Okay. Good afternoon, everyone. I'm Ryan Weispfenning, Vice President of Investor Relations for Medtronic. Thanks for coming to our Restorative Therapies Group Investor Briefing here at the North American Neuromodulation Society Conference in Las Vegas. And welcome to those joining us around the world we are webcasting this afternoon.
So before we get started, I want to note that we could make some comments today that may be considered forward looking statements and actual results might differ materially from those projected in any forward looking statements. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC and we do not undertake to update any forward looking statement. I encourage you to go back and read the slide and I will note that the slides that we're presenting this afternoon, they are available on our website along with the non GAAP reconciliations at investorrelations. Medtronic. Today's webcasted event will last about an hour.
Jeff Martha, our Executive Vice President and President of Medtronic RTG will make some introductory remarks. Then we'll have presentations by Marshall Stanton, their Senior Vice President and President of Pain Therapies and Mike Daley, our Vice President and General Manager of Brain Modulation. And we'll end by having Matt Thomas, who's the VP and GM of Pain Stim and Charlie Covert, our Vice President and GM of Drug Delivery join Jeff Marshall and Mike to take your question. And we plan to wrap up about 4 p. M.
Pacific Time. The last thing I'll note is we're going to be passing around some sign up sheets for those in the room. So if you wouldn't mind noting your name and firm on the sheet before you leave today, I'd appreciate that. So with that, I'll now ask Jeff Martha to come up and start. Jeff?
All right. Just microphone, we'll turn this to you.
Awesome. Okay.
All right. Well, good morning, everybody. Good to see you again. Saw many of you last week, so I hope you're not sick of hearing from me. But just in case you are, don't worry.
I'm not going to do much talking today. It's mainly going to be my team here. Really excited to talk about RTG today. We've really come a long way and I'm excited for the team to share some of the progress with you. Actually, one of your colleagues last week was commenting on the progress that RTG has made over the last couple of years.
And he told me, he's like, don't take this the wrong way. But my first day in my first kind of investor presentation was our Investor Day in June of 2016 in New York.
And he said, you look like a deer in a headlights.
And so I hope I don't look like that today. I don't feel like that. I'm a little tired, but really excited 3 years later. I need glasses now. But I do feel I still feel really good about where we are.
Like I said, we have come a long way. And as you think about Medtronic's growth profile going forward, I really want you to think a lot more about RTG, okay? And hopefully, with some of the events over the last couple of months and today, you'll start to get more familiar with and more comfortable with more familiar with our portfolio of the innovation and more comfortable with our future and our growth profile. As you can see at the bottom of the page here, we're now about a third of the company. What happened here?
I didn't touch it. There you go. We're about a third of the company, 27%. And you can see how we're made up of our big divisions, spine, brain and pain, and then our specialty groups, which really contains our ENT business and our pelvic health business as well as our advanced energy business is in what we call specialty. A couple of months ago, I think in the fall at NANS, you heard a lot about Spine.
And since then, we've closed the Mazor acquisition. So we've got a we're really excited about that. But today, we're not going to get into that too deep today unless you have some questions, we can get it. Today, we're going to highlight a portion of the Brain division and all of the pain division. So in brain, we're going to talk about within brain, we have our neurovascular group, our deep brain stimulation and then all of our enabling technology, even Mazor Robotics and navigation robotics, all of that actually reports up into brain even though a lot of it is used in our spine numbers.
So and I think a couple of we had an investor there are a lot of those in the investor community were in our Irvine in Irvine a few weeks ago or it's actually in December to hear from our neurovascular group. So we're really trying to get at least to get more of the information on our portfolio out there. I don't know what's going on here. This thing just keeps some money even touching it. So anyway so where was I here?
So look, in a nutshell, what's going on there is like okay, hold on, technical difficulties here. Okay. I haven't even touched it, so
I don't know what's going on. Okay.
So and again, even last week at JP Morgan, it discussions, a lot of discussions around what's going on in CVG and what's happening there. And I really hope that today and going forward you get a better feel for us. Look, we've got great markets that we're in. We've built what I think is a really strong team and we've got this innovation pipeline, which we're going to talk about here. So starting with the pain therapies,
all right,
click magic here. Starting with pain therapies,
All right, here we go.
Really breaking up my mojo here, but it's not too hard to talk about these. So starting with pain therapies, obviously, we've had a huge turnaround in pain. I think I calculated it's like almost a $200,000,000 swing. Our FY Q2 of last year or Q1, it was, I think we were shrinking 10%, and last quarter, that business grew 35% globally or no, that's just pain stim, 20% globally. So a huge swing in a pretty short period of time, really driven by innovation.
And you're going to hear about DBS, which right now is a tough period of time for us. So our portfolio still hasn't felt that innovation hit the market yet. But I'm when we start when we start launching our pipeline. We've got a real exciting pipeline of disruptive offerings coming really starting in about a year's time. So with that, without any further ado, I'm going to turn it over to Marshall here to talk about the pain business.
