Medtronic 2011 Annual Report Download - page 31

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Medtronic, Inc.
Weigao’s orthopedic products in China, commenced operations
at the end of the second quarter of fiscal year 2009. In addition,
net sales growth was negatively impacted by the decrease
in demand for BKP driven in large part by articles on
vertebroplasty in the New England Journal of Medicine. BKP
procedures are used to treat vertebral compression fractures. BKP
using Kyphon instruments is presently used by spine specialists,
including orthopedic surgeons and neurosurgeons, interventional
radiologists and interventional neuroradiologists, who repair
compression fractures of the spine caused by osteoporosis,
cancer, benign lesions or trauma, through minimally invasive
spine surgeries. Net sales were also driven by strong growth
in Biologics, including MasterGraft and Progenix products. In
addition, INFUSE Bone Graft sales modestly increased for the
fiscal year, but were impacted by the negative mix due to growth
in smaller kits. INFUSE Bone Graft contains a recombinant human
morphogenetic protein, or rhBMP-2, that induces the body to
grow its own bone, eliminating the need for a painful second
surgery to harvest bone from elsewhere in the body. INFUSE Bone
Graft is indicated for use in spinal fusion with certain Medtronic
titanium interbody fusion devices for single-level lumbar
degenerative disc disease, augmentations and for localized ridge
augmentations for defects associated with extraction sockets.
Neuromodulation net sales for fiscal year 2010 were $1.560
billion, an increase of 9 percent over the same period in the
prior fiscal year. Net sales were driven by increased worldwide
sales of InterStim and Medtronic DBS Therapies, with ongoing
momentum from Activa PC neurostimulator sales in Europe and its
fiscal year 2010 launch in the U.S.
Diabetes net sales for fiscal year 2010 were $1.237 billion, an
increase of 11 percent over the same period in the prior fiscal
year. The increase in net sales resulted from the launch of Veo
outside the U.S. and the launch of 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 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.
Surgical Technologies net sales for fiscal year 2010 were $963
million, an increase of 12 percent when compared to the prior
fiscal year. The increase in net sales for fiscal year 2010 was driven
by strong performance worldwide in nerve monitoring products
with the launch of the NIM 3.0 Nerve Monitoring System, power
disposables and the continued success of the Fusion EM IGS
System and the MR7 next generation pneumatic system, which
is an advanced electromagnetic-based image-guided surgery
system to facilitate sinus surgeries. Additionally, net sales for fiscal
year 2010 increased as a result of service revenue worldwide,
the continued adoption of the O-Arm Imaging System outside the
U.S. and the StealthStation S7 worldwide with the launch of the
Synergy Cranial 2.1 software. The O-Arm Imaging System is a
multi-dimensional surgical imaging platform that is optimized
for use in spine and orthopedic surgery. The StealthStation S7
System, launched in the first quarter of fiscal year 2009, offers
personalized navigation support for surgeons and surgical staff in
the operating room.
Looking ahead, we expect our Restorative Therapies Group
should be impacted by the following:
• Growth of the various markets and our ability to gr ow
consistently within those markets. Our performance in the
Restorative Therapies Group has been and will continue to be
affected by continued market growth and our ability
to increase or maintain our market position. The current
Restorative Therapies Group market is impacted by growth
in procedural volumes partially offset by increasing pricing
pressures and competition within the Spinal and
Neuromodulation businesses.
• Market acceptance of innovative new products, including the
Vertex Select product line, which was launched in the first
quarter of fiscal year 2011, and our new Solera product line,
which began a limited launch in the U.S. at the end of the
second quarter of fiscal year 2010. During the fourth quarter
of fiscal year 2011, we ramped up our launch of the Solera
4.75 system with a full market release. By the end of the
fourth quarter of fiscal year 2011, the Solera 4.75 system had
penetrated 30 percent of our U.S. Legacy system accounts.
• Continued acceptance of our BKP technology. We believ e
worldwide growth continues to be negatively impacted by
the vertebroplasty articles in the New England Journal of
Medicine. In addition, two new competitors entered the U.S.
marketplace in fiscal year 2011.