Rank: #1 (Last year: #1)
Prior Fiscal: $29.95 Billion
Percentage Change: +2.0%
No. of Employees: 90,017
Global Headquarters: Dublin, Ireland
Omar Ishrak, Chairman and CEO
Karen L. Parkhill, Exec. VP and CFO
Michael J. Coyle, Exec. VP and President, Cardiac and Vascular Group
Hooman Hakami, Exec. VP and President, Diabetes Group
Geoffrey S. Martha, Exec. VP and President, Restorative Therapies Group
Bob White, Exec. VP and President, Minimally Invasive Therapies Group
Richard E. Kuntz, M.D., M.Sc., Sr. VP, Chief Medical and Scientific Officer
Eight-year-old Earl Bakken’s fascination with Frankenstein would eventually change the world.
In the early 1930s, Bakken and his friends frequented Columbia Heights, Minn.’s Heights Theater to catch Saturday matinees. Young Bakken found himself captivated by Colin Clive’s performance as Dr. Frankenstein—he was particularly enamored by the possibility of restoring life.
“What intrigued me the most, as I sat through the movie again and again,” Bakken recalled in a memorial issued by Medtronic, “was the creative spark of Dr. Frankenstein’s electricity. Through the power of his wildly flashing laboratory apparatus, the doctor restored life to the un-living.”
Young Bakken’s creative spark flourished throughout his childhood. By nine, he had built a phone system stretching across his street to a friend’s house. Other childhood inventions included a radio fashioned from a crystal set and a five-foot-tall blinking, speaking robot.
“I had an uncle who was an electrician, and he kept telling my mother, ‘you’ve got to stop that child from playing with that electricity, he’s going to kill himself,” he recounted.
Following his confirmation in 1937, a minister was the first to suggest young Bakken use the science he loved to benefit humanity—words that resonated with him for the rest of his life. “I recognized later that was my spiritual calling,” Bakken said in 2008.
Bakken graduated high school in 1941 and enlisted in the Army Signal Corps, serving four years in World War II as a radar instructor. He then attended the University of Minnesota on the G.I. Bill, earning an undergraduate degree in electrical engineering. He entered graduate school for electrical engineering shortly thereafter and began doing part-time work repairing medical electronic equipment in Minneapolis’ Northwestern Hospital.
At the time, post-WWII hospitals were beginning to use electronic equipment but lacked the staff to maintain and repair it. Feeling the spark of opportunity, Bakken left school and co-founded Medtronic with brother-in-law Palmer Hermundslie in an unheated boxcar used as the Hermundslie family’s garage on April 29, 1949. (Perhaps this is why Medtronic ends its fiscal year on the last business day in April?)
Their first month’s revenue was eight dollars.
“Even by startup standards, the place was pretty crude,” Bakken wrote in his autobiography. “On the positive side, the price was right. The Hermundslies didn’t charge the company rent.”
The business struggled—but thanks to it, Bakken began to build valuable relationships with doctors at Minneapolis university hospitals. There he met staff surgeon C. Walton Lillehei, the pioneer of open-heart surgery.
The next—unfortunately, fatal—spark of opportunity struck in 1957. On Halloween night, a Twin Cities power outage caused the death of an infant dependent on an AC-operated pacemaker. Dr. Lillehei, who was then pioneering procedures to help “blue babies” born with often-lethal heart defects, recruited Bakken to devise a battery-operated pacemaker to prevent further loss of life. To build it, Bakken adapted a circuit described in Popular Electronics for an electronic transistorized metronome, creating the world’s first external wearable, transistorized pacemaker. (Many view this as Medtronic’s true “birth.”) After four weeks of work, Bakken tested his pacemaker at a university animal lab, which confirmed it worked as intended. To his immense surprise, Bakken saw the device attached to one of Lillehei’s pediatric patients the next day.
In 1960, the first implantable pacemaker was installed inside a human patient. Bakken and Hermundslie reached a licensing agreement with the inventors, giving the small company exclusive manufacturing and marketing rights for the device, and Medtronic took off. It was also then that Bakken wrote the Medtronic mission statement, which reads in part: “To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.”
