amount nearly equal to 2010. Executives attributed the division’s
flat sales to CRM market contraction in the United States.
ICD and pacemaker sales were flat as well, rising a nominal
0.2 percent and 0.8 percent respectively, according to St. Jude’s
2011 annual report. ICD revenue totaled $1.82 billion while pacemaker system sales stood at $1.2 billion. ICD sales drivers included the Unify cardiac resynchronization therapy defibrillator
and Fortify ICD in Japan. Launched in the second quarter of 2011,
both devices are smaller, deliver more energy and have a longer
battery life than conventional devices.
The CRM division’s dismal performance reflects a continued slump
in the U.S. market for heart-related
devices. While the seeds for the
slump were planted well before 2011,
the market slide rapidly deteriorated
during the first three months of 2011,
shortly after the January publication
of a Journal of the American Medical
Association article that questioned the
need for ICDs. The story cited a study
that showed 22. 5 percent of patients
typically fall short of the medical guidelines necessary to receive the
$25,000 devices. The findings did not determine a reason for such a
high rate of non-compliance with the guidelines, but author Sana M.
Al-Khatib, M.D., offered an explanation to The New York Times, blaming the failure on physicians’ lack of knowledge and awareness of
Medicare’s National Coverage Determination criteria. Such ignorance—as startling as it is sobering—certainly contributed to weak
demand for ICDs in the first three months of 2011, but other factors
in place long before the JAMA article was published very well could
explain lower device sales last year.
One such factor was an investigation by the U.S. Justice Department into hospitals’ICD billing to Medicare; another was the
government’s prosecution of St. Jude Medical for allegedly paying kickbacks to entice doctors to implant the company’s pacemakers and defibrillators (the firm agreed in January 2011 to pay
the government $16 million to resolve the allegations).
St. Jude’s CRM sales slipped 2 percent during the second quarter of 2011 (period ended June 30) to $401 million, a frustrating
setback for the company, considering it gained market share from
a 2010 decision by Boston Scientific Inc. to stop ICD shipments
and pull its field inventory in the United States.
“What we see here is that the U.S. CRM market fell into a pot-
hole during the second quarter,” Chairman, President and CEO
Daniel J. Starks griped to investors during a summertime confer-
ence call to discuss the firm’s Q2 results.“Twenty-eight percent of
our sales fell into a pothole.”
Fortunately for St. Jude, that pothole was limited to the CRM
market. The company’s Cardiovascular division experienced explo-
sive growth last year, garnering $1.3 billion in sales, a staggering 29
percent increase compared with 2010. Robust sales of vascular
products and structural heart devices were responsible for the divi-
sion’s skyrocketing growth rate—each posted double-digit sales increases. Vascular product sales jumped 10 percent to $740 million
due to higher demand of vascular plugs and optical coherence tomography products as well as $34.6 million in favorable foreign currency translation. Lower sales of the company’s Angio-Seal active
closure devices prevented further gains in vascular product revenue.
Structural heart device sales ballooned 63. 7 percent to $597.3
million. Executives attributed the surge to vigorous sales of AGA
ciently, mimicking the performance of a healthy aortic heart valve
and limiting tissue abrasion through stent-to-leaflet contact.
St. Jude’s Atrial Fibrillation (AF) division posted solid gains last
year, but it couldn’t match the upsurge in the Cardiovascular unit.
AF sales totaled $822 million, an increase of 16 percent compared
with 2010. On a constant currency basis, AF product sales increased 12 percent in 2011.
Sales drivers in this unit included the EnSite Velocity System
and related connectivity tools (EnSite Connect, EnSite Courier and
EnSite Derexi modules) as well as Safire BLU and Therapy Cool
line of EP irrigated ablation catheters.
The Therapy Cool Path Duo and Safire BLU Duo are sterile,
single use 7 French catheters constructed of thermoplastic elastomer material and four noble metal electrodes. The catheters
have a through-lumen connected to open conduits at the 4-mil-
limeter tip electrode for heparinized saline irrigation during the
The catheters are inserted into a blood vessel, usually though
a site in the upper leg or neck. The catheter is manually advanced
through the blood vessels until it reaches the correct location inside the heart. Once the site is identified, the devices deliver radio
frequency energy to destroy small areas of tissue blocking the
heart’s internal electrical signals that cause typical atrial flutters.
St. Jude’s Neuromodulation division trailed its brethren in sales
but still delivered a notable performance in 2011, earning $418.3
million, a 10 percent increase compared with FY2010. International neuromodulation product revenue expanded 30 percent,
driven by gains in the Eon Mini platform and growing market acceptance of the Epiducer Lead Delivery system, which gives physicians the ability to place multiple neurostimulation leads through
a single entry point.
Number of patients with
mechanical heart valves made
by St. Jude Medical Inc.