Kind of talked about how we were going to be focusing on trying to turn around the spinal cord stim business, the implantable drug pump, the targeted drug delivery business and what we call the interventional pain business, the Kyphon and now expansion into interventional oncology. Last year, we were showing you how we were going to do it. And this year, you can see the results of what we did. For a few years, we had been a negative growth overall business. And during the past four quarters, we've moved to positive growth, culminating, as Jeff said, with 20% growth across all the pain therapies.
This was driven by products, particularly with the release of Entellus and the new Synchromed II system, new procedures, the EVOLVE workflow, the CONTROL workflow, CONTROL is for targeted drug delivery, we'll talk a little bit about that, and new data services with Snapshot, and I'm going to spend some time talking about that as well. Going forward, we'll be driving further growth with Evidence, with Vectors, and I'll show you the Vectors data, which are released now, the EMBRACE clinical trial. And we're also playing our part in the opioid crisis with generating data on how our devices can actually get people off of oral opioids. We'll also be releasing new platforms. We've released the myPTM, which is a patient controller for the implantable drug pump, SINKRA Med 2 pump.
And at this meeting, we are just launching Acurion, which is our entry into the radiofrequency nerve ablation space, and I'll talk a little bit about that. We'll also be expanding our Snapshot data services. When you look at the pain therapies business, remember, I'm talking about all three businesses together here. You put them together, the overall markets that we're involved in are about $3,500,000,000 now. Those markets have been growing in the low teens in aggregate, and we see them being in that low teens going forward.
Last fiscal year, our revenue was $1,200,000,000 and our market share at that time for that fiscal year was overall 36%. We see ourselves growing a little bit faster than the market overall. The spinal cord stim business field is a very exciting dynamic field right now with a great therapy that can address chronic pain in more and more patients. Today, spinal cord stim Worldwide is about a $2,700,000,000 market over the horizon. And we're looking here at a 10 year horizon because there's a lot of exciting things, I think, coming into near, mid and long term, we see the market doubling.
The indicated patients will expand with new indications and that will increase over about 5 times over what the current failed back surgery syndrome patient population is. We see new stim procedures as well as possibly new stim algorithms coming out and also looking more towards moving from subjective to objective outcomes that really document the benefit that patients get from spinal cord stimulation and developing predictive models that will improve care and lead to value based health care opportunities. Our strategy is fairly simple for our spinal cord stim and early interventions business. 1st, it's winning in the core conditions. We're doing that now with the EVOLVE workflow.
I'll remind you what that is in a little bit with Intelis, and I'll talk about the highlights of Intelis in a little bit. Going forward, as I say, the Vectrus data just coming out now, and I'll show you that. And we'll be coming out in the next 18 months with our next generation primary cell to be followed not too long after that by our rechargeable cell. We are not going to talk about features of those devices, but we do have those devices under development. We will lead with outcomes.
That is particularly around Snapshot. I've talked about that before. I'm going to go over that in some more detail coming up in a minute. And we'll be expanding into adjacencies and new Acurion starting today. And we have planning in place ongoing right now for getting into preoperative spine or what's been called the virgin back as well as painful diabetic neuropathy.
We think that those are important new indications. And certainly, I think on the painful diabetic neuropathy, one of the advantages that Medtronic has is we have a diabetes business. And so we have very extensive access to the physicians and patients because these are not typically patients that are seen by pain specialists. Let's talk about Intelis. Intelis is by far the smallest implantable spinal cord stimulator that's available.
There are devices that are out there now that are upward all the other devices are upwards of 2 times the size of Intelis. It has proprietary battery technology, and I'll talk a little bit more about that in a minute, where you can recharge from empty to full in 1 hour. And over 9 years, the battery fade is only 5%. So I really want to emphasize this because Medtronic is the only company in the spinal cord stim space that designs, develops and manufactures its own batteries. And the rechargeable technology that we have is proprietary.
And that is how we have been able to get to the significant downsizing and also this significant improvement in performance. So in the middle, what you're seeing is battery capacity and how that changes or really as you can from the curves being grouped together doesn't change over testing up to 18 50 cycles. So you maintain that ability to recharge in an hour or less. On the right is testing that has been done in a lot of units. And in those units, you can see that in fact out to 11 years, you have less than 5% battery fade.
I think you all know what battery fade is if you have a cell phone, but there's no other battery out there that matches this performance. And again, this is proprietary. The EVOLVE workflow has been a key to our success. And let me remind you what that is. When a patient when a physician places the leads, they use paresthesia mapping because we think it is very important to have versatility in the ability to adjust your programming based on the patient.
So you do paresthesia mapping. And if you also have any of your electrodes over the T9, T10 area, then you can use the EVOLVE protocol. You start your trial testing with a high dose, that's 1,000 Hertz, 90 microseconds, and you follow the patient and look for pain relief occurring over about 3 days. If they receive sufficient relief, then your trial is done. If they do not, then you move up a bipole and go another 3 to 4 days.
