CRM performance in 2015
In 4Q15, St. Jude Medical’s (STJ) CRM (cardiac rhythm management) segment sales were $580 million. That’s a decline of ~10% on a YoY (year-over-year) basis. It includes the negative impact of ~$40 million due to currency headwinds. CRM sales were hit primarily due to a weakness in the US market from MRI (magnetic resonance imaging) product gaps.
The ICD (implantable cardioverter defibrillator) device suffered a sales decline of ~11%. Pacemaker sales declined by approximately 7%. In 2015, international CRM sales continued to be strong due to a successful CRM product portfolio in Europe and Japan.
In 3Q15, St. Jude launched its Assurity MRI-safe pacemaker in Japan. Medtronic (MDT), GE Healthcare, a subsidiary of General Electric (GE), and Boston Scientific (BSX) are St. Jude Medical’s major competitors in the CRM device segment. Investors can consider the iShares Russell Mid-Cap (IWR) for exposure to St. Jude. STJ accounts for ~0.27% of IWR’s total holdings.
In 2016, the global market for CRM devices is expected to be more than $6.6 billion. But the continued impact of product gaps is going to impact CRM growth in the United States. International sales are expected to register a steady growth. St. Jude Medical is set to launch a number of devices in the United States and in international markets in 2016 and 2017. The diagram below depicts the CRM product pipeline.
St. Jude Medical plans to launch a number of products in 2016 and 2017. That might help the CRM segment regain market share and revive revenue growth. The company is planning to launch MRI-labeled devices to eliminate product gaps. Breakthrough products such as Multipoint CRT pacing and Nanostim, a leadless pacemaker, is expected to generate significant demand and revenues in the second half of 2016.
With the growth of St. Jude’s AF (atrial fibrillation) and HF (heart failure) product segments, it expects to build momentum in the CRM device segment. It also expects to benefit from various collaborations with customers to provide value-based comprehensive services.
Now let’s look at St. Jude’s Thoratec acquisition and the impact on growth potential.