Studies have demonstrated that
) Resolute drug eluting stent ("DES") benefits patients suffering
from coronary artery diseases ("CAD") with or without diabetes even
after two years of follow-up. The Resolute Integrity stent had
received approval from the US Food and Drug Administration ("FDA")
in February 2012. With this approval Resolute became the first DES
to be suitable for patients even with diabetes, a condition that
complicates the treatment.
The stent will be of an immense help to diabetics who are at
increased risk of developing CAD with high rates of mortality.
Implantation of stents in patients with high blood sugar levels has
hitherto been fraught with risk. As a result, conventional
treatment in this patient population has been open heart surgery
involving lengthy hospital stays and longer recovery periods
compared to stent implants.
The study compared the effectiveness of Resolute DES in 878
diabetes patients to 1,903 patients without diabetes enrolled in
the clinical program. Results demonstrated low event rates for two
years in both the groups in spite of a higher risk associated with
diabetic patients. Certain adverse events like cardiac deaths
or the necessity of a repeat procedure at two years of follow-up
were low despite the diabetic arm recording a slightly higher
number (9.6% versus 7.1% in the comparison group).
During the most recent quarter, the company recorded a 12%
increase in sales from its Coronary business (globally at constant
currency) with 24% growth in the US based on the successful launch
of the Resolute DES. We are also encouraged to note that the launch
led to doubling of DES market share in the US on a sequential
basis. Pricing in the US DES market in the fourth quarter of fiscal
2012 was relatively stable on a sequential basis but down in the
mid-single digits year over year.
In the international markets, Medtronic gained 150 basis points
of DES share sequentially on the continued strength of Resolute
Integrity, with particularly strong performances in Europe and
China. Continued expansion in the US market coupled with
prospective launch of Resolute in Japan should further bolster the
company's market share.
Acknowledging the challenges at play in its core segments,
Medtronic is in the process of launching several new products that
are likely to drive growth in this difficult scenario. Many of the
recently launched products are contributing significantly to the
top line. Besides, the company is increasing its focus on the
emerging markets. This strategy is also being followed by its peers
St Jude Medical
Over the long term we have a 'Neutral' recommendation on the
stock. Our recommendation corresponds to a Zacks #3 Rank ("Hold")
held in the short term.
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