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St. Jude, Medtronic offer slightly different views on future of cardioverter defibrillators

Chief executives at the medical device companies assessed the market for implanted cardioverter defibrillators following a critical medical-journal article and a probe by the Department of Justice.

Two chief executives at two of the biggest medical device companies offered different opinions in recent months about the impact of an article about ICDs (implanted cardioverter defibrillators), and a Department of Justice investigation into these products.

Earlier this week, Little Canada-based St. Jude Medical CEO Daniel Starks was questioned about the impact of a Journal of American Medical Association article that described a study in which 22.5 percent of patients were implanted with ICDs when there was no evidence that they needed to be. Starks was also asked to comment on the effect of the government’s investigation into ICDs. Starks, who was answering questions from analysts after announcing the company’s first-quarter earnings call, said the following, according to a transcript of the April 20 call:

“The short answer is that those issues are very small issues, Michael [Weinstein, the JP Morgan analyst who asked the question], with little impact on the global CRM [cardiac rhythm management] market. As we’ve mentioned, partly in the last call and partly at the Feb. 4 conference, when you look closely at the percent of the available population that is potentially impacted by the JAMA article, it amounted to just a very small percent of the total opportunity and really was not material on a total global basis when we look at the anticipated growth rate of the global CRM market.”

However, just two months ago, Medtronic’s chief executive Bill Hawkins acknowledged that Medtronic had been affected by the article and the DOJ investigation in its quarterly performance. Hawkins responded this way, according to a transcript of the Feb. 22 call:

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“So on the ICD, yes, the market was, this quarter, down about 1 percent. And the U.S., we think that there has been some sort of short-term impact because of the JAMA and the DOJ. I think that that is a short-term impact; I think that hospitals are having to adjust a little bit to making sure that they are in conformance with the appropriate guidelines. But I’d take a step back. I continue to be encouraged that this is a large patient population. It is a big market opportunity and I think we’re in just in a little bit of an air pocket here that’s a result of the reaction to the JAMA and the DOJ article.”

The responses from St. Jude Medical and Medtronic were similar in that both agree that there is a large patient population that will benefit from ICDs. However, while Medtronic acknowledged that ICD sales in the United States were hurt, St. Jude, on the other hand, appears unaffected. In fact, Michael Rousseau, St. Jude’s group vice president responsible for Cardiac Rhythm Management and U.S. divisions, said that some hospitals are taking longer to process orders and have probably increased scrutiny, but there haven’t been any “significant or material impact to the overall market.”

In general, these manufacturers of new innovative medical devices have fared differently in ICD performance, with St. Jude’s ICD sales doing better than its in-state rival. St. Jude’s ICD revenue in its first quarter ended April 4 was $465 million, up 3 percent from last year’s first quarter. For Medtronic, worldwide ICD revenue of $735 million declined 2 percent in the quarter ended Jan. 28.