If you don't receive any benefit there, then you go to traditional low dose in the area of paresthesia mapping that you had previously done. So what are the results? These results are online now. And so I'm going to present what they are. Overall, the trialing success was 90% with most patients wind up having success with high dose.
Remember, there's a bias to high dose. It doesn't mean low dose wouldn't have worked in these patients because you go high dose, high dose, low dose. At 3 months of follow-up, implanted patients, 71% had a 50% reduction. And we're very pleased with those results. This is with these are interim results with 87 out of the 103 patients, and we'll be following these patients out to 1 year.
So we anticipate that about a year from now, at next year's NANS, you would see the 1 year results. So those results, if you remember, are consistent with what Doctor. Bertalan had presented as real world results that he and others gathered independent from Medtronic and previously presented. All right. I want to talk about Snapshot.
So we've talked about this a few times, but I want to emphasize that it is very important to move beyond just subjective assessment of pain. You can imagine how that subjective assessment can move for so many different reasons. And so we have an advantage because we're the only spinal cord stimulator that has an activity sensor within it. We have an accelerometer. And so not only can we tell activity, but we can tell position.
In Snapshot 1.0 that was available with the launch of Entellus, the physician can see for a given patient on the programmer physician and activity and how that's changed over time. With Snapshot 2.0 that we're just rolling out now, you can see them these data are sent to the cloud. And so it's easier for a physician to access the data and you also have better time line reporting. So it's easier to see and easier to access. What we're developing now and we intend to release a new version of Snapshot every 6 to 9 months, this being software based, easy for us to continue to get feedback from physicians and upgrade it.
We're moving to 2.1, and I'll highlight that here. What this will show the physician is an aggregate of how their patients are doing. So this would be a look at what a pop up screen might look like. And at the top, they would see how many of their patients had a decrease in their mobility, how many patients had an increase in their pain score, how many patients were not using their stimulator, how many patients were not consistently recharging. They would then be able to, from this, click down and see what those patients were doing.
So for example, now we go from the aggregate to the individual patient. This patient, for example, the data that comes in, in the green line here are patient reported outcomes. So this is their pain score that they're entering. Here, just showing one piece of the data, there's more that we could show, is how they were using their stimulator. And you can see initially that their stimulator was not being used much.
And as they started using it more, their pain score improved. You can see that on a larger timescale here. So this is how we start to evolve our data services as well. Moving to Snapshot 3.0, you would integrate external sensors. And so a patient would wear an external sensor prior to their trial, during their trial, And then you would have those data uploaded into Snapshot, so that you would be able to compare how a patient was doing prior to their trialing, prior to their implant and then after their implant.
We think this is very important not only for patient management and maximizing outcomes, but for also being able to document because we think that in the future payers are going to increasingly say we need more than just is it a smiley face or a frowny face. So this is a direction that we're going. And from this, as we have these data, we'll start doing more sophisticated data analytics and get into predictive modeling so that we can start to identify patient cohorts that benefit from one type of stimulation pattern versus another. So it's a very exciting future. As we get input from physicians on this, this is one of the most exciting things that they've seen.
Our Ocurian nerve ablation system is the most sophisticated that is out there. It has pulsed RF. It has standard thermal RF, but it also has cooled RF. And that cooled RF can be added on as a module if the site wants to start without it. And if they're interested in that, they add that on or if they can get it all together at the problems that physicians have is when they have 4 needles in a patient's back and they're doing radio frequency, they have to trace the cable back to know which of the poles they're stimulating in.
Here, these are have a number on them and the device knows we'll be able to show the number. And so the physician will much more easily be able to see quickly which needle they're ablating from. It's also upgradable and we're working on new versions that would then be able to be downloaded. Little bit on targeted drug delivery. We're very excited that this business has gone from what for a few years was a negative growth business to now a consistent positive growth business.
That's due to the new Synchromed 2 system that was released that has the tablet clinician programmer, the cell phone personal manager for the patient and with rollout of the control workflow. The control workflow is a way to get people off of oral opioids and onto low dose intrathecal drug, which does not deliver systemic effects generally. Data has shown that using the implantable drug pump, at least 50% of patients that are treated for chronic pain who had been taking oral opioids are off their oral opioids at 1 year. That's going to be a minimum because physicians that use that are specifically going after reducing and getting people weaned off of their oral opioids have reported and published data that's 90 plus percent. So from that, we developed a clinical trial called EMBRACE TDD, Targeted Drug Delivery, which has specific weaning of subjects off of their systemic, their oral opioids, implanting the drug pump using low dose morphine, single drug therapy.
And the endpoint is at 6 months looking at side effects and pain relief and most importantly, looking at how many patients are off of all oral opioids. We had our first enrollment and you probably saw a press release come out from us today about that. We will present interim data about a year from now and anticipate having the primary endpoint sometime about 2 years from now. On interventional, we have 2 new products that will be coming out over the next year, the Kyphon Assist, which adds directionality to where you place your balloon, able to turn it within the cavity space in the spine. And osteo control.
