07.27.10
4. Medtronic
$14.6 Billion
KEY EXECUTIVES:
William A. Hawkins, Chairman and CEO
Stephen H. Mahle, Exec. VP, Healthcare Policy and Regulatory
Susan Alpert, M.D., Ph.D., Sr. VP and Chief Regulatory Officer
Martha Goldberg Aronson, Sr. VP and Chief Talent Officer
Robert H. Blankemeyer, Sr. VP and President, Surgical Technologies
Jean-Luc Butel, Sr. VP and President, Medtronic International
H. James Dallas, Sr. VP, Quality and Operations
Kathleen Erickson DiGiorno, VP and Chief Ethics and Compliance Officer
Gary L. Ellis, Sr. VP and Chief Financial Officer
Richard E. Kuntz, M.D., Sr. VP and President, Neuromodulation
Stephen R. La Neve, Sr. VP and President, Spinal and Biologics
James P. Mackin, Sr. VP and President, CRDM
Christopher J. O’Connell, Sr. VP and President, Diabetes
Stephen N. Oesterle, M.D., Sr. VP, Medicine and Technology
Catherine M. Szyman, Sr. VP, Strategy and Innovation
Scott R. Ward, Sr. VP and President, Cardiovascular
NO. OF EMPLOYEES: 38,000
GLOBAL HEADQUARTERS: Minneapolis, Minn.
Not every company can overcome a litany of economic, regulatory and political challenges and still turn a profit. Medtronic Inc. managed such an unlikely feat in fiscal 2009 by striving to deliver better healthcare to both patients and the market.
That struggle, along with a tenacious focus on its core mission of alleviating pain, restoring health and extending patients’ lives, helped the device giant emerge from the most serious economic downfall since the Great Depression with double-digit earnings growth and top market positions in five of its seven business segments.
“This fiscal year saw an unprecedented convergence of challenges in the economy and our industry,” Medtronic Chairman and CEO William A. Hawkins told shareholders in a letter published within the company’s 2009 annual report. “The global economic crisis, public and government demands for greater financial transparency, challenges to the existing federal regulatory regime, a new administration, and looming healthcare reform have all contributed to an uncertainty that is expected to prevail into 2010. Despite these challenges—perhaps because of these challenges—we ended this past fiscal year stronger, more nimble and more resilient than ever before.”
Medtronic also ended the fiscal year much richer. Net sales rose 8 percent to $14.6 billion and gross profit climbed 10 percent to $11 billion for the year ended April 24, 2009. Executives attributed those sizable increases to double-digit sales growth in the company’s Cardiovascular and Surgical Technologies business segments, robust product sales outside the United States, and the successful integration of Kyphon Inc., a Sunnyvale, Calif.-based developer of minimally-invasive spinal technologies. Medtronic purchased Kyphon in November 2007 for $4.2 billion to “help accelerate the growth” of its spinal business; over the last five quarters Kyphon (as part of Medtronic’s Spinal segment) clearly has accomplished its mission, contributing $907 million to its parent company’s bottom line.
While they were not the most profitable, Kyphon products nevertheless recorded the highest sales growth rate in fiscal 2009. Sales more than doubled, according to Medtronic’s annual report, going from $298 million in fiscal 2008 to $609 million in 2009.
Overall, the company’s Spinal segment generated $3.4 billion in sales, a 14 percent increase compared with the $2.9 billion it recorded in fiscal 2008. More than half of the fiscal 2009 revenue ($1.9 billion) came from the sale of core spinal devices such as the CD Horizon Legacy and Mast product lines. Biologics contributed $840 million to the segment’s total revenue, a 3 percent increase compared with the $815 million biological products generated in fiscal 2008.
In contrast, the Cardiac Rhythm Disease Management (CRDM) segment amassed the highest number of dollars for the company, but recorded the least amount of growth. In fiscal 2009, CRDM sales amounted to $5 billion, a mere 1 percent increase compared with the $4.9 billion the segment reported the previous fiscal year. Executives attributed the flat growth to foreign exchange rates that impacted sales by $25 million and a slight decrease in sales of pacemakers and related products due to competition from rivals Boston Scientific Corp. and St. Jude Medical Inc.
