ANALYST: ST. JUDE COULD PROFIT FROM MEDTRONIC AD CAMPAIGN

Medtronic's implantable cardioverter-defibrillator (ICD) DTC ad campaign helps St. Jude Medical more than it helps Medtronic, according to Lazard Capital Markets. But there is some debate about that among market watchers.

Lazard in January had predicted that shares of St. Jude would appreciate more than Medtronic's as a result of Medtronic's DTC initiative.

However, critics of that theory have cited three counterarguments:

Medtronic has gained more net ICD share than St. Jude has in the last few quarters;

Medtronic is the brand that both patients and doctors turn to first in times of safety concerns; and

Medtronic has more than half the total market (52 percent), so a market recovery will benefit Medtronic the most.

But Lazard maintains its position, saying St. Jude derives 33 percent of its revenue from ICDs, whereas Medtronic gets just 23 percent of its revenue from the devices, Lazard analyst Alexander Arrow said.

In its reexamination of the issue, Lazard has "computed the growth implications for each company under a spectrum of possible consumer behavior impacts," Arrow said.

If the new analysis is accurate, then "St. Jude is, counterintuitively, a more effective investment vehicle than Medtronic to capture the benefit of Medtronic's ad spending," Arrow said.

"The public is likely to remember the pro-ICD message but unlikely to insist on a particular brand of manufacturer," he said. This is especially applicable since "ICD brand choice lies in the hands of the electrophysiologist, not the patient."

( http://www.fdanews.com/ddl/34_10/ )