Will This Huge New Find Electrify Med Tech's Growth?

Neuromodulation's become a hot growth arena for med tech leaders, but new data from a study could open up even more opportunities in the long run for investors and patients alike.

Apr 9, 2014 at 2:30PM

Health care is one of the most innovative sectors on the market, and that's especially true in the medical device industry. New technology can revolutionize this often-overlooked but rewarding niche, with launches of everything from robotic surgery to specialized appliances such as stents and heart valves reaping big rewards for savvy investors and forward-thinking companies.

Yet that innovation's not just good for investors -- it can also make a big impact in the lives of patients. When the two ends converge, like Medtronic's (NYSE:MDT) latest bright news from its neurotechnology division, it's a great match and one that opens up promising new doors for smart investors.

Opening up new opportunities
Medtronic's one of the largest players in the up-and-coming neuromodulation niche, a growing area currently explored for treating chronic pain. Boston Scientific (NYSE:BSX) and St. Jude Medical (NYSE:STJ), two of medical tech's largest players, are also on the hunt to capture the neurotech niche's potential, which market forecasting firm MarketsandMarkets projected last year could reach $6.8 billion worldwide by 2017. It's a small but promising development for these three device giants, each of which has performed very well for investors over the past year.

STJ Chart

STJ data. Source: YCharts.

However, there could be more to this budding industry. In a report from The Wall Street Journal released on Tuesday, Medtronic's spinal cord stimulators in combination with physical therapy helped three paraplegic patients in a study move their limbs voluntarily, even years after their initial paralyzing injuries. It's a small sample and shouldn't be taken as a door to any guaranteed revenue for Medtronic and the other leaders in the neurotech field. However, it seems that the study's results could lead to further investigation into whether spinal cord stimulators like Medtronic's could improve the futures of paralyzed patients.

Such a study would be years away -- and even more so from regulatory review and approval -- but this isn't a tiny niche. The Journal reports that more than 270,000 Americans live with spinal cord injuries, and capturing even a slice of that population could lead to a big sales bump for neuromodulation leaders.


St. Jude's Protege spinal cord stimulator. Source: St. Jude medical image gallery.

It's the latest sign of optimism for this small but growing industry that's become a bright spot for growth-hungry device giants such as Medtronic and St. Jude. Boston Scientific's been the growth king in the neuromodulation niche as of late, with  neurotech revenue growing 23% last year for Boston after 9% year over year in 2012. Medtronic boasts the largest division by sales of the bunch and has also seen strong growth, and, while St. Jude's lagged somewhat in this department, the company did manage a win recently when its Protege spinal cord stimulator won FDA approval last week, a first for its type of upgradeable unit. As the chronic pain market continues to grow with the aging of populations in advanced economies, these businesses should only find more opportunity to capitalize on this field.

Keep an eye on the long term
Neuromodulation's already grown into a bright spot among the portfolios of cardiac device makers and opened up new growth avenues for eager investors. When growth can lead to good outcomes for patients such as paraplegic citizens, it's a long-term win for both ends of the health care sector. This technology's still years away from any significant progress into this new niche, but keep an eye on spinal cord stimulators -- and their makers like Medtronic. It could just be the best new treatment for a vulnerable group and a new way to keep your financial future on track for long-term riches.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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