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St. Jude Medical’s Market Position and Opportunities

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Company overview

St. Jude Medical (STJ), headquartered in Minnesota, was founded in 1976. The company is one of the leading medical device companies in the United States. It manufactures the following:

  • cardiovascular devices for cardiac rhythm management (or CRM)
  • cardiovascular and atrial fibrillation therapy devices
  • neurostimulation and interventional pain therapy devices for the treatment of chronic pain and movement disorders

St. Jude operates as a single operating unit with two divisions:

  • Research and Development
  • Manufacturing and Supply Chain Operations

Revenues are reported under its five product segments shown in the chart below. The chart shows St. Jude Medical’s segment-wise revenues for 4Q15.

revenue segmentation

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Market opportunities

St. Jude Medical provides one of the most comprehensive product portfolios in atrial fibrillation and heart failure therapy. Further, the acquisition of Thoratec in 2015 added a market-leading product portfolio of LVAD (left ventricular assist devices) to the company’s heart failure therapy product segment.

The company’s neuromodulation device segment has the opportunity to expand in the $1.6 billion chronic pain market worldwide. That market is highly underpenetrated and is expected to witness 6%–8% worldwide growth in 2016. The diagram below provides 2016 growth estimates for the device market in which the company operates. These estimates exclude any foreign exchange impact.

market opportunity

The company’s global market opportunity in 2016 is expected to exceed $23 billion with mid-single-digit growth.

St. Jude Medical is undergoing a number of clinical trials and approval procedures for new innovative devices it wants to introduce into these markets. The company has a leading portfolio of chronic pain therapies. With the approval of DRG (dorsal root ganglion) therapy in February 2016, the company has expanded its offerings and is expected to gain higher market share.

St. Jude is also the market leader in the AF (atrial fibrillation) device category. It’s expected to introduce advanced mapping systems and catheters in the near future. LVAD and CardioMEMS provide strong growth opportunities in the heart failure therapy areas.

Some of St. Jude Medical’s major competitors include Medtronic (MDT), Boston Scientific (BSX), and Edwards Lifesciences (EW). Investors can invest in the Health Care Select Sector SPDR ETF (XLV) to seek exposure to St. Jude Medical. XLV holds ~0.64% of its total holdings in STJ.

In the next part, we’ll look at St. Jude’s Surround AF strategy and whether it’s helping growth.

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