Recently, Volcano Corporation(VOLC) received clearance for marketing its third-generation Eagle Eye Platinum digital IVUS catheter in Japan. While the product was introduced earlier this month, the full launch is expected in the second quarter of 2011. The Platinum digital Intravascular Ultrasound (IVUS) catheter provides better deliverability and the ease of additional radiopaque markers in addition to the features associated with the previous Eagle Eye Gold catheter.
Earlier, in February 2010, the company had received 510(k) clearance from the US Food and Drug Administration (FDA) to market the Eagle Eye Platinum digital IVUS catheter in the US. Volcano has witnessed a strong response since the product’s launch in the US and Europe, which it expects to replicate in Japan as well.
Volcano decided to end its distribution agreement with Fukuda Denshi in Japan, effective December 1, 2010. As a result, Volcano will be able to address 95% of its business in Japan directly. Japan is the largest IVUS market in the world and the establishment of a direct sales force should allow the company to provide more focused services and support the market. We believe the transition to a direct sales force will boost top- and bottom-line growth in the long run.
Revenues during the fourth quarter of fiscal 2010 increased 14.4% year over year to reach $81.2 million with strong growth in IVUS and FM single-procedure disposables. For the full year, revenues increased 29.1% to $294.2 million. During the quarter, Volcano recorded a 17% increase in revenues from IVUS disposables in Japan to $18.9 million.
Medical segment’s revenue grew 15% to $76.1 million during the quarter driven by increased penetration of the IVUS and FM markets. Barring revenues derived from Consoles ($13 million), which remained unchanged, sales from IVUS single-procedure disposables ($44.9 million), FM single-procedure disposables ($13.9 million) and Other business ($4.3 million) witnessed a growth of 15%, 36% and 15%, respectively. Industrial segment recorded a 2% growth in revenues to $5.1 million.
Volcano continues to implement strategies to boost the top line in the IVUS/FM markets. Moreover, the company faces intense competition for its products from Boston Scientific (BSX) and St. Jude Medical (STJ). Although tight hospital budgets could retard growth in the near-term, we believe that increasing demand for the company’s products will support strong results going forward.
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