Medtronic (MDT) has received approval from Health Canada for ablation frontier cardiac ablation system, a radiofrequency ablation technology for the treatment of atrial fibrillation (AF). The device consists of the Genius multi-channel radiofrequency generator and the pulmonary vein ablation catheter (PVAC). As a condition of the approval, the company has to provide updates on the safety and effectiveness of the PVAC. The product is yet to receive approval from the US Food and Drug Administration.
AF is a rapid heart rhythm in the upper chambers of the heart, which leads to inefficient pumping of the heart. If left untreated, AF patients face five times higher risk of stroke. More than 250,000 people in Canada and seven million people globally suffer from AF.
Viewing the huge potential of the AF market, Medtronic in October 2008 formed an AF solutions business to provide breakthrough AF therapies to patients and physicians. To expand this business, the company acquired CryoCath Technologies in November 2008 for $352 million and Ablation Frontiers in February 2009 for $235 million. With these acquisitions, the company was aiming to expand its CRDM business into the under-penetrated market of catheter based treatment of atrial fibrillation.
Although CRDM is the biggest segment of Medtronic, this segment’s contribution to total revenues has come down from 40% in fiscal 2007 to 33% in fiscal 2010. The segment has been struggling of late.
During the first quarter of fiscal 2011, revenues from the CRDM segment were $1.23 billion (down 8% year over year), the lowest among the past five quarters driven by a decline in both pacing systems (11.75% down to $473 million) and defibrillators (down 6.8% to $722 million).
Slower market growth coupled with pricing pressure was primarily responsible for the decline although the European launch of Protecta implantable cardioverter-defibrillators (ICDs) and growth in AF solutions business provided some cushion.
MEDTRONIC (MDT): Free Stock Analysis Report
Zacks Investment Research