Osteo control is a drill to get into hardened bone after a person has radiation therapy for a metastases, the bone hardens, it's hard to access with typical. And so this drill helps for access, and it also can be used to biopsy as well. We've been driving the growth in kyphoplasty and our business with our movement into interventional oncology, particularly with OsteoCool and also with the mortality reduction data that are out there about balloon kyphoplasty compared to non surgical management. I think in the interest of time, I'll stop there and I'll turn things over to Mike Daley.
Good afternoon, everybody. I'm Mike Daley. I'm the General Manager of the DBS business.
Here we go.
The brain modulation business has 2 strategic imperatives right now. The first is to protect our existing business and that is by rebuilding the foundation. As was mentioned by Jeff earlier in the presentation, we're in a space that's more similar to where pain was in previous years and we're going through that right now. The second is to drive growth and that's through differentiating technologies and pursuing other opportunities that are adjacencies. So when you talk about rebuilding the foundation for us, we started this process already.
We launched the new clinician programmer in June of 2018. We've had really good feedback on the product. It's got great user interface and it's the first time that we've been able to really have a splash in a while in the brain modulation business. The next step in that process are the devices. And that the real big one there is coming with the next gen INS that will be sensing enabled, the first sensing enabled device in our portfolio.
And next will be the directional lead, which will be sensing and is enabled as well. And that's in FY 2021. So when we go to audit when we go to the next step to this, it's automating a therapy and that's when we're talking about sensing. So when we start with sensing, it starts with a passive sensing that gives objective data to the neurologists they've never had before. The data they have now is diary data from the patient, which you can imagine is quite unreliable.
So they'll be able to get objective data on how the therapy is working. They'll be able to use that data in clinic, we believe, to help them program more efficiently. And if they program more efficiently, we believe that will help the patient's outcome. When we get to the next level, that's the ADBS, that's adaptive DBS closed loop therapy. The best way to think about adaptive DBS, the closed loop therapy is like a temperature thermometer on your wall.
So right now, you have a static all the time on with all DBS procedures. When we get to adaptive therapy, you'll be able to adjust that therapy to whether someone's sitting, whether they're standing, whether they're active, whether they're sleeping, whether their drugs are at a high peak or a low peak, which intuitively makes a lot of sense. But beyond intuitively, we've got a lot of data from over 150 implants of our trial product that we are very sure we'll be able to deliver on that promise. The potential for that are several things. One is improved longevity.
And again, if you think about a battery, if it's not on all the time, it's going to last longer. There's reduced side effects and also the programming burden is reduced as well. So when you move to the next phase and that's really when you start Because the procedure can seem daunting not only to the patient, but it because the procedure can seem daunting not only to the patient, it can seem daunting to the neurologists as well. And the reason for that is the invasiveness and also the amount of hardware. When we get to a cranial device, we'll be able to take one device.
So we'll eliminate those extensions. You see, we'll eliminate the pectoral implant, 2 parts of the procedure the neurosurgeon doesn't like and not comfortable for the patient. It will shorten the procedure, make the procedure more comfortable and we believe it will actually impact how patients look at whether or not they want to decide to have this procedure. And then when we talk about pursuing adjacent opportunities, that's epilepsy. We launched at the American Epilepsy Society in November.
They were really at the early stages of this. We believe the opportunity is going to be something that we have to develop that market. It's a different call point. Epileptologists aren't where we had generally done business. So we're starting that business now and it's off to a good start.
The prevalence is about 120,000 patients. We believe we can help with this technology. But again, that will be a market development exercise. So if you look about executing the pipeline, this is really the key thing for the brain modulation business as far as our customers' perception. We haven't launched a lot of products in the last several, several years.
And we've been talking to them about that we're coming. And the first one really was the clinician programmer. And although that's not a needle moving device as far as revenue or share goes, it's a device that we delivered on time with a very, very competitive user interface and a better visual programming that's out there. So it's built our credibility with the customer base. Then next we came with the epilepsy indication and we've done a great job on the training and education and getting our clinicians up and ready for that.
Where it really gets started is in the next phase and that's 2020 and 2021 when we come out with the sensing device and the segmented leads that will have features and benefits that aren't currently available in the marketplace. That will differentiate us. And then as we move forward after that, we get to the cranial device, we'll come out with a device that will change the procedure, change the location and offer standard of care therapy whilst making it much less invasive procedure. So I come back to where I started and it's really like I said a tale of 2 cities. The first is where we are now and that's that one box.
And it's a fight every day for us. That's how it is in the marketplace right now. And our people are doing a nice job holding on to our share and we're continuing to give them things to help them do that in the short run until we get to that second box where we start bringing out the technologies that are going to make a difference for patients and for our business moving forward. Thank you.
All right. We are going to move to Q and A. We've got the panel up here to answer your questions. Mark has a microphone. So because we're webcast, we want to make sure that capture your questions.
First question, Bruce?
