Medtronic says can hit targets even if spine slows

* Confirms fiscal 2011 EPS, revenue targets

* Aims to diversify into emerging markets, technologies

By Susan Kelly

CHICAGO, June 7 (BestGrowthStock) – Medtronic Inc (MDT.N: ) said a
focus on faster-growth emerging markets will help it hit its
financial targets this year even if its sluggish spine and
heart rhythm device businesses come up short.

Speaking to analysts in New York on Monday, company
executives also touted a pipeline of more than 60 new device
and surgical products slated for launch, including an MRI-safe
pacemaker, new spinal technologies and a next-generation sensor
for continuous glucose monitoring to manage diabetes.

“We are intentionally and consciously focused on
diversifying our portfolio,” Medtronic Chief Executive William
Hawkins said in a presentation that was web cast.

Medtronic reiterated its fiscal 2011 goals for earnings of
$3.45 to $3.55 per share on revenue growth of 5 percent to 8
percent excluding the impact of currency fluctuations, saying
it expects double-digit growth in its cardiovascular,
neuromodulation and diabetes units to help offset more modest
expectations for its cardiac rhythm and spinal businesses.

The company expects revenue in its cardiac rhythm device
business to grow in a range of 2 percent to 5 percent, compared
with 4 percent last year, and growth in its spine business to
accelerate to 4 percent to 7 percent, up from 2 percent.

Both diabetes and neuromodulation, which includes devices
for pain management, are expected to grow in the 9 percent to
11 percent range, roughly similar to the year before.

Growth in cardiovascular products, which include heart
valves as well as stents to open clogged arteries, is seen
tempering slightly to a range of 10 percent to 15 percent.

Costs for new product launches, integration of recent
acquisitions and higher pension expenses will be offset with
continued cost reduction initiatives, Medtronic said.

Facing maturing markets in the developed world, the company
is aiming longer term to generate 20 percent of its revenue
from emerging markets such as China, India, Russia, Latin
America and Africa, up from 7 percent last year.

“We expect our revenue mix from emerging markets to triple
in the next five years. This has been a very fast-growing part
of our business, where we have disproportionately invested over
the last couple of years,” Hawkins said.

Part of the company’s strategy will be to develop products
specifically tailored to local markets, Hawkins said. For
example, the company is establishing a research center in
Western Europe that will develop spinal products for that
market. “We are definitely globalizing R&D,” Hawkins said.

The company will also seek smaller, “tuck-in” acquisitions
to broaden its geographic reach, he said.

Medtronic’s struggling spine business, the only unit to
fall short of company targets in fiscal 2010, is in the last
leg of a three-year turnaround plan designed to revive growth
through new product introductions, expanded biologics
indications and clinical evidence to support balloon
kyphoplasty as the standard of care for spinal compression
fractures.

“We have huge confidence it is going to lead to a
renaissance in our spine business,” said Medtronic Executive
Vice President Chris O’Connell.

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(Reporting by Susan Kelly; Editing by Tim Dobbyn)

Medtronic says can hit targets even if spine slows