Johnson & Johnson Battles St. Jude for Cardiac Mapping Leadership

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Treating irregular heartbeats using medical devices rather than drugs is one of the fastest-growing trends in cardiac care. The use of catheters to deliver either heat or cold to damaged heart tissue where faulty electrical signals are created (a process known as catheter ablation) is prompting a wave of innovation from device makers.

Both Johnson & Johnson's  (NYSE: JNJ  ) Biosense-Webster and St. Jude Medical  (NYSE: STJ  ) are making key investments in products like cardiac mapping to win market share in this growing electrophysiology market.

Tapping rhythms
Atrial fibrillation is a serious and increasingly common heart condition that primarily affects older populations. As a result, aging and longer-living baby boomers are expected to drive the number of Americans with AF from 2 million annually to 50 million by 2050, according to data compiled by the Centers for Disease Control and Prevention.

In those patients, faulty electrical signals cause the heart to skip beats; this makes patients more susceptible to stroke and heart failure. It's a potentially life-threatening condition that has increasingly been the primary or underlying cause of death for over two decades, according to the CDC.

Typically, patients with AF have been prescribed drugs to restore the heart's normal rhythm. Those drugs are either prescribed orally or intravenously, and are delivered in hospitals requiring continuous monitoring. Warfarin is also administered pre- and post-treatment, which is a blood-thinning drug with potentially dangerous side effects.

In cases where drugs either can't restore the rhythm or patients can't tolerate the drug regimen, catheter ablation is increasingly becoming the standard procedure. It's a far less invasive surgical option than Maze procedures, which are done during open heart surgery, and it accounts for 45% of all non-drug AF treatment.

That doesn't mean that it's a simple procedure, of course. The use of catheters to deliver energy or refrigerant to the right spot means that doctors have to navigate, identify, and correct faulty signals -- a process creating multiple opportunities for Johnson & Johnson's Biosense-Webster and St. Jude to sell next-generation solutions designed to simplify the procedure and produce better outcomes.

Adoption of 3D-mapping technologies
Biosense-Webster produces a variety of catheters used in ablation and also markets sophisticated 3-D mapping machines such as the Carto 3 to electrophysiologists, or EPs. The Carto 3 machine is designed to quickly map the heart and provide doctors with a clearer view of both the heart and the catheter tips during surgery. In short, it shows EPs exactly what's happening in the heart during the procedure.

The Carto 3 won FDA approval in 2009. St. Jude has countered with its Ensite Velocity Mapping System. The Ensite system similarly visualizes the heart and catheter during procedures. Instead of using an electromagnetic pad placed under the patient to track the catheter, though, it uses electrode patches placed on the patients skin.

Johnson & Johnson continues to lead with the majority of devices in the field, but St. Jude's Ensite is making inroads given it can be used with any catheter and catheter tip. That gives St. Jude's device an advantage over the Carto 3, which requires EPs use its own catheters. Doctors may prefer mixing and matching catheter brands, either for cost savings or out of personal preference.

Developing new technologies
Both Johnson & Johnson and St. Jude need to continue improving patient outcomes if they hope to win future sales. There are questions regarding recurring AF in patients treated with catheter ablation, suggesting that further innovation remains necessary. According to long-term studies concerning patients where ablation succeeded in fixing AF at one year, more than 40% ended up have a recurrence five years following the treatment.

This suggests that new technology may be the key to winning market share. St. Jude's acquisition of Endosense in August is an example of how the two companies may need to look to emerging device makers for that edge. The Endosense deal gives St. Jude promising contact force technology that can help EPs determine if they've adequately corrected faulty electrical signals. St. Jude plans to integrate Endosense's technology into its Ensite device over time.

Foolishly growing opportunity
The EP market is expected to grow from $2.5 billion a year to $5.5 billion a year by 2019 as aging boomers drive procedure demand. This suggests that there is plenty of opportunity for Johnson & Johnson's Biosense and St. Jude to grow sales. With a five-year price tag for the Carto 3 and Ensite running at roughly $410,000 and $495,000, respectively, as well as catheter and other procedure related devices up for grabs, both companies may be positioned to benefit from EP market growth this decade.

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