Sometimes the best medicine is a short, sharp shock; that's why Medtronic's products reside in its customers' hearts and minds (among other places). A leading maker of implantable biomedical devices, the company makes defibrillators and pacemakers that shock the heart to help it beat normally. Its Cardiac and Vascular group also produces catheters, stents, valves, balloons, and surgical ablation technologies used to treat vascular and heart disease. The company's Restorative Therapies Group makes nerve and brain stimulation devices, defibrillators, implantable drug delivery systems, products used to manage diabetes, and surgical devices for ear, nose, and throat (ENT) and spinal conditions.
Medtronic markets its products in more than 120 countries around the globe, with more than half of revenues coming from the US market. The company operates almost 40 manufacturing plants, mainly in the US and Europe.
Minnesota-based Medtronic got its start treating heart disease (it was a leader in the development of pacemakers in the 1950s), and a majority of its revenue still comes from sales of products used to treat heart or vascular conditions. However, it has expanded its reach into the rest of the human body, and the rest of the world.
Within the Cardiac and Vascular group reside its Cardiac Rhythm Disease Management (CRDM) and Medtronic CardioVascular units. CRDM is Medtronic's largest single unit, accounting for more than 30% of sales. The unit makes pacemakers, defibrillators, heart monitors, and other products used to keep the heart beating properly. The CardioVascular unit accounts for around 20% of the company's sales, with a focus on minimally invasive technologies including drug-eluting stents (to prevent reclogging of arteries), heart valves, and surgical ablation systems.
Under the Restorative Therapies Group is Medtronic's Spinal unit, which accounts for around 20% of sales. Through its Medtronic Sofamar Danek business, the unit manufactures spinal devices and implants, as well as surgical instruments used in spine surgery; and bone grafting tissue used in spinal, dental, and oral surgical procedures.
The company's Neuromodulation division (also housed within the Restorative Therapies Group) makes electrical stimulation devices and drug delivery systems that help control conditions including chronic pain, tremors, and urinary incontinence. Additionally, its Diabetes segment manufactures and sells supplies including glucose monitoring systems and insulin pumps. The firm's ENT offerings are housed in its smaller Surgical Technologies segment.
Sales and Marketing
Medtronic sells through direct representatives in the US, while using a combination of independent distributors and direct marketing methods in overseas markets. Its products are marketed to customers including hospitals, physicians, wholesalers, and group purchasing organizations.
In 2012 Medtronic achieved modest sales growth (2%) over 2011, achieving more than $16 billion in sales. Growth was mainly attributable to new products brought on line in the past three years (38% of sales) and 21% growth in emerging markets which contributed 10% of total sales. The company's net income of $3.6 billion represented a leap of almost 17% over 2011. These increases continued the company's trend of year-over-year improvements over the past five years.
Strategically, the company maintains a steady stream of new product introductions through a mixture of internal research and development and acquisitions to fuel its growth. (In fiscal 2011 alone Medtronic brought some 60 new products to market across all of its units.) While the company has grown steadily, its growth has slowed somewhat as recession-worn patients have delayed non-emergency surgical procedures.
Medtronic is also focusing on expanding its international business, which has increased over the past three years to account for 45% of company sales in fiscal 2012. Medtronic has an especially keen eye on the emerging markets of Brazil, China, India, and Russia. It has laid plans to increase sales in those markets to eventually account for some 20% of company sales.
Medtronic sold its smallest segment, Physio-Control, to Bain Capital for some $487 million in 2012. The business provides professional emergency medical response solutions worldwide.
Mergers and Acquisitions
In 2012 Medtronic made progress towards its goal of growing in international markets when it acquired device manufacturer China Kanghui for approximately $816 million in cash. The purchase will add direct distribution operations in the Chinese market, as well as a product portfolio and R&D pipeline containing spinal, trauma, and joint reconstruction devices.