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St. Jude Medical to pay $200 million for NeuroTherm


By Jaimy Lee
Posted: July 14, 2014 - 3:00 pm ET
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St. Jude Medical, a St. Paul, Minn.-based medical device manufacturer, said it will pay $200 million in cash to acquire NeuroTherm, one of the largest makers of radiofrequency ablation devices, which are used to treat chronic pain.

The deal will mark St. Jude Medical's entrance into the market for radiofrequency ablation systems that are used to treat spinal pain. The company is one of the top manufacturers of spinal cord stimulation systems, another treatment for spinal pain.

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“As the only medical device manufacturer with both RFA and spinal cord stimulation, this acquisition will enable us to offer more treatment options to patients worldwide who suffer from the debilitating effects of chronic pain,” Michael Rousseau, chief operating officer of St. Jude Medical, said in a news release.

The privately held NeuroTherm is based in Wilmington, Mass. The deal is expected to close at the end of the third quarter and will add up to $15 million in sales to St. Jude's 2014 results.

Radiofrequency ablation is a minimally invasive procedure that is used to reduce back pain. The procedures are usually performed in outpatient settings or in more nontraditional treatment areas such as in nursing homes, said Mickel Phung, ‎principal analyst at Decision Resources Group, a healthcare research firm. Kimberly-Clark and Stryker are the other two significant players in the radiofrequency ablation market.

Phung noted that reimbursement cuts to other forms of pain treatment, such as epidural steroid injections, may mean that more patients will undergo RFA. “Because of those reimbursement cuts, there's an unexpected swing toward ablation,” he said.

But it's still not a very lucrative market. Most payers cover only two RFA procedures a year and those guidelines are not expected to change.

The spinal cord stimulation market in the U.S. is about eight times bigger than the market for radiofrequency ablation, Phung noted. Medtronic and Boston Scientific also market spinal cord stimulation devices. However, the deal will likely mean that St. Jude Medical will have the capacity to offer a range of treatment options for patients with back pain.

St. Jude Medical has made a number of deals over the last year, including Nanostim, a maker of small, leadless cardiac pacemakers and CardioMems, which recently received approval from the Food and Drug Administration to market a wireless implantable monitoring sensor for heart-failure patients.

The company is expected to release its second-quarter earnings Wednesday.

Follow Jaimy Lee on Twitter: @MHjlee


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