Medtronic 2013 Annual Report Download - page 52

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75732me_10K.indd 37 6/25/13 6:39 PM
Table of Contents
year. The U.S. and Western Europe markets were adversely affected by a number of factors, including competition and pricing
pressures. The continued acceptance of our shock reduction and lead integrity alert technologies, our recently launched Viva/Brava
family of CRT-D devices, increasing lead-to-port ratios, and share gains partially offset the decline in net sales of our defibrillation
system products. Worldwide net sales of our pacing system products declined primarily due to unfavorable foreign currency
translation, declines in the U.S. market caused by pricing pressures and declining implant volumes, and to a lesser extent, pricing
pressures in the Western Europe market. The decline in net sales of our pacing system products was partially offset by international
share gains driven mostly by the launch of our Advisa DR MRI SureScan pacemaker in Japan in the second quarter of fiscal year
2013. Worldwide net sales of our AF Solutions products increased primarily due to the continued global acceptance of the Arctic
Front Cardiac CryoAblation Catheter (Arctic Front) system.
Coronary net sales for fiscal year 2013 were $1.773 billion, an increase of 11 percent over the prior fiscal year. The increase in
Coronary net sales was primarily due to the continued strength of our Resolute Integrity drug-eluting coronary stent. We launched
Resolute Integrity in Japan in the second quarter of fiscal year 2013 and in the U.S. in the fourth quarter of fiscal year 2012.
Resolute Integrity’s deliverability and unique diabetes indication has continued to receive strong customer acceptance and we
received U.S. FDA approval for longer lengths of this product in the fourth quarter of fiscal year 2013. Growth was partially offset
by unfavorable foreign currency translation as well as pricing pressures and competitive launches in Western Europe.
Structural Heart net sales for fiscal year 2013 were $1.133 billion, an increase of 4 percent over the prior fiscal year. The increase
in Structural Heart net sales was primarily driven by strong sales of transcatheter aortic heart valves and growth in our
cardiopulmonary product lines driven principally by a competitor's supply disruption. Growth was partially offset by unfavorable
foreign currency translation and slowing market growth rates and increased competitive pressure for transcatheter aortic heart
valves in Western Europe.
Endovascular net sales for fiscal year 2013 were $867 million, an increase of 11 percent over the prior fiscal year. The increase
in Endovascular net sales was led by new product launches. Growth was driven by the Endurant Abdominal Aortic Aneurysm
(AAA) Stent Graft System, which launched in Japan in the third quarter of fiscal year 2012, as well as the Valiant Captivia Thoracic
Stent Graft System, which launched in the U.S. in the fourth quarter of fiscal year 2012 and in Japan and China in the first quarter
of fiscal year 2013. Strong worldwide sales of our peripheral stent products and drug-eluting balloons also contributed to the
growth. Growth was partially offset by unfavorable foreign currency translation and increased competitive pressure in the U.S.
The Cardiac and Vascular Group net sales for fiscal year 2012 were $8.482 billion, an increase of 4 percent over fiscal year 2011.
Foreign currency translation had a favorable impact on net sales of approximately $174 million compared to fiscal year 2011. The
Cardiac and Vascular Group’s performance was a result of strong net sales in Structural Heart, Endovascular, and AF Solutions,
and solid growth in CRDM pacing systems and Coronary, partially offset by declines in CRDM defibrillation systems. Additionally,
the Cardiac and Vascular Group’s performance was favorably affected by strong international results across all businesses and
new products, with growth partially offset by the macroeconomic downturn, pricing pressures due to competition, slowing of
certain market growth rates, and the trend of increased hospital ownership of physician practices. Additionally, the ICD utilization
article in the January 2011 Journal of the American Medical Association and the hospital utilization investigation by the DOJ had
an effect on the U.S. ICD market throughout fiscal year 2012. See the more detailed discussion of each business’s performance
below.
CRDM net sales for fiscal year 2012 were $5.007 billion, which was flat compared to fiscal year 2011. Worldwide net sales of
our defibrillation system products declined primarily due to the decline in the U.S. market throughout fiscal year 2012. The U.S.
market was affected by a number of factors, including the ICD utilization article in the January 2011 Journal of the American
Medical Association, the hospital utilization investigation by the DOJ, and the trend of increased hospital ownership of physician
practices. In the fourth quarter of fiscal year 2012, we began to see signs of stabilization in the U.S. ICD market. The decline in
net sales of our defibrillation system products was partially offset by net sales growth from the Protecta SmartShock (Protecta)
family of devices, which were launched in the U.S. during the fourth quarter of fiscal year 2011. Worldwide net sales of our pacing
system products increased in fiscal year 2012 primarily due to growth in the U.S. for the Revo MRI SureScan pacing system,
which was launched in the fourth quarter of fiscal year 2011, as well as growth, generally, outside the U.S. Additionally, worldwide
net sales of our AF Solutions products increased primarily due to the continued acceptance in the U.S., and in certain markets
outside the U.S., of the Arctic Front system.
Coronary net sales for fiscal year 2012 were $1.598 billion, an increase of 9 percent over fiscal year 2011. The increase in Coronary
net sales was primarily due to growth outside the U.S., as well as the fourth quarter fiscal year 2012 U.S. launch of Resolute
Integrity. Additionally, the acquisition and integration of Ardian, which was acquired in January 2011, contributed to the net sales
growth.
Structural Heart net sales for fiscal year 2012 were $1.094 billion, an increase of 12 percent over fiscal year 2011. The increase
in Structural Heart net sales was primarily due to growth outside the U.S, driven by the acceptance outside the U.S. of our CoreValve
34