Medtronic 2009 Annual Report Download - page 33

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Medtronic, Inc.
• Future acceptance and customer preference for Medtronic
products due to the strategic marketing collaboration with Eli
Lilly (Lilly), which was announced on May 19, 2009. The
alliance reached with Lilly provides for marketing and sales
operations in the U.S. to improve the delivery of diabetes
education for insulin-taking patients and their caregivers. This
will include the development of new educational resources
and classes around the initiation and intensive management
of insulin, insulin pump therapy and continuous glucose
monitoring.
• Continued acceptance and customer preference for Medtronic
products due to the alliances with LifeScan, Inc. (LifeScan), a
J&J company, and Bayer Diabetes Care (Bayer), a member of
the Bayer group, which we announced on August 21, 2007.
The alliances reached with LifeScan (for the U.S. market) and
Bayer (for markets outside the U.S.) provide for the distribution
and marketing of blood glucose meters that communicate
with Medtronic’s insulin pumps. These alliances provide our
customers an integrated solution for managing diabetes,
thereby improving the quality of life and ease of use. We
launched our co-developed blood glucose meters with Bayer
and LifeScan in February 2008 and April 2008, respectively.
• The future launch and acceptance of a series of new insulin
pumps, including the Paradigm Veo, which offers low glucose
suspend that assists in protecting against the risk of
hypoglycemia by automatically suspending insulin delivery
when glucose falls below a specified threshold set by the
user. The Paradigm Veo was launched in the United Kingdom
in June 2009 and is expected to be launched in other markets
outside the U.S. in fiscal year 2010.
• Potential slowdown in consumer spending. Given the elective
nature of an insulin pump for the management of diabetes
and the possible high out-of-pocket costs to the customer,
there is potential exposure to macroeconomic pressures
which could negatively impact the near-term sales growth
within Diabetes.
Surgical Technologies Surgical Technologies products are used
to treat conditions of the ear, nose and throat, and certain
neurological disorders. Additionally, we manufacture and sell
image-guided surgery and intra-operative imaging systems.
Our portfolio consists of powered tissue-removal systems and
other microendoscopy instruments, implantable devices, nerve
monitoring systems, disposable fluid-control products, a Ménière’s
disease therapy device, hydrocephalus shunt devices, external
drainage systems, cranial fixation devices, neuroendoscopes, dura
repair products and image-guided surgery and intra-operative
imaging systems. Surgical Technologies net sales for fiscal year
2009 were $857 million, an increase of 10 percent when compared
to the prior fiscal year. Foreign currency translation had an
unfavorable impact on net sales of approximately $11 million
when compared to the prior fiscal year.
Core ENT net sales for fiscal year 2009 were $352 million, an
increase of 9 percent when compared to the prior fiscal year. The
increase reflected the continued success of Fusion EM IGS, an
advanced electromagnetic-based image-guided surgery system
to facilitate sinus surgeries. In addition, there was strong
performance in nerve monitoring and drill disposables.
Neurologic Technologies net sales for fiscal year 2009 were
$320 million, an increase of 7 percent when compared to the prior
fiscal year. The primary driver of growth was worldwide increased
sales of disposables associated with high-speed drill systems
including the EHS Stylus high-speed powered surgical drill
system. Additionally, the Strata valves, used in the treatment of
hydrocephalus, contributed to the revenue growth.
Navigation net sales for fiscal year 2009 were $185 million, an
increase of 16 percent when compared to the prior fiscal year. The
increase in net sales was based on strong worldwide net sales of
the O-Arm Imaging System, a multi-dimensional surgical imaging
platform that is optimized for use in spine and orthopedic
surgery, and increased service revenue in the U.S. Additionally,
the StealthStation S7 System, launched in the first quarter of fiscal
year 2009, contributed to the revenue growth. The StealthStation
S7 System offers personalized navigation support for surgeons
and surgical staff in the operating room.
Surgical Technologies net sales for fiscal year 2008 increased by
17 percent over the prior fiscal year to $780 million. Foreign
currency translation had a favorable impact of $20 million on net
sales when compared to the prior fiscal year.
Core ENT net sales grew 16 percent to $323 million in fiscal
year 2008 led by strong growth of sales outside the U.S. of
the Straightshot M4 Microdebrider and endoscopy sales. In the
U.S., there was an increase in net sales of our Image Guided
Surgery Systems which was partially due to the launch of the
Fusion EM IGS System for use in sinus surgical procedures.
Net sales of monitoring disposables also experienced strong
worldwide growth.
Neurologic Technologies net sales grew 14 percent to $298
million in fiscal year 2008. The primary driver of growth in