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The recent US Food and Drug Administration (“FDA”) 510(k) clearance for Affinity Fusion oxygenation system has enhanced the structural heart business of medical devices major – Medtronic, Inc. (MDT - Analyst Report). The company also announced the first US clinical use of this new oxygenation system. Notably, last September, the company gained CE Mark for this system in Europe.

According to Medtronic, this new system, which combines several advanced features, oxygenates and removes carbon dioxide from blood during several open-heart surgical procedures. The company claims that these new features potentially reduce the risk of stroke, preventing the entry of air bubbles in blood during the surgery procedure. According to the company, this system can be helpful for hospitals, which are focusing on implementation of patient blood management programs and other initiatives.

With a number of heart patients undergoing cardiac surgery annually, Medtronic remains hopeful about the greater adoption of this oxygenation system among physicians and hospitals. The company encouragingly noted that, this year, there would be about 1 million cases of cardiopulmonary bypass worldwide. The process has already included the collaboration between the company and more than 500 perfusionists globally.

OurTake

Medtronic’s consistent expansion of its portfolio via approvals in the domestic and international market is encouraging. With the FDA approval for Affinity Fusion oxygenation system, the company extended its structural heart portfolio. Medtronic’s focus on the structural heart business is likely to deliver positive results, as substantial adoption of newer products should leverage the top line.

According to the company, the structural heart business is a high-focus franchise in the emerging markets, especially in China. Notably, Medtronic’s peer in the structural heart business Edwards Lifesciences (EW - Analyst Report) is also committed to meaningful portfolio expansion.

New product launches are expected to contribute at least $200 million in fiscal 2014 for Medtronic. However, unfavorable currency movement, tough competitive landscape and global economic uncertainties keep us on the sidelines. The stock carries a Zacks Rank #3 (Hold). However, other stocks in the medical device sector, carrying a Zacks Rank #1 (Strong Buy), such as Medical Action Industries Inc. and Cyberonics Inc. (CYBX - Analyst Report) appear impressive.

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