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Online Extra: Minding the Pump at St. Jude Medical

CEO Terry Shepherd says its cardiac devices are finding a large, thirsty, needy market. So why is the 51-year-old retiring?

When Terry Shepherd moved up to chief executive of St. Jude Medical in 1999, the cardiac-products company was having an awful year. Net income dropped more than 80%, to $24.2 million, due to a raft of special charges, even as sales climbed 10%, to $1.11 billion. Today, St. Jude could hardly be healthier. Profits totaled $339.4 million in 2003, up 23%, on a 21% rise in sales to $1.93 billion -- enough to land St. Jude (STJ ) at No. 21 on BusinessWeek's 2004 list of the 50 best-performing companies in the U.S., the second year in a row it has gained entry to this exclusive club.

The secret? Mostly, Shepherd acknowledges, it's simply being in the right business at the right time. St. Jude, which started out in 1976 with a single line of heart valves, now produces a catalog of cardiac devices including pacemakers and implantable defibrillators. Because these products are often lifesavers, St. Jude can charge premium prices. Moreover, as the number of middle-age and elderly people rise in the U.S. and other developed countries, the need for heart surgery -- and St. Jude products -- only increases.