1 Industry a Heartbeat Away From Disaster: Medtronic, Inc. (MDT), St. Jude Medical, Inc. (STJ)

Page 1 of 2

Earnings season isn’t over, but the quarters from health care companies that have already reported have given us a great look at how the medical device sector’s faring. Numerous companies have reported good results, but one constant remains: The cardiac rhythm management, or CRM, industry — which handles everything from pacemakers to defibrillators — is facing off with a tough market. Sales are falling across the industry yet again, perpetuating a worrying trait that hasn’t eased up after tough results in the third quarter of 2012, as well.

Is there hope for a turnaround for companies in the CRM space, or is this an industry on the decline that you should keep your investment far away from?

St. Jude Medical, Inc.Sales on the decline
Just a few years ago, the CRM market was on the rise, growing by double digits. Now, however, the market across the world has dried up — in both the U.S. and internationally, sales are falling for CRM products.

St. Jude Medical, Inc. (NYSE:STJ) has traditionally been among the powers in this business, but the company’s reliance on CRM sales has come back to bite it. St. Jude’s CRM division supplies around 50% of total company sales, and when that division’s suffering, it’s tough sledding for the company.

St. Jude’s CRM department has already been on the downslide, with sales falling 4% on a constant currency in the third quarter — a significant year-over-year slide. With the company’s full-year results now out, we can see just how hard the division has fallen: CRM sales at a constant currency fell 5% year over year in St. Jude’s fourth quarter, near the high end of the business’ guidance, with sales down 3.5% over the course of the full year.

Fortunately, St. Jude’s largest segment in the CRM business — its ICD (or implantable cardioverter defibrillator) segment — hasn’t been hit quite as bad. Currency issues have really plagued this business, as the ICD segment only lost 2% over the course of the year at a constant currency. Falling pacemaker revenue has really hit St. Jude hard, but this company is hardly alone in its CRM troubles.

Boston Scientific Corporation (NYSE:BSX) doesn’t rely as heavily on CRM sales as its rival, but its sales are no less concerning. After losing 4% in its CRM revenue for the third quarter, Boston Scientific’s business dropped another 4% in Q4 for a total loss of 7% year-over-year for 2012.

Even the industry’s biggest major player, Medtronic, Inc. (NYSE:MDT) , has witnessed its CRM business losing sales, particularly among pacemakers. Things aren’t so good in this sector, but why are sales falling — and what should you account for in the future?

What the future holds for the CRM business
The CRM market is already mature to the point of saturation in economies such as the U.S. and Europe. New patients for implantable devices will inevitably arise due to rising obesity rates and an aging population in advanced economies — two major indicators for heart problems. However, with many patients already being treated with such devices, finding growth will remain a challenge. The Millennium Research Group has predicted little growth from the CRM market through 2016, particularly with prices falling in advanced economies.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!