Medtronic Puts Woes in Past With Soaring Sales in Diabetes Unit
(Bloomberg) -- Medtronic Plc’s diabetes breakthrough is finally starting to pay off.
The diabetes division led the medical-device company’s sales growth last quarter, with a 17 percent increase. The gain followed more than a year of mishaps that had prevented Medtronic from meeting surging demand for its latest device -- an artificial pancreas that takes over much of the constant attention diabetics must devote to controlling their blood sugar levels.
“I do expect this to be a pivot point in many ways for diabetes,” Chief Executive Officer Omar Ishrak said in a telephone interview following the company’s quarterly earnings call. He expects the division to produce double-digit sales growth.
When Medtronic won approval from U.S. regulators for the world’s first artificial pancreas in September 2016, it became a victim of its own success: its manufacturing wasn’t ready.
A shortfall in the production of sensors used in the new product, called MiniMed 670G, and other Medtronic diabetes devices exacerbated the supply imbalance. The company put some patients on another device while they waited for the new one, but lost some full-price sales as a result.
Now, 18 months after the device was approved, the company says it will be able to meet demand. It also plans to expand into new markets with additional products based on the same sensing technology after addressing manufacturing constraints, company officials said on the earnings conference call.
With $584 million in sales in the fiscal third quarter ended Jan. 26, the diabetes division accounts for about 8 percent of revenue. On Tuesday, the good news from the division wasn’t enough to lift the shares. They declined 1.8 percent as Medtronic reported lower-than-estimated profit margins for the quarter, and disappointed some investors by not boosting its full-year forecast.
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