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St. Jude Medical (STJ) |


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WIKI ANALYSISSt. Jude Medical (NYSE:STJ) makes devices for cardiovascular and neurological conditions, including mechanical heart valves, pacemakers, and catheters. The company generates the majority of its revenue from its Cardiac Rhythm Management (CRM) division, which makes implantable cardiac rhythm devices (ICDs) and pacemakers. The company earned $4.7 billion in revenue and $777 million in 2009.[1]
St. Jude is dependent on the market for implantable cardiac defibrillators; roughly one-third of the company's revenue came from its ICD business. Sales of ICDs have have stagnated in recent years. Several studies suggest that a majority of patients eligible to receive ICDs don't actually receive referrals for the devices from their doctors, implying that the market for ICDs may be smaller than initially estimated by ICD manufacturers.
Company Overview
Business Segments[2]St. Jude has four main business segments: Cardiac Rhythm Management (CRM), Cardiovascular, Neuromodulation, and Atrial Fibrillation.
Business Growth
FY 2009 (ended January 2, 2010)[1]
Trends and Forces
Medicare approval drives neuromodulation segmentHealth coverage is an important determining factor when patients and doctors choose among various treatment options. Medicare coverage is particularly significant in that it directly affects over forty million Americans, how much patients have to pay for St. Jude's products, and how much the company will receive in payments from Medicare. Medicare and other third party payors are emphasizing more cost-effective medical devices, by limiting the reimbursement they will cover. Furthermore, even if a new medical device is cleared by the FDA, St. Jude faces limited demand for the device until Medicare and other payors approve the device for reimbursement.
Saturation of Implantable Cardiac Rhythm Devices (ICD) MarketICDs are stopwatch-sized devices that monitor the heart and deliver appropriate therapy when an abnormal heart rhythm is detected. St. Jude is the second largest producer of ICDs with 20% market share for ICDs and over $1.5 billion in ICD sales.[3] ICDs usage has grown substantially over the years, due to trial results which showed ICDs reduced death by 23% in people with moderate heart failure compared to those who did not receive ICDs. Analysts are concerned, however, that initial market estimates of market size may have been over stated. Growth has been well below industry projections and a study suggests that only one in four patients that are eligible for the device actually receive referrals from their primary care physicians .[4]
Competition St. Jude faces competitors in each of its business segments:[5]
Cardiac Rhythm Management (CRM)St. Jude is one of the three principal manufacturers and suppliers in the global Cardiac Rhythm Management (CRM) market. The company's two larger competitors in this market are:
Atrial Fibrillation TherapyThe atrial fibrillation therapy area is broadening to include multiple therapy methods that include drugs, delivery of diagnostic and ablation catheters, and implantable fibrillators among others. The company's primary competitors include:
NeuromodulationIn the neuromodulation market, St. Jude is one of three principal manufacturers of nerustimulation devices. The principal competitors are Boston Scientific (BSX) and Medtronic (MDT). The company also faces competition from smaller competitors:
References


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