Leading medical devices player, Medtronic (MDT) has received clearance from the US Food and Drug Administration (FDA) to use its CD Horizon Spinal System Pedicle screws to treat adolescent idiopathic scoliosis (AIS), which is the most common type of scoliosis in children affecting nearly 1 million in the US. Subsequent to this approval, children diagnosed with AIS will have a better treatment option.
Pedicle screws are designed for use in the thoracolumbar spine. They are used in surgeries to affix rods to the spine to correct deformities. The CD Horizon Spinal System consists of a broad portfolio of technologies to treat deformity of the spine. This approval is expected to further strengthen Medtronic’s Spinal segment, which is the second largest behind Cardiac Rhythm Disease Management (CRDM).
Medtronic’s Spinal segment supplies medical devices and implants for the treatment of spine. The product portfolio includes thoracolumbar, cervical and antibody devices including the Minimal Access Spinal Technologies (MAST) along with bone growth substitutes, and devices for vertebral compression fractures (VCFs) and spinal stenosis. MAST facilitates safe access to the spine with minimal disruption of vital muscles and complementary structures.
During the second quarter of fiscal 2011, the Spinal segment generated $850 million in sales compared to $862 million in the year-ago period, down 1.4%. Revenues from Core Spinal and Biologics were lower by 1.2% ($634 million) and 1.8% ($216 million), respectively. Metal constructs’ revenues remained flat with growth recorded by new product launches in the minimally invasive portfolio.
The Spinal segment was hampered by slowing market growth (in the range of 3%-4%) as soft economic conditions and higher co-pays affected the number of patients seeking treatment. Pricing pressure in the US spine market remained similar to the first quarter with low single-digit declines. In Europe, the spine market was negatively impacted by curtailed spending. While revenues from both Core Spinal and Biologics declined, the extent of the decline was much less than the previous quarter. In addition, both Core Spinal and Biologics recorded an increase in revenues on a sequential basis. In the Spinal space, Medtronic faces competition from players like Smith & Nephew (SNN), Stryker (SYK) and Zimmer Holdings (ZMH).
We are currently Neutral on Medtronic which also corresponds to a Zacks # 3 Rank (Hold) in the short term.
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