Medtronic 2009 Annual Report Download - page 29

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Medtronic, Inc.
Spinal net sales for fiscal year 2008 increased by 23 percent
from the prior fiscal year to $2.982 billion. Foreign currency
translation had a favorable impact on net sales of $44 million
when compared to the prior fiscal year. The growth in fiscal year
2008 was primarily driven by the November 2007 close of the
acquisition of Kyphon, which generated revenue of $298 million
during the fiscal year.
Core Spinal net sales for fiscal year 2008 were $1.869 billion, an
increase of 9 percent from the prior fiscal year. Growth in the
period was primarily based on continued acceptance of our
products for the thoracolumbar and cervical regions of the spine.
Net sales in fiscal year 2008 were hampered by the trend of small
companies increasing their presence and placing pressure on the
Core Spinal market. Thoracolumbar net sales growth for fiscal
year 2008 was driven by net sales of the CD HORIZON and the
CAPSTONE Vertebral Body Spacer (CAPSTONE) outside the U.S.,
net sales of the VERTE-STACK CRESCENT Vertebral Body Spacer
(CRESCENT) for thoracolumbar stabilization in the U.S. and
worldwide net sales growth of lumbar products. The CAPSTONE
and CRESCENT are minimal access devices and techniques
designed to replace and restore vertebral height in the
thoracolumbar spine. The growth in net sales in our cervical
products during the fiscal year was led by the continued
acceptance of the VERTEX Max Reconstruction System for cervical
stabilization outside the U.S.
Biologics net sales for fiscal year 2008 increased 16 percent
from the prior fiscal year to $815 million. This increase was
primarily driven by continued strong acceptance of INFUSE Bone
Graft in the U.S. In addition to FDA approval for use of INFUSE
Bone Graft for lumbar spinal fusion, we received FDA approval to
use INFUSE Bone Graft for the treatment of certain types of acute,
open fractures of the tibial shaft in fiscal year 2005, and for certain
oral maxillofacial and dental regenerative bone grafting
procedures late in fiscal year 2007. Additionally, although on a
smaller base, we experienced strong fiscal year 2008 growth in
the sales of InductOs Bone Graft, the outside the U.S. equivalent
of INFUSE Bone Graft.
Kyphon, which was acquired in November 2007, had net sales
of $298 million for fiscal year 2008 that were driven by continued
acceptance of balloon kyphoplasty procedures for treating
vertebral compression fractures and acceptance of Kyphon’s
interspinous products for treating lumbar spinal stenosis. Kyphon’s
interspinous products for treating lumbar spinal stenosis include
the commercially available X-STOP IPD technology available in
both the U.S. and outside the U.S. and Aperius PercLID available
outside the U.S.
Looking ahead, we expect our Spinal operating segment should
be impacted by the following:
• Continued acceptance of our products for stabilization of the
thoracolumbar region of the spine, including the CD HORIZON
LEGACY 5.5 and PEEK Rod Systems.
• Increased presence in China as a result of our joint venture
with Weigao to distribute Medtronic’s spinal products and
Weigao’s orthopedic products in China.
• The recent U.S. launch of the PEEK PREVAIL Cervical Interbody
Device and the VERTEX SELECT Reconstruction System
Occipitocervical Module. The PEEK PREVAIL Cervical Interbody
Device offers stability during a spinal fusion for patients that
are treated for a degenerative condition that affects the
patient’s neck. The VERTEX SELECT Reconstruction System
Occipitocervical Module offers adjustability through multiple
plate designs, rods, screws and hooks that gives surgeons
more options during surgery, enabling them to tailor the
procedure to each patient’s needs. The PEEK PREVAIL Cervical
Interbody Device and VERTEX SELECT Reconstruction System
Occipitocervical Module became commercially available in
the U.S. in May 2009.
• Continued regulatory scrutiny of off-label use in medical
devices. During fiscal year 2009, the FDA issued a public
health notice regarding use of bone morphogenic protein in
cervical procedures, which was received negatively by both
physicians and payors. As a result, this negatively impacted
the sales of our INFUSE Bone Graft in fiscal year 2009. It is
uncertain if this trend will continue in subsequent periods.
CardioVascular CardioVascular products consist of coronary
and peripheral stents and related delivery systems, endovascular
stent graft systems, heart valve replacement technologies and
tissue ablation systems, and open heart and coronary bypass
grafting surgical products. CardioVascular net sales for fiscal
year 2009 were $2.437 billion, an increase of 14 percent over the
prior fiscal year. Foreign currency translation had an unfavorable
impact of approximately $23 million when compared to the prior
fiscal year.
Coronary Stent and Other Coronary/Peripheral net sales for
fiscal year 2009 were $1.292 billion, an increase of 16 percent
when compared to the prior fiscal year. The increase in net sales
was primarily the result of the launch of the Endeavor drug-
eluting stent (Endeavor) in the U.S. which began during the fourth
quarter of fiscal year 2008. We received regulatory approval
in Japan during the fourth quarter of fiscal year 2009 and
commercially launched Endeavor in Japan in May 2009. Endeavor