* Share losses in ICD market have stabilized
* Stent market share has increased
* Spine businesses weakened
CHICAGO, April 2 - Medtronic Inc's share in the market for implantable heart devices known as ICDs -- the company's biggest and most important market -- has finally begun to stabilize after many months of steady losses, its chief executive said.
But weakness in some of its other businesses persists, Chief Executive William Hawkins said on Thursday.
"It has been impacted to some degree by the economy," he said. He noted that growth of Medtronic's bone graft product called Infuse, which had been growing at an annual rate of 15 percent with sales reaching near $1 billion, "came to a grinding halt" in recent quarters when insurers refused to pay for uses not approved by health regulators.
Shares of Medtronic have been trending lower and last month fell to their lowest price since 1998, something Hawkins blamed on uncertainty about healthcare reform and concerns about corporate tax policy.
"Add that on top of concerns about the fact that we have seen Medtronic's market shares just being whittled away. What's going to turn our stock around? It's going to be stabilizing markets and modest growth. Our guidance of 5 to 8 percent (annual sales growth) is a modest assumption. What we need to do, and we're doing it, is to stabilize the businesses."
If sales come in at the low end of that range, he said delivering annual double-digit profit growth "will be harder."
Management cut its outlook in January from 9 to 11 percent annual sales growth.
Medtronic, the world's largest stand-alone medical device manufacturer reported fiscal 2008 sales of $13.5 billion.
Hawkins said he hopes to reclaim some of its lost ICD share with innovative products.
"We did lose share ... that has stabilized and now arguably we're on the offensive, Hawkins said.
He said the recall of its Fidelis leads, the wires that run from the device to the heart, cost the company 3 to 4 percentage points of market share in recent quarters. The defective leads were linked to 13 deaths.
Hawkins said he believes that results from a Medtronic-sponsored clinical trial called REVERSE will help expand the market for its heart rhythm management devices to patients with mild heart failure.
Its heart stent market, where Medtronic had been losing share, has improved.
"We are increasing our share this quarter," he said.
Medtronics fiscal fourth quarter ends April 30.
Medtronic did four acquisitions in the past year that have taken it into new treatment areas.
One is the treatment of atrial fibrillation, a common heart arrhythmia, where it will compete with Johnson & Johnson and St. Jude Medical.
The other is transcatheter heart valves, a procedure pioneered by Edwards Lifesciences, to treat aortic stenosis using a catheter to replace the valve instead of open heart surgery.
Those will likely be growth drivers for Medtronic over the longer term, but the company is well behind competitors.
But Hawkins did not rule out smaller acquisitions, nor did he dismiss talk that Medtronic would get into the market for dental implants.
He noted that Infuse has an indication for certain oral maxillo-facial and dental regenerative bone grafting procedures.
"So we are selling to that customer base. I will say it is a very different business than what we do...The distribution model is very different. It's not an area that's necessarily a clean fit," he said.
Asked about other spaces in medical technology, he said: "Hips and knees business would be a natural fit for Medtronic, but that's not a reason in and of itself to move into that space. There are a number of factors you have to look at -- the economics, the growth, the competitive landscape."
Medtronic shares closed up 18 cents to $29.76 on the New York Stock Exchange. They traded in a range between $56.97 and $24.04 during the past 52 weeks.