07.23.08
$12.3 Billion
Art Collins, Chairman
William A. Hawkins, President and CEO
Gary Ellis, Sr. VP and CFO
Susan Alpert, Sr. VP and Chief Regulatory Officer
Pat Mackin, Sr. VP and President, CRDM
Scott R. Ward, Sr. VP and President, CardioVascular
Richard E. Kuntz, MD, Sr. VP and President, Neuromodulation
Stephen La Neve, Sr. VP and President, Spinal and Biologics
Christopher J. O’Connell, Sr. VP and President, Diabetes
Minneapolis, MN
The company whose products benefit nearly 6 million patients annually boasted double-digit percentage gains for four of its eight business units by the end of its fiscal 2007, ended April 27 that year. Medtronic Chairman Art Collins ended his tenure as president and CEO (positions from which he transitioned in August 2007) on a strong note, with fiscal 2007 net sales of $12.3 billion, 9% growth from $11.3 billion for fiscal 2006. Net earnings also grew 10% to $2.8 billion. The increases were led by growth in the Vascular, Diabetes, Spinal and Navigation, and Neurological businesses, as well as international sales.
Current President and CEO Bill Hawkins should be poised to continue Medtronic’s long-term growth, as the company had more than 200 clinical trials underway or planned by the close of the fiscal year—fitting for a corporation that increased its fiscal 2007 R&D spending by 11% to nearly $1.24 billion (about 10% of the company’s revenue). The strategy of looking to future innovation has paid off handsomely in the past, as approximately two-thirds of fiscal 2007’s revenue came from sales of products introduced within the previous two years. Aiding the effort was the addition of more than 2,000 employees as well as facility expansions to increase capacity. New facilities in the United States, Puerto Rico, Switzerland and Ireland played a role, too.
Medtronic arguably is best known as a market leader for pacemakers and defibrillators, and it managed to ride out a particularly rough year for the latter group of products. Although Cardiac Rhythm Disease Management (CRDM) sales of nearly $4.88 billion were flat at 2% growth for fiscal 2007, this number could have been worse had pacing systems not posted a 6% gain to $1.895 billion, compliments of product launches including Adapt, Versa and Sensia pacemakers. As the overall US market for implantable cardioverter defibrillators (ICDs) declined in 2007, the company’s depreciation was only 1% for this category due to strong international sales—total US sales for ICDs dropped 9% to $2.08 billion, while international sales climbed 29% to $835 million with sales growth for the wireless Virtuoso ICD and the Concerto cardiac resynchronization therapy defibrillator. Overall CRDM sales grew 2% for fiscal 2008 to $4.96 billion. While ICD sales dropped 1% again, the company believes an eventual turnaround in the US market as well as opportunities in what it terms an underpenetrated worldwide market should bring favorable change in the future.
In the fourth quarter of fiscal 2007, Medtronic opted to separate its Physio-Control unit from the CRDM segment. The unit, which is a subsidiary offering external defibrillators, emergency response systems, data management solutions and support services used by hospitals and emergency workers, posted a 7% decrease for the year, going from $412 million in fiscal 2006 to $385 million in fiscal 2007. Physio-Control products made at Medtronic’s Redmond, WA facility were temporarily suspended in January 2007 due to quality issues. This voluntary action reduced US sales by 20%, though the company said this impact was partially offset by 19% growth in international sales, which were aided by sales of the Lifepak CR Plus Defibrillator. The company’s recently announced fiscal 2008 results for the year ended April 25, 2008, showed that Physio-Control once again was impacted by the quality problem, as sales decreased 15% from 2007 revenues to $329 million.
Medtronic’s largest-growing segment in fiscal 2007 was the Vascular business, which had a sales increase of 28% to $1.2 billion. Coronary Vascular sales grew 31% to $918 million, primarily due to international sales of the Endeavor drug-eluting stent, which generated $300 million in revenue for the year, along with $260 million in sales for the Driver bare metal stent product line. Endovascular/Peripheral product sales grew 20% as the company capitalized on its fourth-quarter 2006 US launch of the AneuRx AAAdvantage Stent Graft System and increased international sales of the Valiant Thoracic Stent Graft System.
The Cardiac Surgery segment—including heart valve products, perfusion systems, positioning/stabilization systems for heart surgeries, surgical accessories and surgical ablation products—grew 6% to $704 million in fiscal 2007. Growth was fueled mostly by the Valves (9% growth) business, which had a 10% increase in tissue valve sales for products such as the Mosaic line, the Melody Transcatheter Pulmonary Valve and Ensemble Transcatheter Delivery system outside the United States. The Perfusion (4% growth) business also was a main driver, due to stronger international sales for Medtronic’s cardiopulmonary and cannulae product lines.
