IESD revenues. The latter division lost $38 million (1 percentage point) to foreign exchange rates but made up for the deficit by launching the Ellipse and SJM Assura portfolio of implantable cardioverter defibrillators and cardiac resynchronization therapy defibrillators; the Accent MRI Pacemaker; the Tendril MRI lead (approved in Japan in June) and the Allure Quadra Cardiac Resynchronization Therapy Pacemaker. IESD’s $3.2 billion sales gross also got a lift from distribution of the Axium Neurostimulator System, a targeted therapy for chronic pain. St. Jude gained rights to the system through its $40 million equity investment in Menlo Park, Calif.-based Spinal Modulation Inc., a privately held firm developing a next-generation spinal cord stimulator for chronic pain treatment. The venture gives St. Jude a 19 percent voting interest in the company and dibs on purchasing it at a later date for up to $300 million plus milestone payments.
IESD sales and operating profit, which fell 6 percent to $2.1 billion, ultimately were stonewalled by flat implantable cardiac defibrillator revenues ($1.7 billion) and a 6.2 percent decrease in pacemaker systems proceeds. Strong sales of the company’s Ellipse and Assura ICDs featuring DynamicTx Over-Current Detection Algorithm, which automatically adjusts shock configurations, kept revenues on par with 2012. The Ellipse and Assura’s popularity was strongest in the United States, where ICD proceeds climbed 1 percent to $1 billion compared with the previous year. The products did not fare as well internationally, however, as sales declined 2 percent to $714 million.
Pacemaker systems’ grand total ($1 billion) fell victim to overall price declines and foreign exchange rates in 2013, though the losses partially were offset with the Allure Quadra CRT-P, Accent MRI Pacemaker and Tendril MRI lead launches. The company also beefed up its portfolio with the Nanostim, a non-surgical leadless pacemaker that is less than 10 percent the size of a conventional device and is touted to be the least invasive technology currently available. The Nanostim debuted in Europe at the end of 2013, shortly after St. Jude purchased its parent company (Nanostim) for $121 million in cash.
Nanostim’s deft technology, however, failed to impress customers. U.S. and international pacemaker proceeds both tumbled 6 percent last year, dropping to $424 million and $618 million respectively.
Neuromodulation products proved to be the sole moneymakers for IESD (just barely), generating an additional 0.7 percent in sales ($426 million). Executives attributed the growth to St. Jude’s distribution agreement with Spinal Modulation as well as stonger demand for its deep brain stimulation products that treat Parkinson’s disease, tremors and/or dystonia.
Like its sister division, CATD was stung by volatile foreign exchange rates. But the unit overcame its $63 million, 3-percentage-points handicap to secure $2.2 billion in sales thanks to robust gains in atrial fibrillation (AF) and structural heart product revenues.
AF product sales jumped 7 percent to $957 million compared with 2012, according to the company’s annual report. Growth drivers included the EnSite Velocity System and related connectivity tools (EnSite Connect, EnSite Courier and EnSite Derexi modules) as well as St. Jude’s intracardiac echocardiography imaging product offerings, which provide doctors with a clear picture of the heart’s inner mechanism. The company also augmented its AF lineup with the $171 million purchase of Endosense SA, the Swiss developer of the TactiCath irrigated ablation catheter. CE Mark-approved for atrial fibrillation and supra ventricular tachycardia ablation, the TactiCath technology provides physicians with a real-time, objective measure of the force needed within the heart wall during a catheter ablation procedure.
While vascular revenue growth improved from 1 percent in the first half of 2013 to 3 percent in the second half (constant currency), net sales ended the year down 2 percent at $704 million. Executives blamed the poor performance on foreign exchange rates along with economic pressures and average sales price declines in Japan, which has prompted many third-party manufacturers to switch to a direct selling model with end customers. Those Far Eastern headwinds, however, were somewhat offset by strong sales of St. Jude’s FFR technology products and OCT imaging systems, as well as the late-summer European launch of the next-generation EnligHTN Renal Denervation System, a product designed tor treat patients with drug-resistant, uncontrollable hypertension.
Structural heart revenue increased 3.1 percent (12 percent on a constant currency basis) to $631 million, with gains coming primarily from tissue heart valves and left atrial appendage closure devices, both of which grew at double-digit rates.