Personnel from SunTrust. Anyway, Jeff, firstly, just on a strategic level, it took a while to get competitive again in SCS, DBS same thing, sacral nerve it's probably going to be a replay. What processes are going to be put in place so that you just don't fall behind again? And then the question to Marshall is for DBS, clearly you're pursuing closed loop. There's a company here pursuing it as well.
You guys have an investment in it. What do you think about closed loop? And is that something that Medtronic's interested in?
Well, look, to answer your first question, I think it's one of the things that I was going to end on as you answered your question. I'd say 2 things we've done. 1 is very tangible as we've made RTG smaller by breaking up our different businesses. We have 13 general managers, 3 of them are here, Mike and Matt and Charlie. And their whole I mean, we divide up our therapy.
Those are the well, he's got DBS, pain stim and then pain pump. And their day, they wake up in the morning, go to bed at night thinking about their therapeutic areas and their and what is the technology, the innovation roadmap, technology and clinical therapy innovation over the next 5 to 10 years well as the competitive landscape. And I think that focus is key. The second is just the culture. We're very focused on innovation and very accountable and very competitive.
So that was a little less tangible and it may be harder for you to kind of put into a model, if you will, but it is something that is a big change in terms of just that accountable culture. I almost feel like sometimes Medtronic is like too nice. So anytime you guys write reports, especially about these like focused competitors, that's really good material for us, good locker room stuff. It motivates us. And that's the culture that we have.
And there is just it's one thing to like to win, but we hate losing. So that's a big piece of it. But I think tangibly, this GM structure is really it's taken us a lot of figure out exactly how to do it where you're small on the front end. What that means is dedicated sales force calling on specialist physician, dedicated I'll call them like the R and D teams focused on that therapy innovation and then that general manager that led that link to the customer is very important in that focus. So that so we hear about problems or gaps years before they manifest themselves and shame on us if we don't take action.
So that's probably the most those two things, the most tangible change because we've got the assets. We've got the technology. We've got the balance sheet. If we have to go inorganic, the physicians, I find them, they want us to win, and they're glad we're back. They're glad we're back.
So it was execution. And so that's the bigger the big answer on your first question.
And Bruce, to put your question on closed loop, I think in medicine, closed loop algorithms are good. We've been doing them for years at Medtronic, almost 20 years in cardiac rhythm with ventricular capture management, atrial capture management. Our diabetes business has a closed loop. We're going there in brain. If it works in spinal cord stimulation, I think that's going to be a part of the future also.
But keep in mind, this is a very dynamic field. And so there's not going to be, I think, just one thing, and there's a lot of other things that we're at as potential ways to improve outcomes. But yes, I'd say, generally, we certainly have an interest. It's one of the reasons we made an investment in the company you referenced.
Hi, thanks. Matt Miksic from Credit Suisse. So a couple of questions on sort of the pipeline and the growth trajectory. You put the curve up in the beginning of the presentation, sort of the inflection around Intellus and spinal cord simulation. If you could give us a sense of if it's next gen INS or when you expect that to start to perhaps have the same effect to move from defense to sort of offense on the brain side?
And then how those comps for SES sort of roll into next fiscal year? Should we expect kind of middle of the year, end of the year or continued strong growth in what you've already seen and with Intelis? I have one follow-up.
So I'll take the question on when DBS will start to contribute to the growth again. The end of it's going to be a little while is the short answer, because we're not going to have the new INS until the end of fiscal 2020. And then we'll have the leads following 2 quarters earlier. So we'll get that installed base with the promise of the leads to come, not where reps will be, but they'll know that's going to be coming. So we really see an accelerated growth kind of mid-twenty one.
But by then, we'll have the comps will be in place that by bringing that product out and creating excitement, I think the growth in the first half will be pretty decent to start with. But it really accelerates second half twenty twenty one.
I think you're going to see that trajectory that we saw in pain.
Okay. So tail end of 2020 and into 2021 for the INS and then the comps and the sort of sustainability of the Intellus side, the spinal cord stimulation side?
Yes. So I'll make a quick comment about the market first and then about us. Right now, we think that the spinal cord stim market is growing in the low teens. That's pending others reporting, which we don't obviously have visibility to. We feel that we're going to be growing a little bit faster than the market going forward.
As you referenced, there are tougher comps that we come up against.
Okay. That's great. And then the follow-up was around Evoque. It's one of the things that I think folks have been trialing Intellus on the spinal cord stimulation pain side, but it doesn't seem like it has quite gotten the traction, especially since it was out before Intelis and you've been talking about it for a while. I guess what kind of efforts are you putting out there to educate or get adoption going?
What can you tell us about where you're at, where you'd like to be and what you're doing to bring adoption up on that sort of management side of the portfolio?
Yes. So you're talking about the evolve workflow there?
Yes.
Yes. So first off, I would disagree because when we launched it, we did start seeing an uptick in better outcomes. And in fact, there were some countries around the world that haven't launched Intelis yet, that have launched Evolve, that we're seeing the growth pick up. And I referenced that back at the Investor Day that we had. But we are doing things also.
