Edwards Lifesciences Corp. has shifted its research and development strategy to pick up its pace and focus on devices designed to make conventional heart surgery less invasive.
The Irvine-based company plans to introduce six new products this year and started toward the goal with the global debut of its ThruPort IntraClude last month. The device is used during procedures such as mitral heart valve repair or replacement surgery and is designed to allow surgeons to use smaller incisions.
The approach on research and development draws from work done by the company’s engineers on the Edwards Sapien, a less-invasive heart valve that is implanted via catheter. Sapien is known as a transcatheter device, a different segment than conventional heart devices.
The Sapien has been on the market in Europe for several years and was approved for U.S. sales in November. The device is considered one of the biggest advances in replacement heart valves in recent years, with a potential global market of more than $1 billion in annual sales.
The ThruPort IntraClude just received Food and Drug Administration clearance to go with European regulatory approval.
Other new devices for conventional surgery are expected throughout the year as part of the focus Edwards has put on the segment, which falls under the company’s cardiac surgery systems line of business.
Edwards’ efforts to gain approval for the Sapien and its preparation to introduce it to the U.S. market have won plaudits for the company and Chief Executive Michael Mussallem (see Mussallem’s OC 50 profile in Special Report, starting on page 21).
The research and development team assigned to work on the company’s cardiac surgery systems business contributed to the development of products for use in minimally invasive heart valve procedures, aided in part by their prior experience on the Edwards Sapien heart valve.
“When I got here, we completely restructured and retooled the R&D team, and that team came from the transcatheter group,” said Rich Lunsford, corporate vice president of Edwards’ cardiac surgery systems unit since last year.
The unit primarily operates in Draper, Utah, near Salt Lake City. The Draper plant has 300,000 square feet of space and is expected to employ 1,000 people in coming years. It includes a research and development lab and a training facility for doctors in addition to manufacturing of cardiac surgery services unit and some components related to Edwards Sapien.
Edwards received $11.5 million in financial incentives from the state of Utah for the plant and a $3 million financial incentive from the city of Draper.
• Headquarters: Irvine
• Business: Medical devices
• Founded: 2000
• Ticker symbol: EW (NYSE)
• Market value: About $9.74 billion
Lunsford credited Edwards’ ability “to have these product launches in fairly quick succession” to the new research and development team, which formed in early 2011.
“For the past 14 or 15 months, Edwards has really decided to infuse more (resources) and focus in this area,” said Lunsford, who was chief executive of privately held Minnesota device maker Anulex Technologies Inc. before joining Edwards.
Edwards historically has worked closely with doctors, and that pattern has not changed in cardiac surgery systems. Lunsford said much of the interest in “truly minimally invasive” approaches to surgical heart valve repair and replacement comes from cardiac surgeons.
“Even though the transcatheter heart valve is going to be so explosive and really change the cardiovascular industry,” there’s still “much work to do” to facilitate smaller-incision surgery, according to Lunsford.
“The patients want it,” he said.
Cardiac surgery systems accounted for $27.6 million in sales for Edwards in the first quarter, just a sliver of Edwards’ $1.7 billion or so in annual revenue. The unit is part of Edwards’ surgical heart valve therapy group, which had total first-quarter sales of $203.6 million.
Edwards, which “controls half of the growing market in its core business,” is poised for potential revenue growth and profitability through Edwards Sapien and other “new minimally invasive technologies,” Garp Research & Securities Co. analyst Alastair Mackay said in a note issued after Edwards reported its first-quarter results in late April.
Lunsford said there will still be a place for traditional heart valves inserted through open-heart surgery, even with the push toward minimally invasive devices. Traditional heart valves brought in $677 million in sales for Edwards in 2011.
“There’s too many parts of the world where that’s the best procedure for the patient and it’s the best procedure for the doctor who’s doing it,” Lunsford said.