Pacing systems sales fell to $1.9 billion but they were partially offset by sales growth outside of the United States. That growth was driven mostly by sales of the Adapta pacemaker product line, which features an atrial-based pacing mode that reduces unnecessary pacing in the right ventricle of the heart while providing the safety of a dual chamber backup. Studies have suggested that reducing unnecessary pacing in the right ventricle may reduce the risk of developing heart failure and atrial fibrillation.
In addition to its Adapta pacemaker products, Medtronic’s foreign pacing sales also benefited from the July 2008 release of the Reveal DX Insertable Cardiac Monitor in Japan. Deemed a high-priority medical device by the Japanese government, the memory stick-sized Reveal DX is inserted under the skin of the chest area where it can record and save arrhythmia patterns for up to three years.
Executives said pacing sales—as well as defibrillator sales—received an additional boost from the Medtronic CareLink Service, an electronic system that enables clinicians to review data about cardiac devices in real time and access stored data about patients and devices on a website. More than 360,000 patients worldwide are currently monitored through the company’s CareLink Service, a 44 percent increase compared with the 250,000 patients monitored in fiscal 2008.
Besides its CareLink Service, future CRDM sales are expected to be impacted by the January 2009 acquisition of Ablation Frontiers Inc., a privately held company in Carlsbad, Calif., that has developed a device for treating heart arrhythmias. Ablation Frontiers’ technologies have since been folded into Medtronic’s Atrial Fibrillation Solutions franchise.
Defibrillation systems—Medtronic’s largest product line—garnered $2.9 billion in sales during fiscal 2009, a 2 percent increase compared with the $2.8 billion those devices generated for the company in the previous fiscal year. Medtronic received U.S. Food and Drug Administration approval for several new defibrillator products during fiscal 2009, including the Sprint Quattro Secure S Single Coil defibrillation lead. The new products are expected to impact fiscal 2010 sales.
Some of the new products Medtronic released in fiscal 2009 had virtually an immediate impact on sales. The U.S. launch of the Endeavor drug-eluting stent in the fourth quarter of fiscal 2008 helped increase the sales of coronary stents and other coronary/peripheral products by 16 percent to $1.3 billion. Worldwide, the Endeavor and Endeavor Resolute drug-eluting stents generated $603 million for Medtronic, a 44 percent increase compared with the $418 million the products earned for the company in fiscal 2008. Executives expect the Endeavor stent to continue to generate sizeable revenue for Medtronic, particularly since it was approved in Japan last year and is now being sold there.
Endovascular products produced the second-highest sales growth rate for Medtronic (behind Kyphon devices). Sales ballooned 40 percent to $398 million, according to the company’s annual report. Executives said the increase was driven mainly by domestic sales of the Talent Abdominal Aortic Aneurysm Stent Graft System and Thoracic Stent Graft System as well as the international launch of the Endurant Abdominal Stent Graft System in July 2008.
Sales of revascularization and surgical therapies products grew 4 percent to $447 million, while structural heart disease device sales inched up 1 percent to $300 million. Together with the sales of endovascular products, stents and other coronary/ peripheral products, the company’s Cardiovascular segment amassed $2.4 billion, a 14 percent increase compared with the $2.1 billion the segment yielded in fiscal 2008.
The Cardiovascular segment is expected to be a lucrative one for Medtronic over the next fiscal year as the company integrates Ventor Technologies Ltd. and CoreValve Inc. into its business. The firm acquired both Ventor and CoreValve in the fourth quarter of fiscal 2009 for a combined $1 billion ($325 million for Ventor and $700 million for CoreValve). The companies, which develop transcatheter heart valve technologies for the replacement of aortic valves, were purchased to help Medtronic provide “additional momentum” to its growth strategies.
Some of the momentum for Medtronic’s growth during fiscal 2009 came from the Neuromodulation and Diabetes segments, each of which grew 9 percent. Neuromodulation net sales totaled $1.4 billion, while Diabetes products generated $1.1 billion. Within the Neuromodulation segment, sales were robust, with neuro-implantable products earning $1.1 billion (a 7 percent increase compared with fiscal 2008) and gastroenterology and urology devices grossing $289 million (a 19 percent jump compared with fiscal 2008).