We're doing a number of different, I'll say, general marketing type programs to increase physician awareness of it. Our sales force knows it very well. Our sales force knows the results. They'll get excited when they see the Vectrus results. We'll certainly be rolling the Vectrus results out as part of our education of physicians.
Matthew, you want to add anything?
Yes. I'd say that the evidence that we're showing from vectors is actually now market leading evidence, because as you're seeing here at the meeting, broadly speaking, the need for versatility in programming is now clear. And so any approach to saying this is the one modality and it solves every problem forever, I think is gone. And what Vectrus really shows is the power of that versatility in the near term. And then as we collect data over an extended period of time over the long term, We've done the rate of adoption of EVOLVE is tremendous.
And I think as our strategy as we take this evidence, we begin to go after segments of the market that we just haven't been in for a long period of time. So there's a lot of upside for us as the evidence gives us the right to go pursue customers who were waiting for it. So it's exciting, yes.
Vijay Kumar from Evercore. So maybe one on the spinal cord stim. I think you had some figures in the market sizing growth. So the market is going to double up in 10 years, right? And that implies a market CAGR of 7%.
And you said it's growing low teens right now. How long can this low teens last? Is this like a 2, 3 year phenomenon and then the market slows down to 5 or I'm just curious how you guys think about that market evolution?
I think with the again, I keep using the term dynamic. This is a very dynamic market, one of the most dynamic I've been in, in my career. And there are new workflows that are being developed right now, some of which we're not talking about here. There are new indications, some of which physicians are using on their own right now, some of which we and others are developing. Some people are running clinical trials.
And there's also new technologies that we're investigating internally and that others that we're aware of that we have relationships with are investigating externally. So I think there's enough things that are going on that there will be periodic new technologies and new data and indication expansion that will come to keep this market healthy. It'll go up and down a bit, but that's how we see it going forward.
And maybe one, Jeff, switching gears slightly on spine. In the mazorexin, this is something that you guys have spoken a lot about. I know you guys talk about share gains, right? But when I look at the overall spine, now I don't have a model which breaks out core spine versus non core. I'm just looking at overall spine.
It's low singles, right, 0 to 1. When do you think that this overall spine segment for you guys is going to grow low singles, right, 3%. Is that even a possibility overall spine for you guys? Thank you.
So you're saying core spine versus what was that core spine versus core spine being the implants versus, yes, like some of our competitors have like an enabling technology in there. So again, so just to make sure we're all talking to the same page and you can nod your head since you lost your microphone here. But we look at the overall like our overall spine would include for us, it includes implants, biologics and then enabling technology that's dedicated to spine. So if we sell a navigation machine that's not used for use for cranial, we don't count that. Just when it's used for spine and the O arm.
So that overall number for us is $3,000,000,000 of revenue a year and that is already growing mid single digit overall, okay? But the mix of that is the implants have been kind of 18 months ago when we've been growing at the market on the implant side now for like, I'd say 18 months, 2 years, right? And 2 years ago, that was more like 3%. For a couple of quarters, now it's down to like 1% because the pricing pressure procedures aren't as growing as what they used to. So it's stabilized around 1%.
And we feel we're growing at the market. We think our competitors overall, that's the kind of market which you seem to be in agreement. And so you're asking, can we get that up to like 3%. That's our expectation. That's not an aspiration.
That's an expectation. And I'd put that out a few quarters, like not years though, but a couple of quarters. It's we're seeing the momentum from a number of things, Mazor being a big one though in terms of when we planned a Mazor in there, we're getting more business and not just from robotic surgeries because that's a minority of them, but the accounts pay for these Mazor units and they buy an ORM with them and they pay for it with incremental spine share. And there's a lag on that because it takes some time to switch over. But we're seeing a lot of that, plus our portfolio is we filled a few gaps, and we're building up capacity in our manufacturing to handle it.
So it's a couple of quarters off, but not years. And our expectation is that 3% ish.
You sell that Meso Rx system. Is that a usage based model or is that a CapEx sale and is that going under the spine overall spine segment? Thank you.
It doesn't. It reports under brain the way we report and we've thought about maybe different ways because I always have to explain it. I'm getting tired of that. And our competitors don't do it that way. And so we're kind of leading with our chin effectively, reporting the lowest number there in the core spine unit.
But so those sales are going under the brain unit.
Larry?
Thanks. Larry Biegelsen, Wells Fargo. Jeff, I wanted to ask one follow-up question on Mazor X. The volume based contracts versus a capital sale, you guys have talked a lot publicly about the volume based contracts. Any color on how prevalent that will be versus just the capital sale for Mazor X with the Yes.
So it's new. So we've been doing these earn outs, we call them. It's not a it's a placement sign, we call them an earn out because they're going to earn out the value of the equipment. We've been doing them for a few years with our ORMs and navigation. It just wasn't as popular the Mazor units came because everybody wants a robot and they don't have it in their budget and they're using this method to pay for it.
