Although it garnered substantial coverage in last week’s Wall Street Journal, a new study suggesting that pacemakers are useless – and maybe even harmful – for a high percentage of patients who receive them has had little impact on the shares of the top three manufacturers.
Since the results of the study were published June 14, both Medtronic (NYSE:MDT) and St. Jude Medical (NYSE:STJ) are trading up a bit and Boston Scientific (NYSE: BSX) has remained steady. So the study in the Annals of Internal Medicine has proved to be much ado about nothing as far as investors are concerned.
Maybe that’s because some leaders in the cardiovascular field pooh-poohed the results of the study, which was actually a review based on several other large studies. One head of a large heart and vascular institute said the study results wouldn’t case his organization to alter their practice. He said all it demonstrates is the need for additional research into the value of pacemakers in cardiac resynchronization therapy (CRT).
CRT involves the use of battery-powered pacemakers in heart-failure patients to get the heart’s lower chambers, or right and left ventricles, beating in sync. But the study said that of the patients who are eligible to receive CRT devices under current American Heart Association guidelines, nearly 40% don’t benefit from them. The study suggests that in these patients, the devices are not only useless, they are potentially harmful, exposing the patient to the rigors of surgery and risks associated with the devices themselves.
Heart failure, especially at its advanced stages, is a deadly disease affecting approximately 6 million Americans. Annual costs related to heart failure approached $40 billion in 2010. The global CRT devices market is expected to reach at $2.8 billion by 2015 with the North American segment accounting for nearly 40% of the global value.
Medtronic, which owns more than half of the pacemaker market, didn’t appear alarmed by the study results. The company said the study’s statistical method, called a meta-analysis, has limitations and shouldn’t be used for treatment guideline decisions. Medtronic added that multiple randomized clinical trials have demonstrated the significant benefit of CRT in the currently indicated patient population.
Going a step further, the company pointed to a number of studies showing that patients who could benefit from certain implantable cardiac devices are not getting them. For example, a Medtronic study found only 41.2% of patients indicated for a CRT device received one.
Another good reason for the blasé market reaction to the study may be due to the fact the pacemaker market has slowed down, as evidenced by Medtronic’s flat sales of the devices last year. What’s more, pacemakers are now more often being used with defibrillators, which deliver a shock to correct possibly fatal heart flutters. In fact, at Medtronic sales of defibrillation systems topped $3 billion in 2010, up 7% from the previous year.
For investors, the lesson here is that when it comes to studies of drugs and devices, sometimes it’s good to wait until all the facts become available before jumping in our out of a stock.
