Dive Brief:
- Getinge said Tuesday it will phase out its surgical perfusion business and reallocate resources to higher-growth areas such as extracorporeal membrane oxygenation (ECMO) and transplant care.
- CEO Mattias Perjos said on an earnings call that surgical perfusion has “been a struggling category” since a consent decree forced Getinge off the U.S. surgical perfusion market in 2015.
- Needham and Stifel analysts framed the news as a positive for Livanova, which they expect to compete for the 450 million Swedish krona (about $41 million) in sales in 2024 that Getinge is giving up on.
Dive Insight:
Getinge signed a consent decree with the Food and Drug Administration in 2015, agreeing to temporarily suspend production of certain devices at a site in New Hampshire while working to strengthen its quality management system. Ten years later, the Swedish medtech company has not returned the devices to the U.S. market. Perjos told investors how the consent decree affected the business.
“The rationale behind withdrawing from surgical perfusion is the low market share that we continue to have, really in the wake of the consent decree 10 years ago,” the CEO said. “It's a loss-making category for us as well. So, we don't feel that we're good owners of this anymore. The effect of withdrawing from this segment is that we actually free up competency and resources for transplant care and for ECMO.”
Getinge’s market share outside of the U.S. has fallen from 15% in 2018 to 7% in 2023, according to the company. As the company exits the market, Perjos expects surgical perfusion sales to fall to around $27 million in 2025.
Analysts see Livanova as a beneficiary of Getinge’s gradual exit from the sector.
“[Livanova] has been gaining share with its Essenz heart lung machine and increased oxygenator production capacity, and we expect it to gain additional market share as Getinge exits the market,” Needham analysts said in a note to investors. Stifel analysts made a similar point, telling investors that Getinge’s action “is clearly positive news for Livanova.”
Getinge has told employee representation bodies about its plans, in line with local labor laws, and the details of the restructuring will depend on the outcome of the negotiations. Perjos estimates the process will cost roughly $73 million, around two-thirds of which was recognized in the company’s fourth-quarter results.
The company highlighted extracorporeal life support (ECLS), another term for the support provided by ECMO, as a driver of almost 12% acute care therapy growth year over year in the fourth quarter. Medtronic launched a rival ECMO device, called Vitalflow, in the U.S. last year and named the system as a contributor to growth in cardiac surgery sales on a November earnings call.
“You're right that there's been some new competition in the ECLS arena. We're monitoring this closely,” Perjos said when questioned on the call about rising competition. “We can see that they're making some headway, but, at the same time, we're still able to grow our business. It kind of confirms our hypothesis that this is a nicely growing space where there is both customer loyalty to our products, but also room for new entrants.”
