With a strong presence in the implantable cardioverter-defibrillator (ICD) market, the medical device maker Medtronic (NYSE: MDT ) announced on Monday it would voluntarily suspend distribution of its Sprint Fidelis family of defibrillation leads due to the risk of lead fractures.
Reaction in the market was swift yesterday with Medtronic shares retreating more than 11% by the closing bell. This decision by Medtronic will likely heighten anxiety not only in the company's shareholders, but also in patients who have been implanted with these defibrillation leads. Medtronic has identified five patient deaths in which a Sprint Fidelis lead fracture may have been a possible or likely contributing factor. Patients with Medtronic pacemakers are not affected.
Its ICD business is not the company's only segment that has been met with adversity of late. Medtronic's coronary stent segment also nearly hit a snag when the FDA said that a study that compared the company's Endeavor drug-coated stent with Boston Scientific's (NYSE: BSX ) competing drug-coated stent failed to meet a secondary goal. But last week, an FDA advisory committee recommended the Endeavor for conditional approval. Medtronic is battling to enter the U.S. drug-coated stent market alongside Boston Scientific and Johnson & Johnson (NYSE: JNJ ) .
Shares of Medtronic are now very close to the stock's 52-week low. The decision by the company to suspend its distribution of the potentially faulty Sprint Fidelis leads was crucial for the organization to maintain its overall integrity. Fortunately, the company has a fairly diverse product portfolio and should be able to bounce back from this episode over time.
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