Can Innovation Drive St. Jude Medical’s Growth?
St. Jude's Valuation Story: Growth Drivers and Future Trends
Innovation strategy
St. Jude Medical’s (STJ) Surround AF (atrial fibrillation) strategy focuses on providing physicians a product portfolio for targeting the treatment of patients. This growth strategy is driven by innovation. The company focuses on innovations that will help increase patient outcomes, reduce costs, and thus provide value to customers. In 2015, St. Jude Medical spent $676 million on innovation, representing approximately 12% of its total sales.
Recent clinical trials
St. Jude Medical’s Portico Re-sheathable TAV (transcatheter aortic valve) system is going through a US IDE (investigational device exemption) trial. The study analyzes the effectiveness and safety of the system when delivered transfemorally. It also analyzes other alternative delivery mechanisms for high risk and extreme risk patient groups. Medtronic (MDT) and Edwards Lifesciences (EW) are St. Jude’s major competitors in this therapy area.
Thoratec’s MOMENTUM 3 is a study of MagLev technology. It began in 2014 for patients undergoing MCS (mechanical circulatory support) therapy with HM3 (HeartMate 3). MCS therapy is a support system that takes blood from the heart and pumps it back into circulation in case of a weakened heart. The study aims to establish the non-inferiority of HM3 to HMII LVAS (left ventricular assist system) by evaluating the effectiveness and safety of the device for the treatment of advanced left ventricular heart failure. HeartMate 3 is a hemodynamic support system.
The HeartMate PHP system is another medical device in a clinical trial. The device is used during high-risk percutaneous coronary interventions (or PCI) for patients with severe coronary artery disease but stable cardiovascular function. The HeartMate PHP system is a catheter-based heart pump that provides temporary hemodynamic support. It won the European CE (Conformité Européene) Mark in July 2015.
Abiomed’s (ABMD) Impella 2.5 is a competing product that’s also under clinical study.
Investors can invest in the Guggenheim S&P 500 Equal Weight Health Care ETF (RYH) to gain exposure to St. Jude Medical.
Next, let’s look at St. Jude’s heart failure segment, including its performance and opportunities.
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