Medtronic 2012 Annual Report Download - page 52

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pressures due to competition, slowing of certain market growth rates, and the continued trend of increased
hospital ownership of physician practices. Additionally, the ICD utilization article in the January 2011
Journal of the American Medical Association and the hospital investigation by the DOJ had an effect on the
U.S. ICD market throughout fiscal year 2012, but in the fourth quarter we began to see signs of stabilization.
See the more detailed discussion of each business’s performance below.
CRDM net sales for fiscal year 2012 were $5.007 billion, which is flat compared to the prior fiscal year.
Worldwide net sales of our defibrillation system products declined primarily due to the decline in the U.S.
market throughout fiscal year 2012. The U.S. market was affected by a number of factors, including the ICD
utilization article in the January 2011 Journal of the American Medical Association, the hospital utilization
investigation by the DOJ, and the continued trend of increased hospital ownership of physician practices.
In the fourth quarter of fiscal year 2012, we began to see signs of stabilization in the U.S. ICD market. The
decline in net sales of our defibrillation system products was partially offset by net sales growth from the
Protecta SmartShock (Protecta) family of devices, which were launched in the U.S. during the fourth quarter
of fiscal year 2011. Worldwide net sales of our pacing system products increased primarily due to growth in
the U.S. for the Revo MRI SureScan pacing system, which was launched in the fourth quarter of fiscal year
2011, as well as growth, generally, outside the U.S. Additionally, worldwide net sales of our AF Solutions
products increased primarily due to the continued acceptance in the U.S., and in certain markets outside the
U.S., of the Arctic Front Cardiac CryoAblation Catheter system (Arctic Front system).
CardioVascular net sales for fiscal year 2012 were $3.475 billion, an increase of 12 percent over the
prior fiscal year. The increase in CardioVascular net sales was primarily due to growth outside the U.S. in
our Coronary, Structural Heart, and Endovascular and Peripheral businesses. The primary contributors to
net sales growth were driven by the fourth quarter fiscal year 2012 launch in the U.S. of the Resolute
Integrity drug-eluting coronary stent within Coronary, and the continued acceptance outside the U.S. of our
CoreValve transcatheter valve within Structural Heart. Within Endovascular and Peripheral, the Endurant
Abdominal and Valiant Captivia Thoracic Stent Graft System continues to perform well outside the U.S. and
the Endurant Abdominal Stent Graft System continues to perform well in the U.S. Additionally, the
acquisitions and integration of Ardian and ATS Medical, which were acquired in January 2011 and August
2010, respectively, contributed to fiscal year 2012’s overall net sales growth.
The Cardiac and Vascular Group net sales for fiscal year 2011 were $8.119 billion, which was flat
compared to the prior fiscal year. Foreign currency translation had a favorable impact on net sales of
approximately $4 million compared to the prior fiscal year. The Cardiac and Vascular Group’s performance
was a result of strong sales in Coronary, Structural Heart, Endovascular and Peripheral, and AF Solutions,
offset by declines in CRDM defibrillation systems and pacing systems. The Cardiac and Vascular Group’s
performance was affected by strong international results from the AF Solutions, Structural Heart,
Endovascular and Peripheral, and Coronary businesses offset by the continued macroeconomic downturn,
pricing pressures due to competition, slowing of certain market growth rates, and reduced reimbursement
in certain countries including Japan, where R-Zone and foreign reference pricing changes resulted in a
decline in our selling prices. Net sales growth for fiscal year 2011 was negatively affected by a CRDM
competitor’s stop shipment in the prior fiscal year and due to the extra selling week in the prior fiscal year,
which affected all of the Cardiac and Vascular Group’s businesses.
CRDM net sales for fiscal year 2011 were $5.010 billion, a decrease of 5 percent over the prior fiscal
year. Worldwide net sales of our defibrillation system products declined primarily due to continued pricing
pressures and a decline in the U.S. market in the second half of fiscal year 2011. Net sales growth for fiscal
year 2011 was negatively affected by a CRDM competitor’s stop shipment in the prior fiscal year and the
extra selling week in the prior fiscal year. Pricing pressures included negative impacts from the delay in the
launch of the Protecta family of devices in the U.S. and a shift in product mix from initial to replacement
implants. The U.S. launch of Protecta was delayed as we awaited final resolution of the Mounds View U.S.
FDA warning letter and subsequent approval, which occurred in the fourth quarter of fiscal year 2011. Net
sales of defibrillation system products were also negatively affected by competitor product launches in
certain international markets. The decline in worldwide net sales of our defibrillation system products was
partially offset by net sales growth from the launch of Protecta outside the U.S., which received CE Mark
approval late in fiscal year 2010. Additionally, worldwide net sales of our pacing system products declined
due to continued pricing pressures and an extra selling week in the prior fiscal year. Pricing pressures
included a negative impact from R-Zone pricing changes in Japan and the delayed U.S. FDA approval and
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