Leading medical devices player, Medtronic (MDT) has recently acquired the rights to chitosan-dextran gel technology from its developers, Adelaide Research & Innovation Private Limited, Robinson Squidgel Limited and Otago Innovation Limited in order to complement its functional endoscopic sinus surgery (FESS) product portfolio.
The financial terms of the deal were however not disclosed. This innovative gel technology helps control postoperative bleeding and adhesions common in sinus patients and thereby increases the probability of a successful FESS.
The demand for FESS is currently on a high with 525,000 annual cases handled in the US. The incorporation of the gel technology to Medtronic’s FESS procedure would bolster the company’s surgical technology foothold and help capitalize on the growing demand for sinus surgeries.
Medtronic earns revenues from seven divisions – Cardiac Rhythm Disease Management (CRDM), Spinal, CardioVascular, Neuromodulation, Diabetes, Surgical Technologies and Physio-Control. The Surgical Technologies segment comes under the restorative therapies group. This segment deals with products and therapies to treat diseases and conditions of the ear, nose and throat (ENT), and certain neurological disorders.
During the most recent quarter, the segment generated sales of $259 million, up 8% year over year. The strong results were driven by improved performance across the portfolio of ENT, Power Systems, and Navigation product lines. Balanced growth across capital equipment, disposables, and service also added to this success.
Metronic’s acquisitions (the most recent being privately held Ardian) and a strong pipeline should enable the company to increase revenues in the forthcoming period. In addition, Medtronic is increasing its focus on emerging markets and honing its skills on upcoming therapies touted to be major growth drivers ahead. The emerging market recorded a 26% growth in the last reported quarter.
However, the company operates in a highly competitive landscape with stiff competition from larger players like Boston Scientific Corporation (BSX),St. Jude Medical (STJ), and Zimmer (ZMH). The company is also exposed to the risk of currency movement. Moreover, its biggest segment, CRDM, continues to be a drag on its top line.
We currently have a ‘Neutral’ rating on Medtronic.
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