In April 2007, Medtronic combined its Vascular and Cardiac Surgery segments. The newly named CardioVascular business reported total net sales of $2.13 billion for fiscal 2008. The US launch of the Endeavor stent in the fourth quarter was a main driver of the Coronary stent unit’s 27% growth for the year to $710 million.
In fiscal 2007, Medtronic posted an impressive gain in the Diabetes segment, which grew sales 20% in fiscal 2007 to $863 million. Within this segment, external pump sales were $389 million, representing 32% growth from fiscal 2006 due to strong sales of the Paradigm REAL-time sensor-augmented pump system that integrates continuous glucose monitoring and insulin pump functionality. This system also helped Medtronic’s Diabetes segment continue to prosper in fiscal 2008, with an 18% annual sales increase to approximately $1.02 billion.
Neurological business, Medtronic’s fourth-largest sales segment for fiscal 2007, grew 16% with total net sales of $1.183 billion. Within this category, Neurological Implantables grew 15% to $962 million, driven by sales of products such as the RestoreADVANCED and PrimeADVANCED neurostimulation systems for pain management and Activa Therapy for treatment of movement disorders associated with Parkinson’s disease and essential tremor. Increased sales of the Synchromed II drug delivery pump also helped. Gastroenterology and Urology products increased 21% collectively to $221 million, with gains led by sales of the InterStim product line for treatment of overactive bladder and incontinence and the Prostiva line for treatment of an enlarged prostate. Overall, the Neurological segment changed in fiscal 2008 with the divestiture of the Gastroenterology and Urology diagnostics product lines, and the category was renamed as the Neuromodulation segment. This business increased 11% to $1.3 billion for the fiscal year; when adjusting for the divestiture of the aforementioned product lines, the unit actually grew 15%.
For Medtronic’s Spinal and Navigation segment, sales grew 13% in fiscal 2007 to $2.54 billion. Within the company’s minimal access technology portfolio, CD Horizon Sextant II, a percutaneous lumbar fixation system with minimal access technologies that reduce procedural steps, was the main growth driver. Capstone and Crescent Vertebral Body Spacers also led to growth within the Spinal Instrumentation business. Biologics, with had net sales of $696 million (a 22% increase from fiscal 2006), had continued success with the Infuse Bone Graft; introduced in fiscal 2003 for spine, Infuse received FDA approval in late fiscal 2007 for use in certain oral maxillo-facial and dental regenerative bone grafting procedures. Navigation increased 18% to $127 million due to strong sales of the PoleStar N2O, an intra-operative MRI Guidance System and O-arm Imaging System, a multi-dimensional surgical imaging platform for use in spine and other orthopedic surgery. For fiscal 2008, Spinal revenue was even healthier than it was in fiscal 2007, with revenues totaling $2.98 billion, a 23% increase.
The Ear/Nose/Throat (ENT) segment, which also contains neurologic technology-related products, posted a single-digit gain of 8% in 2007, bringing its total net sales to $539 million. Core ENT sales were $278 million, a 5% increase from fiscal 2007. Medtronic said these sales were impacted by the loss of revenue from the company’s third-quarter fiscal 2006 sale of its tanometry product line. Neurologic Technologies had a net sales gain of 11% to $261 million for fiscal 2007.
Given the previously cited fiscal year 2008 results, it should come as no surprise that Medtronic brought back the days of double-digit gains for overall net sales—the company recorded a 10% increase to $13.5 billion compared with fiscal 2007.
“Medtronic had a strong close to the year,” said Hawkins. “The stabilization of the ICD market, the launch of our Endeavor drug-eluting stent and strong performance in virtually every business and geography provides positive momentum as we begin our new fiscal year.” For fiscal 2009, the company expects revenue of between $15 billion and $15.5 billion.
The company is looking to streamline operations and restructure its organization. Earlier this year, Medtronic announced it would reduce its staff by approximately 1,100 as part of its global restructuring and in response to a slower ICD and stent market. This spring, Michael DeMane, chief operating officer, also left the company. Several other additions were named, however, including the appointment of Jean-Luc Butel as president of Medtronic International. Steve LaNeve, formerly president of Medtronic Japan, also was named senior vice president and president of Medtronic’s Spinal and Biologics business, replacing Pete Wehrly, who left the company.