Throughout the years, Medtronic refined its heart devices and expanded into other medical businesses like diabetes treatment, brain surgery, and spine therapy, holding fast to its mission statement.
Bakken led Medtronic for 40 years, retiring as chairman in 1989. Upon leaving the Medtronic board in 1994, he built a home in Hawaii. There he was a prominent volunteer and philanthropist, becoming chairman of the Board of Directors of the Five Mountain Medical Community as it developed the North Hawaii Community Hospital. He had several devices implanted in himself, including stents, insulin pumps, and a Medtronic pacemaker.
“I’m on my second pacemaker, and I’m on about my third or fourth insulin pump,” Bakken told the Pioneer Press in December 2010. “So I’m glad I invented the company, or I wouldn’t be sitting here.”
Ninety-four-year-old Earl Bakken passed away peacefully in his home on Hawaii’s Kiholo Bay on Oct. 21, 2018.
“The contributions Earl made to the field of medical technology simply cannot be overstated,” Medtronic chairman and CEO Omar Ishrak said in a statement commemorating Bakken’s life. “His spirit will live on with us as we work to fulfill the mission he wrote nearly 60 years ago—to alleviate pain, restore health, and extend life.”
ANALYST INSIGHTS: Medtronic continues to be a juggernaut with strong fundamentals. However, the company had a bit of a wobble recently with their false start in orthopedics, flagging spine revenue, and slow move into robotics.
—Patrick West, Partner, Mirus Capital Advisors
Fortunately, Bakken lived long enough to watch the business he built 70 years ago in his brother-in-law’s garage officially become the world’s largest medical technology company in 2017. Medtronic has led MPO’s Top 30 ever since, and this year is no different. As the first medical technology enterprise to reach $30 billion in revenue—$30.56 billion last year, to be exact—the late Bakken’s company sits atop the list of elite medtech makers once again.
The slight 2 percent sales bump to reach this milestone arose from healthy growth in Medtronic’s Restorative Therapies and Diabetes groups. The July 2017 divestiture of its Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses to Cardinal Health—consisting of dental and animal health, chart paper, wound care, incontinence, electrodes, SharpSafety, thermometry, perinatal protection, blood collection, compression, and enteral feeding offerings—partially offset the gains. Sales were flat in non-U.S. developed markets, with consistent growth in Japan and Korea, partially offset by declines in Australia. Performance in China, the Middle East and Africa, Eastern Europe, and both South and Southeast Asia also flourished.
Medtronic’s flagship Cardiac and Vascular enterprise remained relatively flat with $11.5 billion in sales, growing 1 percent. Success in Coronary & Structural Heart as well as Aortic, Peripheral & Venous division sales provoked this growth. Slumping Cardiac Rhythm and Heart Failure proceeds partially counteracted these gains.
Cardiac Rhythm and Heart Failure segment sales dropped 2 percent to $5.8 billion, mainly as a result of declines in Heart Failure, Care Management Services, and Cath Lab Managed Services (CLMS). CRT-D replacements and left ventricular assist device (LVAD) headwinds due to a competitor’s product launch in the U.S., coupled with changes in U.S. heart transplant guidelines precipitated the Heart Failure business’s downturn. The continued strength of the Arctic Front Cardiac CryoAblation Catheter System and increased TYRX absorbable antibacterial envelope adoption fortified the Arrhythmia Management business. The Reveal LINQ insertable cardiac monitor’s strong performance stimulated the Diagnostics segment’s success.
Last June, unexpected power source switching in the HeartWare HVAD system (an LVAD for advanced heart failure) made it the subject of a Class I recall. Potential transient interruption in the HVAD system and controller’s electrical connection was found to cause unintended switching to the device’s secondary power source, potentially causing momentary stop and restart. Further, unintended power switching carried a risk of unexpected audible beeping as it resolves, which could confuse the patient or caregiver as the controller may display sufficient battery capacity or AC/DC connectivity. Medtronic advised users to ensure two power sources are connected to the device at all times. The company also made a lubricant solution available to apply to HeartWare HVAD’s power source connectors to mitigate unexpected transient power switching. As yet there have been no confirmed reports of catastrophic harm related to the issue. (At the time, Medtronic estimated the per patient probability of serious adverse events at about 0.003.)
