Medtronic shrugs off concerns over newer weight-loss drugs, raises annual forecast
By Khushi Mandowara and Christy Santhosh
(Reuters) -Medtronic raised its annual earnings forecast on Tuesday as strong sales in its surgical and diabetes units allayed concerns about the impact of new diabetes and weight-loss drugs on long-term growth, sending its shares up nearly 4% in morning trade.
Makers of medical products used in bariatric surgery and glucose-monitoring devices have been trying to ease investor concerns over a potential hit to demand from the rising popularity of new GLP-1 drugs like Novo Nordisk (NYSE:NVO)'s Ozempic and Eli Lilly (NYSE:LLY)'s Mounjaro.
Medtronic (NYSE:MDT)'s CEO Geoffrey Martha said GLP-1 drugs would have a modest but temporary impact on the bariatric surgery market.
Dublin-based Medtronic joins peers Johnson and Johnson and Abbott Laboratories (NYSE:ABT) in playing down the impact of GLP-1 drugs, which suppress hunger in patients.
«Bariatric surgery will continue to remain the gold standard for addressing obesity,» Martha said, adding that many patients who try these drugs will not stay on them for more than a year due to concerns related to costs and side effects.
Over the long term, health care costs may be delayed with the use of GLP-1s but not eliminated, limiting the impact on medical-device companies, said John Boylan, analyst at Edward Jones.
When asked about a possible spin-off or sale of its respiratory and patient-monitoring units, Martha confirmed to Reuters that Medtronic is continuing to work on the separation, which is expected by the first half of the next fiscal year.
Sales in Medtronic's diabetes unit stood at $610 million, beating estimates of $588.4 million. Martha expects diabetes devices to drive the company's sales growth in the second half of the fiscal
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