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What Investors Can Expect from Medtronic

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Part 13
What Investors Can Expect from Medtronic PART 13 OF 15

Medtronic Aims to Improve MRI Access for These Devices

MRI access

To counter pressures generated by increasing competition from peers such as Abbott Laboratories (ABT), Boston Scientific (BSX), and St. Jude Medical (STJ) in the cardiac rhythm and heart failure disease management (or CRHF) business, Medtronic (MDT) has planned to make devices in its lower technology tiers, magnetic resonance imaging (or MRI) compliant. This move would standardize MRI-compliance as a key device characteristic, regardless of the price paid by customers. Since the accuracy and forecasting capacity of the new 3Tesla MRI machine is greater than that of the 1.5Tesla MRI machines, Medtronic also aims to secure U.S. Food and Drug Administration (or FDA) approval for its CRHF implantables as 3Tesla MRI compliant devices.

Medtronic Aims to Improve MRI Access for These Devices

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Quadripolar cardiac resynchronization therapy pacemakers

On May 10, 2017, Medtronic announced that it had secured FDA approval for its quadripolar cardiac resynchronization therapy pacemakers (or CRT-Ps), which could help improve therapy delivery for heart failure patients. The company is currently in the early launch phase for this product. The low power CRT-P segment is one of the few areas in the implantables business where Medtronic doesn’t enjoy a clear market-leading position. However, the company expects to remedy this situation with the introduction of features such as VectorExpress and AdaptivCRT in the low power CRT-P segment.

High power implantables

Medtronic is also focused on developing and launching 1.5Tesla and 3Tesla MRI-safe high power cardiac resynchronization therapy (or CRT) devices. The company currently has FDA approval for around 70% of its implantable cardioverter defibrillator (or ICDs) for being MRI-safe. However, around 20% of the company’s CRT defibrillators (or CRT-D) were MRI-safe in 1Q17. Thus, the company has significant scope to improve MRI-compatibility for its CRT-D products and then also expand the label to tolerate 3Tesla MRI scans. Expansion in MRI access is expected to boost Medtronic’s share prices as well as those of the Vanguard Dividend Appreciation ETF (VIG). Medtronic makes up about 3.1% of VIG’s total portfolio holdings.

In the next article, we’ll discuss major growth drivers for Medtronic’s CHRF implantables business in greater detail.

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