A month later, Medtronic achieved FDA approval for a less invasive implant approach for the HVAD system. The nod made it the only LVAD approved in the U.S. for thoracotomy, a small lateral surgical incision between the ribs on the left side of the chest. Typically LVADs are implanted via median sternotomy, during which the surgeon makes an incision down the middle of the chest and separates the breastbone. Medtronic also made new surgical implant tools tailored to thoracotomy for the HVAD available at the time.
“Implanting the HVAD via thoracotomy preserves the chest for a subsequent procedure that patients may need, such as a heart transplant,” Edwin McGee Jr., M.D., professor and director, Heart Transplant & Ventricular Assist Device Program, Loyola University Medical Center, Maywood, Ill., explained to the press. “It also has been shown to result in shorter hospital stays.”
The SelectSecure MRI SureScan Model 3830 cardiac pacing lead obtained an FDA label expansion last July to include stimulation of the bundle of His, making it the only pacing lead on the market approved to do so. Permanent His bundle pacing is an alternative to right ventricular pacing, harnessing the heart’s native His-Purkinje system.
Medtronic’s SynchroMed II drug delivery system also gained FDA approval last July to administer Remodulin (which is made by United Therapeutics Corporation) for pulmonary arterial hypertension patients. An intravascular catheter was newly developed to intravenously deliver Remodulin to those previously receiving it via an external infusion pump. Medtronic and United Therapeutics pursued parallel regulatory findings for the device and drug.
The firm began a pilot study for its investigational Extravascular Implantable Cardioverter Defibrillator (EV ICD) last August. The EV ICD involves a lead placed outside the heart and veins to deliver defibrillation and anti-tachycardia pacing therapy in one system. The pilot study will assess the EV ICD system in 20 patients at four sites. The system is intended to offer benefits of traditional transvenous ICDs. EV ICD is the same size and shape as conventional ICDs, without any leads in the heart or veins. It’s implanted in the left mid-axillary region below the left armpit, with the lead placed under the sternum.
Coronary & Structural Heart sales advanced 5 percent to $3.7 billion. The CoreValve Evolut PRO TAVR’s global strength and continued adoption in intermediate-risk patients was partially responsible for this growth. Healthy sales of the Bio-Medicus Next Gen Cannulae, guide catheters, and coronary balloons also fortified sales.
Aortic, Peripheral & Venous revenue jumped 4 percent to $1.9 billion. Part of this was a result of The Centers for Medicare & Medicaid Services granting final approval for the VenaSeal vein closure system’s reimbursement payment last January. Growth in percutaneous transluminal angioplasty (PTA) balloons also augmented last year’s proceeds.
Last February witnessed the U.S. launch of the Resolute Onyx 2.0-mm drug-eluting stent (DES), the smallest sized DES on the market at the time. It joined the Resolute Onyx 4.5- and 5.0-mm DES to provide the broadest DES size matrix available, allowing treatment for patients with the smallest coronary vessels to the largest. The new stent will help interventional cardiologists treat coronary artery disease patients with small vessels often untreatable with larger stents during percutaneous coronary intervention.
The IN.PACT Admiral drug-coated balloon (DCB) received FDA approval to treat long superficial femoral artery lesions up to 360 mm in peripheral artery disease patients last April. The 200-mm and 250-mm lengths of the device attained FDA approval last June.
Last October saw FDA approval for the Valiant Navion thoracic stent graft system for minimally invasive repair of all lesions of the descending thoracic aorta, including aneurysms, blunt injuries, ulcers, hematomas, and dissections. Valiant Navion allows patients with small iliac arteries to receive thoracic endovascular aneurysm repair, a less invasive approach compared to open surgical procedures. The system features both proximal covered and proximal bare metal stent configurations. Valiant Navion received CE mark approval a month later.