The Surgical Technologies segment experienced a growth rate similar to the Neuromodulation and Diabetes sectors, rising 10 percent to $857 million. The most profitable products in that segment were those for the ear, nose and throat, which collected $352 million in fiscal 2009. Conversely, the least popular were navigation devices, which netted $185 million in sales but posted a 16 percent increase compared with the $159 million those products earned in fiscal 2008.
Medtronic’s smallest revenue producer in fiscal 2009 was the Physio-Control segment, which manufactures the LIFEPAK 15 defibrillator/monitor and the LIFEPAK 20e defibrillator/monitor. Sales in this segment grew 4 percent to $343 million.
In an effort to streamline operations and align the firm with its long-term growth outlook, Medtronic announced plans last year to reduce its global workforce by 1,500 to 1,800 employees. The plan cost the company $27 million (in restructuring charges) in the final quarter of fiscal 2009 and $41 million (after taxes) in the first quarter of fiscal 2010.
$14.6 Billion
KEY EXECUTIVES:
William A. Hawkins, Chairman and CEO
Stephen H. Mahle, Exec. VP, Healthcare Policy and Regulatory
Susan Alpert, M.D., Ph.D., Sr. VP and Chief Regulatory Officer
Martha Goldberg Aronson, Sr. VP and Chief Talent Officer
Robert H. Blankemeyer, Sr. VP and President, Surgical Technologies
Jean-Luc Butel, Sr. VP and President, Medtronic International
H. James Dallas, Sr. VP, Quality and Operations
Kathleen Erickson DiGiorno, VP and Chief Ethics and Compliance Officer
Gary L. Ellis, Sr. VP and Chief Financial Officer
Richard E. Kuntz, M.D., Sr. VP and President, Neuromodulation
Stephen R. La Neve, Sr. VP and President, Spinal and Biologics
James P. Mackin, Sr. VP and President, CRDM
Christopher J. O’Connell, Sr. VP and President, Diabetes
Stephen N. Oesterle, M.D., Sr. VP, Medicine and Technology
Catherine M. Szyman, Sr. VP, Strategy and Innovation
Scott R. Ward, Sr. VP and President, Cardiovascular
NO. OF EMPLOYEES: 38,000
GLOBAL HEADQUARTERS: Minneapolis, Minn.
Not every company can overcome a litany of economic, regulatory and political challenges and still turn a profit. Medtronic Inc. managed such an unlikely feat in fiscal 2009 by striving to deliver better healthcare to both patients and the market.
That struggle, along with a tenacious focus on its core mission of alleviating pain, restoring health and extending patients’ lives, helped the device giant emerge from the most serious economic downfall since the Great Depression with double-digit earnings growth and top market positions in five of its seven business segments.
“This fiscal year saw an unprecedented convergence of challenges in the economy and our industry,” Medtronic Chairman and CEO William A. Hawkins told shareholders in a letter published within the company’s 2009 annual report. “The global economic crisis, public and government demands for greater financial transparency, challenges to the existing federal regulatory regime, a new administration, and looming healthcare reform have all contributed to an uncertainty that is expected to prevail into 2010. Despite these challenges—perhaps because of these challenges—we ended this past fiscal year stronger, more nimble and more resilient than ever before.”
Medtronic also ended the fiscal year much richer. Net sales rose 8 percent to $14.6 billion and gross profit climbed 10 percent to $11 billion for the year ended April 24, 2009. Executives attributed those sizable increases to double-digit sales growth in the company’s Cardiovascular and Surgical Technologies business segments, robust product sales outside the United States, and the successful integration of Kyphon Inc., a Sunnyvale, Calif.-based developer of minimally-invasive spinal technologies. Medtronic purchased Kyphon in November 2007 for $4.2 billion to “help accelerate the growth” of its spinal business; over the last five quarters Kyphon (as part of Medtronic’s Spinal segment) clearly has accomplished its mission, contributing $907 million to its parent company’s bottom line.
While they were not the most profitable, Kyphon products nevertheless recorded the highest sales growth rate in fiscal 2009. Sales more than doubled, according to Medtronic’s annual report, going from $298 million in fiscal 2008 to $609 million in 2009.
