BANGALORE (Reuters) – Zoll Medical Corp, a maker of resuscitation products, is aiming to increase return on sales to between 13 percent and 15 percent in the next five years as it bets on its new products to drive growth.

The company, which currently has a 9 percent return on sales, is targeting 15 percent growth for its traditional defibrillators in the next five years, Chief Executive Richard Packer told Reuters in an interview.

Last week, Zoll had set conservative revenue forecast for the next financial year ending September 2009, citing concerns of a dip in municipal and town spending.

“There is some concern that there may be some effect going forward if states have budget trouble,” Packer said, but added that the company has not seen any effect from the worsening economy on its growth rate.

The company is also waiting for the outcome of the November U.S. presidential elections to see if the new administration would make drastic changes in healthcare reform that could possibly impact hospital spending.

However, Zoll is not cutting down on its expenses and is investing in areas such as re-engineering its hypothermia resuscitation product, which it acquired from privately held Radiant Medical last year.

The hypothermia product is expected to be pushed commercially in 2010, Packer said.

The CEO said the company was also focusing on its automated cardiopulmonary resuscitation (CPR) product, AutoPulse, and projected that the ultimate size of the automated CPR market would be more than $600 million on an annual basis.

The company, named after founder Paul Zoll — a pioneer in the development of pacemakers and defibrillators, currently has an 80 percent share of the automated CPR market, according to Packer. AutoPulse accounted for 5 percent of its third-quarter sales.

Zoll, which typically makes an acquisition a year, is looking to add ventilation-related technology for resuscitation to its portfolio this year.

WRESTLE FOR MARKET SHARE

Zoll has benefited after major competitor Physio-Control, a unit of Medtronic Inc, stopped shipping products in early 2007 after quality system problems were discovered.

In April 2008, Physio-Control agreed to a consent decree with the U.S. Food and Drug Administration that outlined actions it must take in order to resume unrestricted distribution of the portable electronic devices.

Analysts expect Physio-Control to re-enter the market in 2009.

“If you measure market share based on orders in the professional markets that we care most about, which is hospitals and ambulances, I don’t think our share will change. I think Physio is already competing and taking orders,” Packer said.

If you were to measure market share by shipments, then surely our market share and everybody’s in the industry will go down somewhat as Physio relieves the backlog of orders they have built up over this period of time.”

Once that backlog is cleared out, Packer expects market share to fall back in line with its current order levels.

CONSERVATIVE VIEW?

Zoll shares shed more than 12 percent of their value on July 24, after the company’s third-quarter results edged past analysts’ average estimate by only a cent and it issued a conservative fiscal 2009 outlook.

Zoll forecast revenue growth of 10 percent and earnings-per-share growth of 25 percent to 30 percent.

Even though the 2009 revenue forecast is conservative compared to historical run-rates, the bottom-line is expected to grow strongly, even against a poor economy, Packer told Reuters.

Shares of the Chelmsford, Massachusetts-based company were down about 2 percent at $28.37 in midday trade on Nasdaq. Zoll is a component of the S&P 600 small cap index <.SML>, which was down more than 1 percent at 366.13.

(Editing by Himani Sarkar)

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