The Minimally Invasive Therapies Group amassed $8.5 billion in sales, dropping 3 percent from the year prior. Currency conversion had an unfavorable effect to the tune of $164 million, and the 2017 shedding of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses to Cardinal Health also affected the segment’s performance.
Before the divestiture, the Surgical Solutions and Patient Monitoring & Recovery Divisions were realigned into the Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions. The former gathered $5.8 billion of proceeds, jumping 4 percent from the year prior. Surgical Innovations’ strength was a consequence of new products—namely, the LigaSure vessel sealing instruments with nano-coating, Exact and L-Hook, and both the Tri-Staple 2.0 endo stapling specialty reloads and Signia powered stapler.
Medtronic began a collaboration with Philips last January to develop and commercialize the LungGPS Patient Management Platform to streamline lung nodule patient management from identification through diagnosis, treatment, and long-term survivorship. Together, the two medtech giants will provide solutions to integrate hospital data, patient management, and clinical workflows. The LungGPS platform hopes to facilitate identification and management of patients with incidental pulmonary nodules within disparate hospital information systems. LungGPS’s natural language processing quickly searches and analyzes data contained within various reports, highlighting relevant information. Philips’ lung cancer screening software automates routine administrative tasks and standardizes clinical workflows.
Respiratory, Gastrointestinal & Renal franchise sales dropped 14 percent to $2.7 billion due to the divestiture. Apart from that decline, continued adoption of MicroStream capnography monitoring products, pulse oximetry, ventilators, and video laryngoscopy products and growth in renal access products drove sales in this segment.
ANALYST INSIGHTS: Medtronic continues to expand its business through M&A across multiple market segments. While it has placed many bets for future growth, none of its investments are greater than its commitment to robotics. CEO Omar Ishrak has made it clear 2020 will be ‘the year of the robot’ for Medtronic. It will be interesting to observe whether they can create adoption for its Mazor, SuperD, and other robotic platform investments.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Medtronic issued a voluntary field corrective action for its Puritan Bennett 980 ventilator series, which is used to support a patient’s breathing, last December. The corrective action, which the FDA identified as a Class I recall, was a software update to address customer feedback. The software updates external USB drive performance and its impact on graphical user interface (GUI) functionality and the labeling displayed on the GUI during ventilator use.
The Restorative Therapies Group collected $8.2 billion, growing 6 percent over the previous year. This was mainly driven by strong performance in the Brain Therapies, Specialty Therapies, and Pain Therapies divisions. The first of these grew an impressive 11 percent to reach $2.6 billion in sales. Strong sales of stent retriever, flow diversion, neuro access, coil, and embolic protection products contributed to a part of these gains. Neurosurgery revenue growth was provoked by strong capital equipment sales of the Mazor X robotic guidance systems, StealthStation S8 surgical navigation systems, Midas Rex powered surgical instrument systems, O-Arm Imaging Systems, and Visualase MRI-guided laser ablation systems.
Medtronic began the deal to acquire Israel’s Mazor Robotics for $1.6 billion last September, building on a prior arrangement between the two that had included Medtronic taking a stake in Mazor and serving as the sole distributor of the robotics company’s Mazor X system. By combining its spine implants, navigation, and intraoperative imaging technology with Mazor’s robotic-assisted systems, Medtronic intends to offer a fully-integrated procedural solution for surgical planning, execution, and confirmation.
“Over the past two years it’s become clear to us that enabling technology like this is the future,” Geoff Martha, president of Medtronic’s Restorative Therapies Group, told Bloomberg. “It improves outcomes in spinal surgery and reduces the variability. Once we realized this is clearly the future, we knew we had to integrate all this technology.”
The deal was an effort to hasten the move toward guided, robotic procedures. Medtronic and Mazor unveiled their new Mazor X system at last year’s North American Spine Society conference. Mazor X identifies spine abnormalities and creates a patient-specific surgical implant, potentially positioning Medtronic to better compete with rival Globus Medical. The deal for Mazor, completed last December, was valued at about $1.7 billion.
