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June 22, 2010
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Medtronic (MDT) strengthened its spinal product portfolio in the US with the launch of Kyphon ActivOs 10 Bone Cement with Hydroxyapatite. The product is meant to treat patients with vertebral compression fractures (VCFs) who are undergoing minimally invasive surgery with kyphon balloon kyphoplasty.
The Kyphon products were included in the company’s portfolio following the acquisition of Kyphon Inc. during the third quarter of fiscal 2008. In addition to Kyphon ActivOs 10 Bone Cement with Hydroxyapatite, Medtronic has another bone cement product in its portfolio, Kyphon HV-R Bone Cement. Hydroxyapatite is chemically and structurally similar to human bone, which is used in dental and orthopedic surgeries.
Medtronic earns revenues from seven divisions - Cardiac Rhythm Disease Management (CRDM), Spinal, CardioVascular (CV, combined Cardiac Surgery and Vascular segments), Neuromodulation, Diabetes, Surgical and Physio-Control. During fiscal 2010, these segments accounted for 33%, 22%, 18%, 10%, 8%, 6% and 3%, respectively, of total revenues.
Medtronic’s spinal products include thoracolumbar, cervical and antibody devices, including the Minimal Access Spinal Technologies (MAST) along with bone growth substitutes, and devices for vertebral compression fractures and spinal stenosis.
Contribution of the Spinal segment to total revenues has increased over the past few years. This segment generated revenues of $2.5 billion (20% of total revenues) in fiscal 2007, which increased to $3.5 billion in fiscal 2010 (22% of total revenues).
Medtronic, a leading player in the medical devices market, has grown through several acquisitions in the past few years. However, a deep product pipeline and strong R&D program are responsible for the organic growth of the company. Recent product launches should strengthen its portfolio further, which is likely to boost its top line in the forthcoming period.
We have a Neutral recommendation on the stock.
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