Medtronic 2010 Annual Report Download - page 28

24 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
• Final timing of resolution of our Mounds View FDA warning
letter. We are currently awaiting the FDA’s follow-up inspection.
The future launch timing of Protecta, Revo MRI SureScan, U.S.
Arctic Front and the Ablation Frontiers’ system of ablation
catheters and RF generators is dependent on the resolution
of our Mounds View FDA warning letter.
Spinal Spinal products include thoracolumbar, cervical, neuro
monitoring, surgical access, bone graft substitutes and biologic
products. Spinal net sales for fiscal year 2010 were $3.500 billion,
an increase of 3 percent over the same period of the prior fiscal
year. Foreign currency translation had a favorable impact on net
sales of approximately $16 million when compared to the prior
fiscal year.
Core Spinal net sales for fiscal year 2010 were $2.632 billion, an
increase of 3 percent when compared to the prior fiscal year.
Growth in the period was primarily driven by further acceptance
of our products for the thoracolumbar region of the spine.
Thoracolumbar net sales growth for fiscal year 2010 was driven by
worldwide net sales of the CD HORIZON LEGACY (CD HORIZON)
and TSRH family of products. CD HORIZON net sales increased
primarily from the increased use of our MAST line of less invasive
technologies in the U.S. and outside the U.S. CD HORIZON is
designed to provide procedural solutions for degenerative,
deformity or trauma applications using color coded implants,
unique minimally invasive instruments and ergonomic designs.
Our market share in the Core Spinal business continues to
experience pressure from the proliferation of smaller, public and
privately held companies competing in the market. Core Spinal
net sales growth outside the U.S. for the year was positively
impacted from our joint venture with Shandong Weigao Group
Medical Polymer Company Limited (Weigao). The joint venture,
which distributes Medtronic’s spinal products and Weigao’s
orthopedic products in China, commenced operations at the end
of the second quarter of fiscal year 2009. In addition, net sales
growth was negatively impacted by the decrease in demand for
Kyphon Balloon Kyphoplasty (BKP) driven in large part by the
vertebroplasty articles in the New England Journal of Medicine. BKP
procedures are used to treat vertebral compression fractures. BKP
using Kyphon instruments is presently used by spine specialists,
including orthopedic surgeons and neurosurgeons, interventional
radiologists and interventional neuroradiologists, who repair
compression fractures of the spine caused by osteoporosis,
cancer, benign lesions or trauma, through minimally invasive
spine surgeries.
Biologics net sales for fiscal year 2010 were $868 million, an
increase of 3 percent when compared to the prior fiscal year.
Growth in the period was primarily driven by strong growth in
other biologics, including MasterGraft and Progenix products. In
addition, INFUSE Bone Graft sales modestly increased for the
fiscal year, but were impacted by the negative mix due to growth
in smaller kits. INFUSE Bone Graft contains a recombinant human
morphogenetic protein, or rhBMP-2, that induces the body to
grow its own bone, eliminating the need for a painful second
surgery to harvest bone from elsewhere in the body. INFUSE Bone
Graft is indicated for use in spinal fusion with certain Medtronic
titanium interbody fusion devices for single level lumbar
degenerative disc disease, augmentations and for localized ridge
augmentations for defects associated with extraction sockets.
Spinal net sales for fiscal year 2009 were $3.400 billion, an
increase of 14 percent when compared to the prior fiscal year.
Foreign currency translation had an unfavorable impact on net
sales of approximately $11 million when compared to the prior
fiscal year. The growth in fiscal year 2009 was partially driven
by the third quarter fiscal year 2008 acquisition of Kyphon,
Inc. (Kyphon).
Core Spinal net sales for fiscal year 2009 were $2.560 billion, an
increase of 18 percent from the prior fiscal year. Growth in the
period was primarily driven by continued adoption of our
products for the thoracolumbar region of the spine. Thoracolumbar
net sales growth for fiscal year 2009 was driven by net sales of
the CD HORIZON family of products outside the U.S., and net
sales growth in the U.S. was augmented by demand for our CD
HORIZON LEGACY PEEK Rod System, which allows for a less rigid
implant as compared to traditional metal rod systems. Net sales
growth in the U.S. was also driven by our MAST family of products,
which includes a comprehensive offering of minimal-access
procedural solutions. Our market share in the Core Spinal business
continued to experience pressure from the proliferation of smaller,
public and privately held companies competing in the market.
Also, Core Spinal net sales growth for the fiscal year was positively
impacted from our joint venture with Weigao. In addition, Kyphon
was acquired in the third quarter of fiscal year 2008; therefore, net
sales for the prior period only included six months of net sales.
Kyphon net sales were driven primarily by BKP.
Biologics net sales for fiscal year 2009 were $840 million, an
increase of 3 percent when compared to the prior fiscal year. This
increase was primarily driven by worldwide net sales growth of
INFUSE Bone Graft in the first quarter of fiscal year 2009. Net sales