We modeled in our model, the Mazor deal model, which is now my business plan, like a third of the Mazor units will be sold this way. And again, it's early, but I think I've already told last quarter it was 70%, so a lot more. And I just reviewed now we've set up operating mechanisms, and I just reviewed them yesterday, all of our earn outs going back the last 4 years. Again, like I said, those don't involve Mazores, but and you can see a big tick up in the earn outs in the last couple of quarters, and we're tracking these now. I review them personally on a quarterly basis to make sure we're keeping the discipline to get that volume.
But I'd say it's too early to say, but we modeled a a third of them rather 33%, and we got 70% last quarter. I'd say at least 50% of these are going to be sold this way. Especially as you see these physicians moving out into surgery centers, when they have more financial skin in the game, they're almost demanding that kind of a structure.
Thanks. And Marshall, so two questions for you, wearable technology and SCS, I'm aware of 2 companies pursuing that. What's Medtronic's view of these external kind of stimulators with the leads implanted, SimWave, NALU? And second, you've talked about new indications. You talked about it today, virgin back and diabetic peripheral neuropathy.
What's the status of your clinical trials there?
Yes. On the latter question first, those trials are in the development stage. So we've not yet done 1st enrollment in either of those. On wearable technologies, what I'm going to tell you is what I've learned from talking to physicians and encourage you to do the same is that when they trial that, most patients don't like the idea of wearing something and having that, which is the advantage of a totally implantable system, which is why the totally implantable systems swamp the external systems.
But on that note though, we're the only implantable system with the accelerometer and now you have the snapshot, we feel it's a good I think the wearables will be a nice oh, he's talking about the absence. Yes, he's talking about the wearables. Stimulant, no, yes, yes, yes, yes. I agree with you.
You. Josh Jennings.
Thanks. Josh Jennings from Cowen. Jeff, just had a question for you to start. Just in terms of the breadth of your portfolio, particularly in the neurosurgeon segment or anything you can comment on. I mean, have you had great good success or any success kind of bundling the portfolio in terms of going after hospital contracts or hospital system contracts within brain and pain?
In terms of just bundling, not
really. Bundling, yes. Okay.
Not really.
We shouldn't be thinking about that yet in terms of both
the product. I think you have to have honestly, I mean, I'm not going not as much as I would have thought. And I don't think it's an execution issue on our part. I think you have to have a more tangible linkage. So like the linkage, one thing that's unique about us is our capital equipment linking it not just in spine, but in other areas too, linking capital equipment or diagnostic equipment with the therapy.
That is where we're seeing a lot of success, like we talked about Mazor. But it's just an overall kind of we have a few of these. We have a few accounts where the head of the neuroscience institute or the neuroscience is has enough of control of his team where he can kind of do that sort of thing. We see it more in cardiology, not as much in the neurosciences yet.
And that's mostly on the hospital side, just hasn't evolved enough to try and take advantage of the breadth of your portfolio, it sounds like?
Not as much as we would have hoped, yes. Okay.
And then for Marshall, you mentioned just on Snapshot and developing some subjective excuse me objective data alongside of subjective data. I'm just curious, are you seeing anything acutely within kind of payer decisions? Or what is your expectation in terms of how that those payer contracts or payer decisions or prior auths, etcetera, evolve? And how important will this objective data be? And any time lines with you, I think you're the only one company pursuing this level of data?
There's not a big movement to that now that I know of. I'll let Matt comment after I do. But we feel, though, that we want to be proactive in being ready. It's not something we're necessarily going to push. And we're not saying that the subjective is going away.
It just needs to be enhanced.
I think when you look at And like the diabetes business and the value of having objective measures for interstitial glucose and how that's affected payer contracts and other categories as well. There's an opportunity there, but to Marshall's point, we don't know what it is yet. That's why we're doing the work to collect it. And it's going to be we're following the data and the impact the variables that matter may vary by patient type. That's why we're doing the work, right?
But it requires ultimately, it requires objective data to expand the use of stimulation because payers are going to expect it. So that's where we're
at. Glenn DeVore.
Thanks. Glenn Varo with RBC. Marshall, you're excited about the vectors data that we presented. But how will the docs take the data given that it's interim data? Does this move the needle now or do we need to come back 12 months from now to see the final results?
I'm just trying to understand how the docs will interpret it and will it actually move the needle or do we have to wait 12 months? Yes. And then one other on the closed loop deep brain, I don't think I saw a time line for launches. So can you talk about time lines there? Thank you.
Yes. On vectors, first, we committed that a year ago that we would present data here. It would be interim data. I'm very pleased it's 87 out of 103 patients. And so it's whatever that percentage is, 86% of the patients.
We will present the full data set, and we will present out to 1 year as well. So very pleased with the large part of the cohort.
As far as the close with ADT test, there are typical requirements seem to be consistent though that there are significant evidence required to get the ADBS on the market. So the timelines look like the, as we said, over the end of the first half of the new device of 'twenty, mid 'twenty one, and we'd expect to have ADBS sometime about 12 to 18 months past that. So we'll have the passive sensing when we launch the first can.