Last January saw an FDA nod for the Riptide Aspiration system, which retrieves thrombus (blood clot) through the Arc Catheter and restores blood flow in ischemic stroke patients. In the procedure, a catheter is inserted through an incision in the leg and up the blocked artery to remove the clot. It is intended for revascularization in those with acute ischemic stroke secondary to large vessel occlusive disease within eight hours of onset.
The Visualase MRI-Guided Laser Ablation System obtained CE mark approval last April. The Visualase system delivers laser energy to the target area with an applicator to destroy unwanted soft tissue. MRI images guide precision and controlled ablation during the procedure. The system has been FDA cleared since July 2017.
Medtronic’s Deep Brain Stimulation (DBS) therapy gained FDA approval as adjunctive treatment to reduce the frequency of partial-onset seizures in adult patients who are drug-resistant to three or more antiepileptic medications last May. DBS therapy for epilepsy works by applying controlled electrical pulses to the brain’s anterior nucleus of the thalamus, part of a network involved in seizures. The approval was based on seven-year follow-up data collected in the company’s SANTE trial, which demonstrated seizure frequency reduction, a six-month seizure-free period for some patients, and no significant cognitive declines or worsening depression.
A month later, the clinician programmer and Activa programming application for DBS therapy achieved FDA approval. The programming application was developed with input from over 100 clinicians and is managed on the Samsung Galaxy Tab S2 tablet interface. Activa DBS therapy treats both Parkinson’s and dystonia.
The Spine franchise accrued $2.7 billion in revenue, dropping 1 percent. Despite the slip, the segment saw incremental growth due to increased spinal impact attachment rates in conjunction with the company’s Surgical Synergy strategy, which integrates spinal implants with robotics, imaging, navigation, power instruments, and nerve monitoring.
Infuse Bone Graft was FDA approved for two new spine surgery indications last April. The second expanded indication for Infuse in just over two years, it can now be used with polyetheretherketone (PEEK) implants in oblique lateral interbody fusion (OLIF) 25 and 51 and anterior lumbar interbody fusion (ALIF) procedures at a single level.
A day later at the American Association of Neurological Surgeons (AANS) annual meeting, Medtronic launched TiONIC technology—a titanium 3D printed platform for spine surgery implants. TiONIC technology’s enhanced surface textures are created with a differentiated laser method, increasing osteoconductivity and promoting bone response. ARTiC-L, for use in transforaminal lumbar interbody fusion (TLIF) spine surgery, was the first implant to feature TiONIC technology. The implant’s 3D printed honeycomb design provides an osteoconductive scaffold for bony ingrowth and improved mechanical load distribution.
The Synergy TLIF workflow was also unveiled at last year’s AANS meeting. The spine surgery procedural workflow combines Medtronic’s O-arm System imaging and SteathStation imaging guidance technologies to create a completely navigated, minimally invasive procedure allowing for fewer intraoperative surgical steps. The new CD Horizon Solera Voyager 5.5 System has percutaneous and mini-open rod insertion options for treating both degenerative and adult deformity conditions. The system’s non-cannulated ATS screw reduces the number of screw placement steps from nine to three (vs. traditional pedicle screw placement).
Last September saw the Infinity OCT (occipitocervical-upper thoracic) Spinal System’s launch. Infinity OCT immobilizes and stabilizes the spine while it fuses. It includes a multi-axial screw with 60 degrees of angulation in any direction, a locking cap with a quick-start thread, and 3.0- and 5.5-mm screws. When paired with the company’s O-arm imaging and StealthStation navigation system, Infinity OCT can simplify complex posterior cervical procedures. It can be used in cases of degenerative disc disease, instability or deformity, tumors, and traumatic spinal fractures or traumatic dislocations.
Specialty Therapies proceeds expanded 5 percent to accrue $1.6 billion. Strong sales of Aquamantys bipolar sealers and PlasmaBlade dissection devices, as well as ENT growth, provoked this segment’s success.
