Analysts bullish on leadless pacing market, call it a $700M opportunity

Leadless pacemakers are a "game-changing technology" that could eventually grab as much as half of the overall pacemaker market, say Leerink Swann equity analysts.

The U.K.-based electrophysiologists that the analysts Danielle Antalffy and Puneet Souda talked to believe leadless pacemakers could eventually replace all single-chamber, single-lead versions of the device. Those in the U.S. estimate the devices will grab a market share of 10% to 20% of all pacemakers. "But these U.S. physicians do not yet have commercial access to these devices, and the discrepancy could signal an under-appreciation for the market opportunity more broadly," the analysts write in a research note.

Antalffy and Souda estimate that leadless pacemakers will be $700 million market in 2016 out of a worldwide pacemaker market of $3.8 billion.

St. Jude Medical's ($STJ) Nanostim was the first leadless pacemaker to hit the market with the receipt of a CE mark in 2013. But in May, registry data showed that 6 out of 200+ patients suffered from perforation, including two deaths, slowing its momentum. At that time Antalffy wrote that "the company determined that 5 of the 6 perforations 'would not have occurred if the European registry aligned with the U.S. pivotal [trial] inclusion/exclusion criteria," according to Qmed. In addition, the most recent analyst note cites a U.K. physician who says the adverse events were due to an operator error.

Boston Scientific's S-ICD lead system--Courtesy of Boston Scientific

Medtronic's ($MDT) leadless Micra is near approval in Europe, and will compete with the Nanostim, the analysts add. While the analysts say leadless pacemakers could drive the market share of single chamber versions of the device from 30% to 50%, they say "ultimately, the winner in leadless pacing will be the company that launches the first dual chamber device--a potential $3 billion market opportunity."

Finally, the analysts project that Boston Scientific's ($BSX) S-ICD will gain market share, noting that "one physician sees the S-ICD as at least on par with leadless pacing from a disruptive technology perspective." Boston touts the S-ICD's improved safety because its leads are not the transvenous ones that contact the heart.

But leadless pacemakers would take that one step further, eliminating leads and the many complications that are the result of those wires malfunctioning.

- read the analyst note

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