Medtronic 2011 Annual Report Download - page 30

26 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
2011 were $7.389 billion, an increase of 2 percent over the same
period in the prior fiscal year. Foreign currency translation had a
favorable impact on net sales of approximately $8 million when
compared to the prior fiscal year. The Restorative Therapies
Group’s performance was primarily a result of strong net sales in
Diabetes and Surgical Technologies partially offset by softer net
sales in Spinal. The Restorative Therapies Group’s performance
was impacted by the continued macroeconomic downturn,
increased payor scrutiny, competition, and the recent launch of
notable products. Net sales growth for fiscal year 2011 was also
negatively affected by the extra selling week in the prior fiscal
year, which impacted all businesses. See more detailed discussion
of each business’s performance below.
Spinal net sales for fiscal year 2011 were $3.414 billion, a
decrease of 2 percent over the same period in the prior fiscal year.
The decrease in Spinal net sales was primarily due to the decline
in INFUSE Bone Graft sales and the continued decrease in demand
for Kyphon Balloon Kyphoplasty (BKP) driven in part by the
articles on vertebroplasty in the New England Journal of Medicine,
partially offset by growth in our Solera products and Biologics,
which benefited from our acquisition of Osteotech, Inc. (Osteotech)
during the third quarter of fiscal year 2011. We have also seen a
decrease in the number of Spinal procedures as certain patients
are postponing elective procedures due to the current
macroeconomic and other factors. In addition, Spinal net sales
were negatively impacted by continued pricing pressures and a
challenging reimbursement environment in many of our major
markets. These decreases were slightly offset by growth outside
the U.S. including the positive impact from the joint venture with
Shandong Weigao Group Medical Polymer Company Limited
(Weigao). The joint venture distributes Medtronic’s spinal products
and Weigao’s orthopedic products in China.
Neuromodulation net sales for fiscal year 2011 were $1.592
billion, an increase of 2 percent over the same period in the prior
fiscal year. The increase in net sales was primarily due to the
growth of Activa PC and RC deep brain stimulation (DBS) systems
for movement disorders and InterStim Therapy for overactive
bladder, urinary retention, and bowel control (outside the U.S.),
partially offset by declines in pain management products.
Diabetes net sales for fiscal year 2011 were $1.347 billion, an
increase of 9 percent over the same period in the prior fiscal year.
Net sales increased worldwide led by international sales growth
of 13 percent over the same period of the prior fiscal year. This
was the result of continued growth for our MiniMed Paradigm
Veo System (Veo) in certain markets outside the U.S. In addition,
the MiniMed Revel System (Revel) contributed to the growth
in the U.S. market. We also saw an increase in CGM sales
worldwide.
Surgical Technologies net sales for fiscal year 2011 were $1.036
billion, an increase of 8 percent over the same period in the
prior fiscal year. The increase in net sales was driven by strong
performance worldwide across the portfolio of ENT, Power
Systems, and Navigation product lines, as well as growth across
capital equipment, disposables, and service.
The Restorative Therapies Group net sales for fiscal year 2010
were $7.260 billion, an increase of 7 percent over the same period
in the prior fiscal year. Foreign currency translation had a
favorable impact on net sales of approximately $38 million when
compared to the prior fiscal year. The Restorative Therapies
Group’s performance was a result of strong net sales in
Neuromodulation, Diabetes, and Surgical Technologies. The
Restorative Therapies Group’s performance was impacted by
balanced growth across each business and geography. Net sales
growth for fiscal year 2010 also benefited from the extra selling
week in the first quarter, which impacted all businesses.
Spinal net sales for fiscal year 2010 were $3.500 billion, an
increase of 3 percent over the same period in the prior fiscal
year. The increase in net sales was primarily driven by further
acceptance of our products for the thoracolumbar region of the
spine. Thoracolumbar net sales growth for fiscal year 2010 was
driven by worldwide net sales of the CD HORIZON LEGACY (CD
HORIZON) and TSRH family of products. CD HORIZON net sales
increased primarily from the increased use of our MAST line
of less invasive technologies in the U.S. and outside the U.S.
CD HORIZON is designed to provide procedural solutions for
degenerative, deformity or trauma applications using color
coded implants, unique minimally invasive instruments and
ergonomic designs. Our market share in the Core Spinal business
continues to experience pressure from the proliferation of smaller,
public and privately-held companies competing in the market.
Core Spinal net sales growth outside the U.S. for the fiscal year
was positively impacted from our joint venture with Weigao. The
joint venture, which distributes Medtronic’s spinal products and