A smart programmer for the InterStim system, which delivers sacral neuromodulation therapy to treat overactive bladder, chronic fecal incontinence, and non-obstructive urinary retention, obtained FDA approval last December. The smart programmer streamlines multiple devices into a single, touch screen Samsung mobile device and allows care personalization by letting patients simply and discreetly manage therapy. Physicians can also check MRI eligibility and view insights and access for a detailed view of the patient’s therapy experience.
With $1.3 billion of revenue, Pain Therapies jumped 10 percent from the previous year. The Intellis spinal cord stimulation (SCS) platform drove sales in this segment, as did the firm’s Evolve workflow algorithm, Snapshot reports, and Targeted Drug Delivery products.
A new clinician programmer for the Synchromed II pump was approved last January. Its visual tools and intuitive workflows simplify therapy management, running on a tablet with vibrant screen display. Visual enhancements include a side-by-side comparison of therapy changes and flex dosing graphics.
The firm launched OptiSphere embolization spheres, a resorbable embolic platform to embolize hypervascular tumors, last April. OptiSphere is manufactured for Medtronic by Vascular Solutions, a Teleflex Inc. subsidiary. Its spherical shape allows smooth embolic delivery and even, predictable distribution.
Medtronic’s Kyphon HV-R bone cement secured FDA clearance last June to fix sacral vertebral body fractures using sacroplasty. The 510(k) broadened the company’s commitment to treat fragility fractures beyond vertebral compression fractures caused by osteoporosis, cancer, or benign lesions.
The Control Workflow evidence-based approach for the Synchromed II pain pump launched last October. It includes oral opioid weaning considerations that can be fitted to each patient and helps physicians to identify those likely to have positive outcomes with the pain pump. It supports oral opioid tapering and drug holidays to minimize intrathecal medication dose during treatment, which several studies have determined may be more effective than a combination of oral and intrathecal pain treatment.
SynchroMed II’s myPTM Personal Therapy Manager received FDA approval last October. myPTM lets patients alleviate unpredictable pain with on-demand doses within therapeutic limits set by their doctor. The application is used on a touchscreen Samsung J3 smart device. It features clear dose delivery, access to therapy details, and lockout alerts if the patient exceeds the prescribed limit.
The Diabetes Group vaulted 12 percent upward with $2.4 billion in proceeds. Continued demand for the company’s MiniMed 670G hybrid closed-loop system (which claimed both CE mark approval and FDA approval for children ages 7-13 last June) and high CGM user sensor attachment and utilization drove sales upward. Further expansion came as a result of strong insulin pump sales in Europe, Latin America, and Asia Pacific. Guardian Connect CGM system sales padded further growth.
Last February saw the launch of the MiniMed Mio Advance infusion set. The newest addition to the MiniMed family aims for more convenient set changes by reducing the number of steps necessary. Its design lets users insert the device with one hand and can easily access hard-to-reach sites like the lower back. It has no visible needle and contains a built-in insertion device for consistent insertion force.
A few days later, the FDA approved a new arm indication for the Guardian Sensor 3. The approval lets patients wear the sensor on their upper arm, allowing further flexibility and enhanced performance and accuracy for glucose readings.
The FDA approved the Guardian Connect CGM system for patients aged 14-75 years last March. It is the only CGM system that can alert of potential high or low glucose events up to 60 minutes in advance. Guardian Connect also offers access to the Sugar.IQ smart diabetes assistant so patients can analyze their glucose level’s response to food intake, insulin dosages, daily routines, and other factors.
Medtronic added nutrition-related data services, analytics, and technologies firm Nutrino Health to its family last November. Medtronic hopes to reduce diabetes patients’ food and nutrition management burdens by implementing Nutrino’s extensive food and analysis infrastructure, nutrition expertise, and AI-driven personal insights into its technology. Further, Nutrino had been developing algorithms to predict glycemic responses to food. Medtronic and Nutrino’s partnership began in 2016—Nutrino played a role in the introductions of Medtronic’s updated iPro2 myLog app used with professional CGM solutions (which launched last June powered with a FoodPrint food data app powered by Nutrino) and the Sugar.IQ diabetes assistant app used with Guardian Connect. (The Sugar.IQ app also became commercially available in the U.S. last June.)