KEY EXECUTIVES:
Art Collins, Chairman
William A. Hawkins, President and CEO
Gary Ellis, Sr. VP and CFO
Susan Alpert, Sr. VP and Chief Regulatory Officer
Pat Mackin, Sr. VP and President, CRDM
Scott R. Ward, Sr. VP and President, CardioVascular
Richard E. Kuntz, MD, Sr. VP and President, Neuromodulation
Stephen La Neve, Sr. VP and President, Spinal and Biologics
Christopher J. O’Connell, Sr. VP and President, Diabetes
NO. OF EMPLOYEES:
38,000
GLOBAL HEADQUARTERS:
Minneapolis, MNThe company whose products benefit nearly 6 million patients annually boasted double-digit percentage gains for four of its eight business units by the end of its fiscal 2007, ended April 27 that year. Medtronic Chairman Art Collins ended his tenure as president and CEO (positions from which he transitioned in August 2007) on a strong note, with fiscal 2007 net sales of $12.3 billion, 9% growth from $11.3 billion for fiscal 2006. Net earnings also grew 10% to $2.8 billion. The increases were led by growth in the Vascular, Diabetes, Spinal and Navigation, and Neurological businesses, as well as international sales.
Current President and CEO Bill Hawkins should be poised to continue Medtronic’s long-term growth, as the company had more than 200 clinical trials underway or planned by the close of the fiscal year—fitting for a corporation that increased its fiscal 2007 R&D spending by 11% to nearly $1.24 billion (about 10% of the company’s revenue). The strategy of looking to future innovation has paid off handsomely in the past, as approximately two-thirds of fiscal 2007’s revenue came from sales of products introduced within the previous two years. Aiding the effort was the addition of more than 2,000 employees as well as facility expansions to increase capacity. New facilities in the United States, Puerto Rico, Switzerland and Ireland played a role, too.
Medtronic arguably is best known as a market leader for pacemakers and defibrillators, and it managed to ride out a particularly rough year for the latter group of products. Although Cardiac Rhythm Disease Management (CRDM) sales of nearly $4.88 billion were flat at 2% growth for fiscal 2007, this number could have been worse had pacing systems not posted a 6% gain to $1.895 billion, compliments of product launches including Adapt, Versa and Sensia pacemakers. As the overall US market for implantable cardioverter defibrillators (ICDs) declined in 2007, the company’s depreciation was only 1% for this category due to strong international sales—total US sales for ICDs dropped 9% to $2.08 billion, while international sales climbed 29% to $835 million with sales growth for the wireless Virtuoso ICD and the Concerto cardiac resynchronization therapy defibrillator. Overall CRDM sales grew 2% for fiscal 2008 to $4.96 billion. While ICD sales dropped 1% again, the company believes an eventual turnaround in the US market as well as opportunities in what it terms an underpenetrated worldwide market should bring favorable change in the future.
In the fourth quarter of fiscal 2007, Medtronic opted to separate its Physio-Control unit from the CRDM segment. The unit, which is a subsidiary offering external defibrillators, emergency response systems, data management solutions and support services used by hospitals and emergency workers, posted a 7% decrease for the year, going from $412 million in fiscal 2006 to $385 million in fiscal 2007. Physio-Control products made at Medtronic’s Redmond, WA facility were temporarily suspended in January 2007 due to quality issues. This voluntary action reduced US sales by 20%, though the company said this impact was partially offset by 19% growth in international sales, which were aided by sales of the Lifepak CR Plus Defibrillator. The company’s recently announced fiscal 2008 results for the year ended April 25, 2008, showed that Physio-Control once again was impacted by the quality problem, as sales decreased 15% from 2007 revenues to $329 million.
Medtronic’s largest-growing segment in fiscal 2007 was the Vascular business, which had a sales increase of 28% to $1.2 billion. Coronary Vascular sales grew 31% to $918 million, primarily due to international sales of the Endeavor drug-eluting stent, which generated $300 million in revenue for the year, along with $260 million in sales for the Driver bare metal stent product line. Endovascular/Peripheral product sales grew 20% as the company capitalized on its fourth-quarter 2006 US launch of the AneuRx AAAdvantage Stent Graft System and increased international sales of the Valiant Thoracic Stent Graft System.
The Cardiac Surgery segment—including heart valve products, perfusion systems, positioning/stabilization systems for heart surgeries, surgical accessories and surgical ablation products—grew 6% to $704 million in fiscal 2007. Growth was fueled mostly by the Valves (9% growth) business, which had a 10% increase in tissue valve sales for products such as the Mosaic line, the Melody Transcatheter Pulmonary Valve and Ensemble Transcatheter Delivery system outside the United States. The Perfusion (4% growth) business also was a main driver, due to stronger international sales for Medtronic’s cardiopulmonary and cannulae product lines.