Thanks. This is Matt Taylor with UBS. So first question I wanted to ask was for Mr. Daley. You talked a little bit about the indication for epilepsy and the recent launch.
So I was wondering if you could give us a little bit more color on how the launch is going and how your offering compares to the incumbent there and how you plan to sell against them?
Sure. Like I said, we came out at the end of November at the American Epilepsy Society. It's been a relatively controlled launch and we've had the Christmas break. We're running right now ahead of our expectations on a revenue basis and we feel very confident that we'll meet those by the end of the first half. Going into next year, if we meet those, we feel very confident about the second half numbers.
As far as competing technology right now, we're not looking at it at that point really as a competing technology. There's a pent up demand for these patients for DBS right now. And with the amount of focus that we have on it right now, we're meeting that demand and developing our skills and our experience and our data as we move forward. So it's not so much of a competitive play right now as it is a market development play for the specific DBS slice of that market.
Okay. And then I guess just kind of think about the next steps for that business as you work on this development, gain customers and data, what are the things that you need to put in place to grow that business meaningful size? Like what
are the guideposts that we should look at?
Yes. It's a business we're looking at pretty holistically. So we've got on one side, we've got a slice of the pie of the DBS side, the slice. The other side in our enabling technologies, we have Visulace. So you've got 2 good surgical examples and the big piece of the pie is in the middle that we don't play.
So we're looking at the entire epilepsy space and whether or not we should play across that whole space. And because we know that both of those therapies are going to be somewhat niche therapies. So we so I don't have an answer for you right now what exactly our plan moving forward will be, but we're looking at the entire space as an opportunity potentially. Jeff? Yes.
I think we just have
to determine how aggressive we want to get in epilepsy. I mean, because like Mike said, between DBS for epilepsy, Vigillase and there's other VNS, we could enter that market. I mean, how aggressive do we want to set up, in my mind? And then you have to build out a new channel. So we don't have an answer because we haven't decided exactly how aggressive.
We just got out of our strat plan with our Board, our strategic plan, which is a 5 year horizon with our Board in December. And this is a topic everybody is very interested in. So for us, that would be like getting back to the GM structure, putting a dedicated business around epilepsy with a general manager and start to think about building up that sales force. That's the requirement is having a dedicated sales force as well and then filling it up with these different therapies. So we haven't really laid that out.
We're going to take it just for DBS and keep it within DBS or pull it out and put it in an epilepsy business unit.
And then maybe I'm just curious on the accountability of GM structure. Can you talk about any differences in incentives or how does the play, obviously, very dynamic market?
Yes. It's you grow above the market or I find another GM. I mean, because that's how Omar is holding me accountable, right? We're it's taken us a while, but we're now growing above the market. And if we start dipping below, then somebody will be up there talking in my speech.
So I'm like but that's really it. I mean, these are great markets, and our expectation is to grow at the market or above. And that's where we are. I mean, that's how our plan is built. The investment profile that we have assumes that look, there's different like especially now getting out of the gates, we've got some businesses that are a little behind like our overactive pelvic health business, which is the neuromodulation for overactive bladder.
I mean once they get their new we didn't talk about that today, but they have a new platform coming out, a 3cc device, because they've got new competition coming in. That comes out in FY early FY 2021. And from then on, we're not looking back. And so none of these businesses, paying stem, we're not looking back. We've got that first couple of launches out.
DBS, I mean, they're fighting a good fight right now, but in a year when we launched that INS, there's no looking back because we have products coming after that. Now if for some reason we don't fund it, and that's a different story, but assuming we're continuing to fund these This whole enterprise excellence thing you hear about, what we're doing is taking some of these enabling functions in our operations and taking making them more efficient and then shifting that money into our innovation. And then as we perform and get more credibility, we're getting our fair share of the acquisition dollars that Medtronic has allocated.
I just wanted to get back to the SCS market growth. The low teens that you're talking about, that's a worldwide number, not a U. S. Number, correct? And then I realize a lot of the discussion is more technology oriented U.
S. Focused, but can you just talk about international SCS trends? It's obviously a much smaller geography, but the growth industry growth has really slowed quite a bit. I'm just wondering, is it a reimbursement dynamic, a competitive dynamic? And then what changes the growth profile internationally?
It is slower. It's more price dependent. It has traditionally been more primary cell, not rechargeable, but we're seeing a shift in that, particularly with our launch of Intelis. We're definitely seeing that. Matt, do you want anything else to add?
I mean, it's very situational dependent. I mean, if you look at Europe, there are countries like Belgium, which radically restricted reimbursement for stim in the last year. And so you can't take even a big continent and look at it in totality. You got to look at unique dynamics within those. In some geographies, there's a preference for treating conditions outside of FBSS.
And so you've got demand and preference for conditions that aren't in the core in the U. S. So you've got to look at technologies like PCRC, you've got to look at conditions, what are on label and what's reimbursed. And then the reimbursement situation country by country fluctuates as payers reevaluate their budgets.
Okay. We're at the top of the hour, so we'll end there. Thank you everyone for coming.