Medtronic 2011 Annual Report Download - page 28

24 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
a thin lead body, providing physicians a tool to deliver therapy
to hard-to-reach areas of the heart in heart failure patients.
Additionally, worldwide net sales performance of our pacing
system products were flat for the fiscal year primarily due
to modest growth outside the U.S. in the Adapta family of
pacemakers offset by continued pricing pressures in the Japan
market as a result of the Kappa/Sigma field action that was
announced in early fiscal year 2010. The Adapta family of
pacemakers incorporates several automatic features to help
physicians improve pacing therapy and streamline the patient
follow-up process, potentially minimizing the amount of time
spent in a physician’s office. Adapta offers Managed Ventricular
Pacing, which is an atrial based pacing mode that significantly
reduces unnecessary pacing in the right ventricle while providing
the safety of a dual chamber backup if necessary. Clinical studies
have suggested that reducing this unnecessary pacing in the right
ventricle may decrease the risk of developing heart failure and
atrial fibrillation, a potentially life-threatening irregular heartbeat.
CardioVascular net sales for fiscal year 2010 were $2.864 billion,
an increase of 18 percent over the same period in the prior fiscal
year. The increase in CardioVascular net sales was primarily due to
growth outside the U.S. in our Coronary and Peripheral, Structural
Heart, and Endovascular businesses. The increase in net sales was
primarily the result of the fiscal year 2010 launch of Endeavor
in Japan and strong sales of Endeavor and the Resolute drug-
eluting stent outside the U.S. Endeavor and Resolute generated
worldwide revenue of $767 million for the fiscal year compared to
$603 million for the prior fiscal year. In addition, during fiscal year
2010 we entered into a buyout agreement with our coronary
distributor in Japan. In order to settle a preexisting relationship
with this distributor, a revenue reversal of $18 million was
recorded in the first quarter of fiscal year 2010 related to inventory
previously sold to the distributor. The increase in Endovascular
net sales was primarily the result of increased sales in the U.S. of
the Talent Abdominal Aortic Aneurysm Stent Graft System and
Thoracic Stent Graft System and the Endurant Abdominal Stent
Graft System outside the U.S. The Endurant Abdominal Stent Graft
System expands the applicability of endovascular aortic repair
to more patients with abdominal aortic aneurysms (AAA) by
addressing those AAA patients whose aortas are highly angulated.
The Endurant Abdominal Stent Graft System also enables
treatment of patients with small or tortuous iliac arteries due to
lower crossing profile of the delivery system. Additionally, the
increase in Structural Heart net sales was primarily the result of
net sales growth outside the U.S. from our transcatheter valves,
tissue surgical valves, and cannulae products.
Physio-Control net sales for fiscal year 2010 were $425 million,
an increase of 24 percent over the same period in the prior fiscal
year. Net sales were driven by the LIFEPAK 15 monitor/defibrillator
and by the resumption of unrestricted global shipments early
in the fourth quarter of fiscal year 2010 following the lifting of
FDA restrictions.
Looking ahead, we expect our Cardiac and Vascular Group
should be impacted by the following:
• The recent slowdown in market growth rates. Our
performance in the Cardiac and Vascular Group has been
and will continue to be affected by continued market growth
and our ability to increase or maintain our market position.
The current Cardiac and Vascular Group market is impacted
by increasing pricing pressures, competition, and slowing
procedure growth.
• The recent slowdown in market growth rates for our U.S.
defibrillation system products. We believe the U.S. market
could be impacted during fiscal year 2012 by the ICD
utilization article in the Journal of the American Medical
Association and the hospital utilization investigation by the
Department of Justice.
• Market acceptance of our Protecta family of devices which
was launched outside the U.S. late in the fourth quarter
of fiscal year 2010 and in the U.S. in the fourth quarter
of fiscal year 2011. The Protecta portfolio leverages the
already established Vision 3D platform to deliver a full suite
of single, dual, and triple chamber defibrillators that include
SmartShock Technology, a family of new Medtronic-exclusive
algorithms that reduces the delivery of inappropriate shocks,
which is a leading clinical request from physicians.
• Continued and future growth of the first pacing system
developed specifically for use in MRI machines. During the
fourth quarter of fiscal year 2010 we launched Advisa MRI
SureScan, our next generation MRI pacing system in Europe
and, early in the fourth quarter of fiscal year 2011, we received
FDA approval for the Revo MRI SureScan, our first generation
MRI pacing system in the U.S. Both Advisa MRI SureScan and
Revo MRI SureScan are designed to address and mitigate
interactions between the pacing system and the magnetic
resonance imaging environment. We believe these MRI
compatible products will help drive potential share gains and
alleviate pricing pressures.