In April 2007, Medtronic combined its Vascular and Cardiac Surgery segments. The newly named CardioVascular business reported total net sales of $2.13 billion for fiscal 2008. The US launch of the Endeavor stent in the fourth quarter was a main driver of the Coronary stent unit’s 27% growth for the year to $710 million.
In fiscal 2007, Medtronic posted an impressive gain in the Diabetes segment, which grew sales 20% in fiscal 2007 to $863 million. Within this segment, external pump sales were $389 million, representing 32% growth from fiscal 2006 due to strong sales of the Paradigm REAL-time sensor-augmented pump system that integrates continuous glucose monitoring and insulin pump functionality. This system also helped Medtronic’s Diabetes segment continue to prosper in fiscal 2008, with an 18% annual sales increase to approximately $1.02 billion.
Neurological business, Medtronic’s fourth-largest sales segment for fiscal 2007, grew 16% with total net sales of $1.183 billion. Within this category, Neurological Implantables grew 15% to $962 million, driven by sales of products such as the RestoreADVANCED and PrimeADVANCED neurostimulation systems for pain management and Activa Therapy for treatment of movement disorders associated with Parkinson’s disease and essential tremor. Increased sales of the Synchromed II drug delivery pump also helped. Gastroenterology and Urology products increased 21% collectively to $221 million, with gains led by sales of the InterStim product line for treatment of overactive bladder and incontinence and the Prostiva line for treatment of an enlarged prostate. Overall, the Neurological segment changed in fiscal 2008 with the divestiture of the Gastroenterology and Urology diagnostics product lines, and the category was renamed as the Neuromodulation segment. This business increased 11% to $1.3 billion for the fiscal year; when adjusting for the divestiture of the aforementioned product lines, the unit actually grew 15%.
For Medtronic’s Spinal and Navigation segment, sales grew 13% in fiscal 2007 to $2.54 billion. Within the company’s minimal access technology portfolio, CD Horizon Sextant II, a percutaneous lumbar fixation system with minimal access technologies that reduce procedural steps, was the main growth driver. Capstone and Crescent Vertebral Body Spacers also led to growth within the Spinal Instrumentation business. Biologics, with had net sales of $696 million (a 22% increase from fiscal 2006), had continued success with the Infuse Bone Graft; introduced in fiscal 2003 for spine, Infuse received FDA approval in late fiscal 2007 for use in certain oral maxillo-facial and dental regenerative bone grafting procedures. Navigation increased 18% to $127 million due to strong sales of the PoleStar N2O, an intra-operative MRI Guidance System and O-arm Imaging System, a multi-dimensional surgical imaging platform for use in spine and other orthopedic surgery. For fiscal 2008, Spinal revenue was even healthier than it was in fiscal 2007, with revenues totaling $2.98 billion, a 23% increase.
The Ear/Nose/Throat (ENT) segment, which also contains neurologic technology-related products, posted a single-digit gain of 8% in 2007, bringing its total net sales to $539 million. Core ENT sales were $278 million, a 5% increase from fiscal 2007. Medtronic said these sales were impacted by the loss of revenue from the company’s third-quarter fiscal 2006 sale of its tanometry product line. Neurologic Technologies had a net sales gain of 11% to $261 million for fiscal 2007.
Given the previously cited fiscal year 2008 results, it should come as no surprise that Medtronic brought back the days of double-digit gains for overall net sales—the company recorded a 10% increase to $13.5 billion compared with fiscal 2007.
“Medtronic had a strong close to the year,” said Hawkins. “The stabilization of the ICD market, the launch of our Endeavor drug-eluting stent and strong performance in virtually every business and geography provides positive momentum as we begin our new fiscal year.” For fiscal 2009, the company expects revenue of between $15 billion and $15.5 billion.
The company is looking to streamline operations and restructure its organization. Earlier this year, Medtronic announced it would reduce its staff by approximately 1,100 as part of its global restructuring and in response to a slower ICD and stent market. This spring, Michael DeMane, chief operating officer, also left the company. Several other additions were named, however, including the appointment of Jean-Luc Butel as president of Medtronic International. Steve LaNeve, formerly president of Medtronic Japan, also was named senior vice president and president of Medtronic’s Spinal and Biologics business, replacing Pete Wehrly, who left the company.