business

Fresh out of Stanford Medical School in 1987, young Eric Fain went to work at a small California medical technology start-up called Ventritex Inc. that was dabbling with a promising medical device.

The product, an implantable cardioverter defibrillator (ICD), involves a pacemaker-like device that uses electrical current to shock an erratically beating heart back into rhythm, warding off sudden cardiac arrest.

The technology had fascinated Fain since medical school. Even before that, majoring in applied math and biology at Brown University, he was captivated by probing the ways that technology could interact with the heart.

"The whole algorithm development side really appealed to me," he said recently. He thought he'd give Ventritex a year, then resume his career track to become a practicing physician.

That was 20 years ago. Ventritex now is part of Little Canada-based St. Jude Medical Inc., and Fain, 47 and graying slightly at his temples, heads the $3.3 billion company's cardiac rhythm management division, which makes pacemakers and heart defibrillators.

The affable Fain has held several management positions with St. Jude, and his promotion in July -- replacing Michael Coyle, who retired -- comes at a critical time for the company. St. Jude is historically the No. 3 player in a three-horse ICD market.

Fain and his ultra-competitive boss, St. Jude CEO Daniel Starks, want to change that. St. Jude could become the No. 2 player in the ICD market next year --something that was unthinkable three years ago.

Defibrillators are high-margin, $30,000 devices, part of a $5.7 billion worldwide market. The industry considers the market underpenetrated -- less than 35 percent of those who need the devices get one. That represents a scintillating financial opportunity -- and a daunting challenge for Fain and his competitors.

Industry leader Medtronic Inc. of Fridley this month named Pat Mackin president of its $4.9 billion cardiac rhythm disease management division, replacing Stephen Mahle, who now is executive vice president and senior health care adviser.

Recalls put the skids on

They, along with No. 2 player Boston Scientific Corp., must grow a business that has stalled behind a series of safety-related recalls in the past two years by all three major manufacturers, particularly Guidant Corp., now part of Boston Scientific.

The recalls spooked patients and doctors alike, causing sales of the device to lag. While ICD makers predict that the market will rebound, industry analysts had hoped a recovery would have happened by now. Before the recalls, it was not uncommon to see annual ICD growth rates of 20 percent or more.

"It is increasingly difficult to differentiate your products in the [pacemaker and ICD] marketplace," said Tim Nelson, an analyst with Piper Jaffray & Co. Now, manufacturers compete largely by promoting different product features.

"The challenges are significant," Nelson added, "primarily because the market isn't growing, so that makes the [market] share battles pretty intense."

As of the most-recent quarter, Medtronic holds 50 percent of the U.S. ICD market, with Boston Scientific at 25 percent, and St. Jude 22 percent, according to Nelson.

Rising career trajectory

Growing up in Barrington, R.I., Fain often would accompany his mother, a hospital administrator, to work. "In junior high, I spent a summer working in shock and trauma," he said with a chuckle.

He followed his passion for medicine to Stanford, thinking he'd move back to the East Coast after medical school. But the Ventritex opportunity and California's weather appealed to him. Today, Fain lives in Northern California, commuting weekly to St. Jude's manufacturing facility in the Sylmar area of Los Angeles, and making quarterly trips to Minnesota.