Spine Market Up, Medtronic Looses Share

Medtronic, Inc.’s reported spine revenue was flat, on a constant currency basis, during the last quarter. Total spine sales were $744 million.

Core spine was also flat. A company announcement on February 18, 2014, said that if declining balloon kyphoplasty sales were excluded, core spine sales grew in the low single-digits. BMB (Infuse) revenue declined by 1%, as the business is seeing signs of sequential stability in underlying demand and faced a favorable comparison due to a supply constraint in the prior year period.

New Launches Expected

Management told analysts that the company expects to launch their next generation Prestige LP artificial cervical disc in the U.S. in summer 2014 and enhance their interbody and cervical plate offerings with a series of launches in the next fiscal year.

Losing Market Share

The company estimates the global and U.S. spine markets continued to show signs of stability.

Glenn Novarro of RBC Capital Markets, LLC, estimates that Medtronic lost 80 basis points of U.S. core spine market share, compared to a 50 basis point share loss in the last quarter.

Spine Market Growing

Novarro said worldwide spine market growth appeared to be up approximately 3% during the quarter on a constant currency basis. “We believe the underlying health of the worldwide spine market was slightly improved on a sequential basis, owing to slightly better underlying U.S. spine market trends.” He estimates that the U.S. spine market was up about 2% during the quarter, while international spine market growth was in the mid-to-upper-single-digits. He says NuVasive, Inc. was one of the largest U.S. share gainers in the quarter while DePuy/Synthes and Medtronic continued to cede market share.

After the Medtronic results, Novarro says he continues to see evidence pointing to a stable to slightly improving U.S. spine market. “However, part of the improvement in [fourth quarter] U.S. spine trends could have been due to a pull-forward of procedures to [the second half of 2013] from 2014, owing to Obamacare concerns. We saw this dynamic occur in other orthopedic markets like hips/knees. Accordingly, we will continue to look for evidence of a more sustainable uptick in U.S. spine market growth in 2014.”