Medtronic 2013 Annual Report Download - page 55

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Table of Contents
Surgical Technologies net sales for fiscal year 2013 were $1.426 billion, an increase of 14 percent over the prior fiscal year. The
increase in net sales was driven by sales of capital equipment, including O-arm imaging and StealthStation S7 surgical navigation
systems, Midas Rex powered surgical equipment, and Advanced Energy products, including the Aquamantys bipolar sealers and
PEAK PlasmaBlade electrosurgical products. Additionally, net sales were positively affected by balanced growth of disposables
and service revenue in our Neurosurgery and ENT businesses. Growth was partially offset by unfavorable foreign currency
translation.
The Restorative Therapies Group's net sales for fiscal year 2012 were $7.702 billion, an increase of 4 percent over the prior fiscal
year. Foreign currency translation had a favorable impact on net sales of approximately $99 million when compared to the prior
fiscal year. The Restorative Therapies Group's performance resulted from strong net sales in Diabetes and Surgical Technologies,
as well as solid growth in Neuromodulation, partially offset by weaker net sales in Spine. The Restorative Therapies Group's
performance was affected by strong international results across all businesses. The Restorative Therapies Group's performance
was positively affected by the recent launch of notable products, sales force expansion, and the acquisitions of Salient and PEAK
in the second quarter of fiscal year 2012, and negatively affected by the continued macroeconomic downturn, continued heightened
payer scrutiny, competition, and the continued trend of increased hospital ownership of physician practices. See the more detailed
discussion of each business's performance below.
Spine net sales for fiscal year 2012 were $3.267 billion, a decrease of 4 percent over fiscal year 2011. The decrease in Spine net
sales was led by a 10 percent decline in U.S. sales partially offset by a 12 percent increase in sales outside the U.S. Additionally,
Spine’s performance was negatively affected by a decrease in the number of Spine procedures as certain patients are postponing
elective procedures due to current macroeconomic factors, continued pricing and competitive pressures, questions raised about
peer-reviewed literature associated with INFUSE, and a challenging reimbursement environment in certain of our major markets.
More specifically, the decline in Spine’s sales was due to a decline in sales of Core Spine, which was primarily due to negative
performance in core metal constructs and BKP products. BKP’s sales declined 6 percent, when compared to the prior fiscal year.
The decline in BKPsales was due to the continued decrease in demand and competitive pricing pressures. The negative performance
in Core Spine was partially offset by growth from the ongoing launch of new product lines, including Solera, Vertex Select, and
Atlantis Vision Elite cervical plates, and positive performance from other biologics products, including MAGNIFUSE and
GRAFTON. BMP also negatively affected Spine’s performance, primarily due to the decline in sales of INFUSE bone graft, which
declined 18 percent over the prior fiscal year. The decline in INFUSE bone graft sales was primarily driven by the June 2011
articles in The Spine Journal as further described below. Furthermore, Spine net sales were positively affected by growth outside
the U.S., including the benefit from the joint venture with Shandong Weigao Group Medical Polymer Company Limited (Weigao).
Neuromodulation net sales for fiscal year 2012 were $1.700 billion, an increase of 7 percent over fiscal year 2011. The increase
in net sales was primarily due to the growth of InterStim Therapy for overactive bladder, urinary retention, and bowel control,
Synchromed II drug pumps for pain and spasticity relief, and Activa PC and RC DBS systems for movement disorders. Additionally,
the full U.S. launch of RestoreSensor during the last week of the third quarter of fiscal year 2012 positively affected net sales
growth.
Diabetes net sales for fiscal year 2012 were $1.481 billion, an increase of 10 percent over fiscal year 2011. The increase in net
sales was led by international sales growth of 19 percent over the prior fiscal year. The net sales growth was the result of continued
demand in certain markets outside the U.S. for our Veo and Enlite sensor. Additionally, worldwide sales of CGM systems positively
affected our fiscal year 2012 net sales growth.
Surgical Technologies net sales for fiscal year 2012 were $1.254 billion, an increase of 21 percent over fiscal year 2011. 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. Additionally, net sales for fiscal year 2012
were positively affected by the August 2011 acquisitions of Salient and PEAK.
Looking ahead, we expect our Restorative Therapies Group could be affected by the following:
• Changes in procedural volumes, competitive and pricing pressure, reimbursement challenges, and mix impacts
from changes in our product offerings.
• Market acceptance of innovative new products, such as our Solera product line, Bryan ACD Instrument Set,
and other biologics products, including MAGNIFUSE and GRAFTON products, and POWEREASE, a powered
instrument solution for Solera.
• Market acceptance of BKP. We remain focused on generating evidence to better demonstrate the clinical and
economic benefits for BKP. We will continue to tailor our BKP product offering to meet market needs and
respond to competitive challenges.
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