Medtronic 2010 Annual Report Download - page 32

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28 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
adapts stimulation by responding to changes in body position
and activity.
• Continued leadership in the Intrathecal Drug Delivery market
as we anticipate future competition.
Diabetes Diabetes products consist of external insulin pumps and
related consumables (together referred to as Durable Pump
Systems) and subcutaneous continuous glucose monitoring (CGM)
systems. Diabetes net sales for fiscal year 2010 were $1.237 billion,
an increase of 11 percent when compared to the prior fiscal
year. Foreign currency translation had a favorable impact on net
sales of approximately $7 million when compared to the prior
fiscal year.
Durable Pump Systems net sales for fiscal year 2010 were $1.061
billion, an increase of 8 percent when compared to the prior fiscal
year. The increase in net sales resulted from the launch of the
MiniMed Paradigm Veo outside the U.S. and the launch of the
MiniMed Paradigm Revel in the U.S. during the third and fourth
quarter of fiscal year 2010, respectively. There was also an increase
in worldwide net sales of related consumables. Net sales of CGM
and other accessories were $176 million, an increase of 34 percent
when compared to the prior fiscal year. Growth was driven by
strong acceptance of CGM systems worldwide. During fiscal year
2010, we reached settlement with the suppliers involved in the
July 2009 recall of specific lots of Quick-set infusion sets that are
used with the MiniMed Paradigm insulin pumps. The recall was
initiated because the affected infusion sets may not allow the
insulin pump to vent air pressure properly, which could potentially
result in the device delivering too much or too little insulin. The
recall did not have a significant impact to total net sales for fiscal
year 2010.
Diabetes net sales for fiscal year 2009 were $1.114 billion, an
increase of 9 percent when compared to the prior fiscal year.
Foreign currency translation had an unfavorable impact on net
sales of approximately $13 million when compared to the prior
fiscal year.
Durable Pump Systems net sales for fiscal year 2009 were $983
million, an increase of 5 percent when compared to the prior
fiscal year. The increase in net sales resulted from demand for the
MiniMed Paradigm REAL-Time System that integrates continuous
glucose monitoring and insulin pump functionality and related
consumables. Net sales of CGM and other accessories were $131
million, an increase of 56 percent when compared to the prior
fiscal year. Growth was driven by strong acceptance of CGM in the
U.S. and an increase in U.S. sales of glucose test strips.
Looking ahead, we expect our Diabetes operating segment
should be impacted by the following:
• Continued acceptance from both physicians and patients of
insulin-pump therapy and CGM therapy.
• The continued acceptance and expanded launch of a series of
new insulin pumps, including the MiniMed Paradigm Veo
System, which offers low-glucose suspend that assists in
protecting against the risk of hypoglycemia by automatically
suspending insulin delivery when glucose falls below a
specified threshold set by the user. The MiniMed Paradigm
Veo System was launched in select markets in Asia and
Europe in the third quarter of fiscal year 2010 and was
launched throughout Asia and Europe in the fourth quarter of
fiscal year 2010. In addition, the next MiniMed Revel System
was launched in the U.S. in the fourth quarter of fiscal year
2010. The launch of this system extended our line of sensor-
augmented therapy options available on the market.
• Continued acceptance and improved reimbursement of CGM
technologies, which provide patients and physicians valuable
insight into glucose levels.
• Our ability to increase or maintain market share through
the successful introduction of future products within the
competitive pump market.
• Given the elective nature of an insulin pump and CGM for the
management of diabetes and the possible high out-of-pocket
costs to the customer, there is potential exposure to
macroeconomic pressures which could negatively impact the
near-term sales growth within Diabetes.
Surgical Technologies Surgical Technologies products are used to
treat conditions of the ear, nose and throat (ENT), and certain
neurological disorders. Additionally, we manufacture and sell
image-guided surgery and intra-operative imaging systems. Our
portfolio consists of powered tissue-removal systems and other
microendoscopy instruments, implantable devices including those
for obstructive sleep apnea and benign snoring, nerve monitoring
systems, disposable fluid-control products, a Ménière’s disease
therapy device, hydrocephalus shunt devices, external drainage
systems, cranial fixation devices, neuroendoscopes, dura repair
products and image-guided surgery and intra-operative imaging
systems. Surgical Technologies net sales for fiscal year 2010 were
$963 million, an increase of 12 percent when compared to 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.