Jan 14 (Reuters) - A new class of pacemakers will likely debut this year, offering new hope for the 5 million Americans suffering congestive heart failure--a disease that is the most common cause of elderly hospitalization.

Major medical device makers, including Medtronic Inc. and Guidant Corp., are seeking US regulatory approval for a slate of devices to treat heart failure--a market that could reach $16 billion.

If approved, doctors will see advances in bi-ventricular pacemakers, a new kind of therapy that electrically stimulates the heart to beat more efficiently. These pacemakers may also be equipped with implantable defibrillators that can revive a patient whose heart had stopped functioning.

"It's a touchstone year," said Banc of America Securities analyst Kurt Kruger, referring to the slate of heart failure treatments set for approval in 2002. "In the past, doctors put patients on drugs and basically sent them home to die."

The new treatments offer hope for people who suffer congestive heart failure, an often-fatal condition that slowly starves the body's organs of oxygen. The condition is the most frequent reason for hospitalization in the United States for people over 65, and kills almost 285,000 yearly.

The new stopwatch-sized pacemakers have wires leading to the heart's ventricles and are implanted in the chest to deliver a mild shock to help bring a patient's heartbeat back into normal rhythm.

Until recently, treatment options for the disease were limited to drug therapy. Although drugs were effective in treating symptoms, they were incapable of addressing damage to heart tissue that reduces its pumping function.

NEW RHYTHM

Despite its name, congestive heart failure is a not a sudden, life-ending event. It typically results after age, illness or a heart attack has left a patient's heart muscle so damaged it can no longer circulate enough blood. It can result in fatigue, shortness of breath and swelling of feet.

For almost half of patients with advanced heart failure, electrical impulses no longer occur in a coordinated rhythm, further reducing the heart's effectiveness.

For those patients, bi-ventricular pacemakers can provide relief, said Douglas Zipes, chairman of cardiology at Indiana University and president of the American College of Cardiology.

"What we're doing with our pacing is changing the sequence of the electrical events," he said. The process, known as cardiac resynchronization, increases the efficiency of the heart's pumping function.

Minneapolis-based Medtronic, the world's largest medical device maker, sells the only resynchronization device on the US market. Approved last August, the device has seen rapid acceptance, with sales forecast to exceed $100 million by the end of Medtronic's fiscal year in April, said Ursula Gebhardt, general manager of Medtronic's heart failure unit.

In 2002, Medtronic expects to expand its product line with the addition of the InSync ICD, a device equipped with an implantable cardiac defibrillator. The InSync ICD is intended to guard against sudden cardiac death by delivering a massive shock to restart a patient's heart. The condition accounts for nearly half of the deaths from people with heart failure. An US Food and Drug Administration (FDA) panel will evaluate the device in early March.

Medtronic also is seeking approval this year for a new delivery system and leads, the wires that carry the electrical signal to the heart's ventricles.

"The implant technique is getting simpler," Gebhardt said.

This fall, Medtronic expects FDA approval of the InSync III, a device equipped with software that allows physicians to adjust treatment based on a patient's recovery.

"Rather than being in a hospital and putting them on a monitor, we'll have the capability of making these implanted devices function like a coronary care unit," Zipes said.

GUIDANT'S DEVICES

Medtronic will face competition from Indianapolis-based Guidant in 2002. The cardiovascular device maker expects the FDA to rule in March on its Contak CD, a device that failed to gain approval from an FDA panel in July.

Since then, Guidant has been working closely with the agency to demonstrate the device's effectiveness.

Guidant has a lot riding on approval of Contak CD. Chief Executive Ronald Dollens told Reuters that devices to treat heart failure represent a $16 billion market opportunity.

"We think we have identified a way for (the FDA) to see additional input that would give them great confidence on the efficacy of the device," he said in an interview.

Guidant also expects to benefit from the positive results of its MADIT II study of defibrillator use in heart attack patients. Fred McCoy, president of Guidant's Cardiac Rhythm Management unit, said results of the study could double the number of people who would qualify for an implantable defibrillator to 600,000 patients a year.

Since 75% of the patients participating in the MADIT II trial had heart failure, McCoy said the results show the need for a defibrillator back-up in cardiac resynchronization.

Like Medtronic, Guidant also plans to add diagnostic features to its resynchronization devices in 2002. Dollens said the company is working on its third-generation device, which he said could be on the US market by the fourth quarter.

"Already Medtronic has two quarters under his belt and this has been a smashing success so far," Kruger said.

He said this year will determine whether that success was based on clinical curiosity, or real demand: "This could be proof positive that there is a substantive market developing."