Medical device maker Medtronic posts higher quarterly earnings
Aug 21, 2012 (Menafn - The Commercial Appeal - McClatchy-Tribune Information Services via COMTEX) --Medtronic Inc.'s first-quarter profits and revenues were up over the same period last year despite falling sales in its Memphis-based spinal business unit.
The medical device maker on Tuesday reporting profits of 864 million in the quarter, which ended July 27, an increase of 5 percent over last year.
Overall revenue rose about 2 percent to slightly more than 4 billion, the company said, but revenues from spine products slipped to 786 million, a 5 percent decline from last year. That decline was driven by a 19 percent decline in sales of the company's much-maligned Infuse bone graft.
Infuse was the target of a Senate investigation last year after the company was accused of paying doctors who handled clinical trials for the material. Those doctors were later accused of hiding safety concerns and certain side effects. Published medical papers have since linked Infuse to certain types of cancer.
Infuse sales were about 800 million in fiscal year 2011 but fell to 624 for fiscal 2012. Infuse sales in the first quarter of 2013 were 141 million, down from 174 million from the same time last year.
Sales in Medtronic's core spinal division -- responsible for making spine surgery devices -- fell to 645 million in the first quarter from 651 million last year.
The company, however, said it "saw improvement" in the unit as "new products reached greater scale and new procedural innovation drove increased surgeon interest in Medtronic therapies."
Medtronic CEO Omar Ishrak said the company is working with Food & Drug Administration officials to clear up violations spelled out in a July warning letter to the company concerning some of its implantable drug-delivery devices. The FDA said in the letter that 567 complaints have been filed and not closed against Medtronic's SynchroMed II drug infusion pump. Reports to the FDA show that the pump can corrode, which removes gear teeth in the device and stop drug delivery. The company told doctors about the problem but the FDA said it wasn't enough.
Further FDA analysis predicts additional "patient injuries resulting from device failure due to motor corrosion."
The FDA said the company also needs to establish "adequate procedures for receiving, reviewing and evaluating complaints by a formally designated unit."
"We take these findings very seriously and we are working to address the FDA's observations and make the necessary improvements," said Medtronic spokesman Donna Marquard. "For most of the observations noted in their inspection, the FDA stated that our proposed corrective actions appear appropriate pending a follow-up inspection to evaluate implementation and effectiveness."
Medtronic's overall financial performance was basically in line with Wall Street estimates. Looking ahead to next quarter, Leerink Swann analyst Danielle Antalffy said recently launched products, especially new drug-eluting stents, should help "offset weaker-than-expected second quarter market dynamics" for the company's medical devices units.
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