Heart Valve Maker Sets Sights on North American Market

Originally Published MDDI July 2004

NEWSTRENDS

Sherrie Conroy

As part of its move to enter the North American heart valve market, the Sorin Group has restructured its operations and will aggressively promote a new tissue valve manufactured by its Mitroflow division (Vancouver, BC, Canada). The company made the announcements at the grand opening of Mitroflow's new facility in June.

Sorin's new organization allocates management responsibilities by business unit and geographic region. The company is divided into four business units: cardiac surgery, vascular therapy, cardiac rhythm management, and renal care. The company's market-oriented approach is designed to improve its focus on customers. 

“Partnering with cardiac surgeons is essential to the treatment of patients,” said Drago Cerchiari, CEO of the Sorin Group (Milan, Italy). “Sorin does not sell devices. It sells therapies.” 

“The creation of these business units allows the company to tailor product lines for emerging markets,” said Eros Roncaia, vice president and general manager of Mitroflow. To gain a greater foothold in the cardiac surgery market, Sorin will concentrate on the launch of the Mitroflow valve. Mitroflow's new facility is dedicated to manufacturing the tissue valve, which is currently marketed in Europe and is being implanted through an IDE in North America. Sorin acquired Mitroflow as part of CarboMedics in 2003.

“The Mitroflow tissue valve is critical to Sorin's expansion in the North American market,” said Rodger Stewart, president of Sorin North America. Through its IDE, the company now has 110 valves implanted, which Stewart said is ahead of the company's planned schedule. The Mitroflow tissue valve is scheduled to be on the market by 2007. “At the current pace, we believe we can beat projections,” Stewart said.

Mitroflow's new 5000-m2 facility in Vancouver is designed to produce 25,000–35,000 valves per year, which could supply as much as 30% of the worldwide tissue valve market, said Roncaia. Mitroflow tissue valves currently account for less than 1% of those implanted in patients in North America.

The worldwide market for heart valves and repair is valued at $810 million, said Jim Trevor, vice president of global strategic marketing for Sorin's cardiac surgical business. Tissue valves account for $405 million. Major U.S. valve manufacturers include Medtronic Inc. (Minneapolis), St. Jude (St. Paul, MN), Terumo (Sumerset, NJ), and Guidant (Indianapolis). Sorin also plans to aggressively market its tissue valves in Europe, where the company is currently a market leader in mechanical heart valves. 

Cerchiari said that half of the valves implanted in patients in Europe are Sorin valves. “We do not see any significant erosion of the mechanical valve market over the next few years. The tissue valve is designed for a different set of patients.”

He expects double-digit growth for tissue valves in Europe over the same time period. He said that mechanical valve sales have declined slightly in Europe due to the increased sales of tissue valves for mitral valve repair. In North America, the trend toward the use of tissue valves continues, he said.

In 2003, North America represented 66% of all tissue valve revenues, partially because tissue valves are priced at a premium level, Trevor said. Trevor attributes the increased use of tissue valves to the technology's maturity. “More than 17 years of clinical data for tissue valves 
are now available to demonstrate their durability,” Trevor said.

The Sorin Group plans to market both its Sorin Biomedica and CarboMedics product lines worldwide to gain further market share in the mechanical heart valve market, which Trevor said has been flat in the past several years. The two Sorin companies combined have nearly 800,000 mechanical heart valves implanted worldwide, he said. 

By early 2007, Sorin plans to launch a percutaneous valve based on its stent and valve technologies, Cerchieri said. The valve is designed for minimally invasive surgery. 

CarboMedics is also planning to launch an alternative treatment to valve replacement called DurNol. DurNol is a short- and long-chain alcohol combination that consists of 1,2-octanediol in an ethanolic-buffered solution. The treatment reduces the tendency of pericardial tissue to calcify. The alcohol combination is implanted into the heart—without surgery—on the tip of a catheter and is left in position without sutures. “It is great for high-risk patients,” said Franco Vallana, president of Sorin's cardiac surgery business unit. The company plans to start clinical trials 
next year and to market the product by the end of 2006. Vallana expects the treatment to cut into the valve market significantly.

Sorin hopes to increase its North American revenues from $195 million in 2003 to about $400 million by 2008. Stewart said the company was on track to achieve this growth as of the first quarter of 2004.

Market Strategies Key to Growth

In addition to its focus on heart valves, Sorin plans to step up marketing of its other core cardiopulmonary products. Sorin companies control about 40% of the cardiopulmonary segment in the United States. “The vascular therapy and cardiac rhythm management markets are expected to grow faster than the cardiac surgery market,” said Sorin CEO Cerchiari.

Sorin's North American companies include COBE Cardiovascular (Denver), CarboMedics (Austin, TX), Mitroflow (Vancouver, BC), and Ela Medical (Minneapolis). The integration of Ela, Sorin's most recent acquisition, is a key to the company's market growth in the United States. Ela's operations will move to Sorin's U.S. headquarters in Denver. Stewart noted that the Ela brand is not well recognized, so the company will focus on building a stronger sales network. Sorin will also increase clinical studies to enable it to focus on solving therapeutic issues rather than on developing products.

Sorin's strategic direction for 2004–2005 will concentrate on the integration of its acquisitions. In 2006–2008, the company will shift its focus to expansion in the United States and the development of new technologies. Sorin expects North America to contribute 35% of its revenues by 2008 (compared with 23% in 2003).

Sorin's cardiac rhythm management unit expects to expand its share of both the pacemaker and defibrillator markets in the United States. “Bradycardia will drive the growth of implantable cardioverter defibrillators (ICDs) and cardiac resynchronization therapy defibrillators (CRT-Ds),” said Cerchieri. By the end of 2005, Sorin plans to launch a new generation of products to serve this market. The company's GXD II will use the same electronics platform as the company's other ICD and CRT-D products, the Alto 2, which was launched in late 2003, and the Alto 2 MSP, which will be on the market in the third quarter of 2004.

In the vascular market, Sorin produces about 7% of biocompatible stents in Europe. The company is developing a platform for a drug-eluting stent that should be on the market by the end of this year. The company will aggressively target the ICD and CRT-D markets, said Stewart. Sorin has not yet received FDA approval for its drug-eluting stent, which Stewart noted is critical to the company's growth in the vascular therapy market. The company plans to explore a strategic alliance or a distribution partnership for the stent, which is currently in clinical trials in Europe. 

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