Overall, the company’s Spinal segment generated $3.4 billion in sales, a 14 percent increase compared with the $2.9 billion it recorded in fiscal 2008. More than half of the fiscal 2009 revenue ($1.9 billion) came from the sale of core spinal devices such as the CD Horizon Legacy and Mast product lines. Biologics contributed $840 million to the segment’s total revenue, a 3 percent increase compared with the $815 million biological products generated in fiscal 2008.
In contrast, the Cardiac Rhythm Disease Management (CRDM) segment amassed the highest number of dollars for the company, but recorded the least amount of growth. In fiscal 2009, CRDM sales amounted to $5 billion, a mere 1 percent increase compared with the $4.9 billion the segment reported the previous fiscal year. Executives attributed the flat growth to foreign exchange rates that impacted sales by $25 million and a slight decrease in sales of pacemakers and related products due to competition from rivals Boston Scientific Corp. and St. Jude Medical Inc.
Pacing systems sales fell to $1.9 billion but they were partially offset by sales growth outside of the United States. That growth was driven mostly by sales of the Adapta pacemaker product line, which features an atrial-based pacing mode that reduces unnecessary pacing in the right ventricle of the heart while providing the safety of a dual chamber backup. Studies have suggested that reducing unnecessary pacing in the right ventricle may reduce the risk of developing heart failure and atrial fibrillation.
In addition to its Adapta pacemaker products, Medtronic’s foreign pacing sales also benefited from the July 2008 release of the Reveal DX Insertable Cardiac Monitor in Japan. Deemed a high-priority medical device by the Japanese government, the memory stick-sized Reveal DX is inserted under the skin of the chest area where it can record and save arrhythmia patterns for up to three years.
Executives said pacing sales—as well as defibrillator sales—received an additional boost from the Medtronic CareLink Service, an electronic system that enables clinicians to review data about cardiac devices in real time and access stored data about patients and devices on a website. More than 360,000 patients worldwide are currently monitored through the company’s CareLink Service, a 44 percent increase compared with the 250,000 patients monitored in fiscal 2008.
Besides its CareLink Service, future CRDM sales are expected to be impacted by the January 2009 acquisition of Ablation Frontiers Inc., a privately held company in Carlsbad, Calif., that has developed a device for treating heart arrhythmias. Ablation Frontiers’ technologies have since been folded into Medtronic’s Atrial Fibrillation Solutions franchise.
Defibrillation systems—Medtronic’s largest product line—garnered $2.9 billion in sales during fiscal 2009, a 2 percent increase compared with the $2.8 billion those devices generated for the company in the previous fiscal year. Medtronic received U.S. Food and Drug Administration approval for several new defibrillator products during fiscal 2009, including the Sprint Quattro Secure S Single Coil defibrillation lead. The new products are expected to impact fiscal 2010 sales.
Some of the new products Medtronic released in fiscal 2009 had virtually an immediate impact on sales. The U.S. launch of the Endeavor drug-eluting stent in the fourth quarter of fiscal 2008 helped increase the sales of coronary stents and other coronary/peripheral products by 16 percent to $1.3 billion. Worldwide, the Endeavor and Endeavor Resolute drug-eluting stents generated $603 million for Medtronic, a 44 percent increase compared with the $418 million the products earned for the company in fiscal 2008. Executives expect the Endeavor stent to continue to generate sizeable revenue for Medtronic, particularly since it was approved in Japan last year and is now being sold there.
Endovascular products produced the second-highest sales growth rate for Medtronic (behind Kyphon devices). Sales ballooned 40 percent to $398 million, according to the company’s annual report. Executives said the increase was driven mainly by domestic sales of the Talent Abdominal Aortic Aneurysm Stent Graft System and Thoracic Stent Graft System as well as the international launch of the Endurant Abdominal Stent Graft System in July 2008.
Sales of revascularization and surgical therapies products grew 4 percent to $447 million, while structural heart disease device sales inched up 1 percent to $300 million. Together with the sales of endovascular products, stents and other coronary/ peripheral products, the company’s Cardiovascular segment amassed $2.4 billion, a 14 percent increase compared with the $2.1 billion the segment yielded in fiscal 2008.
The Cardiovascular segment is expected to be a lucrative one for Medtronic over the next fiscal year as the company integrates Ventor Technologies Ltd. and CoreValve Inc. into its business. The firm acquired both Ventor and CoreValve in the fourth quarter of fiscal 2009 for a combined $1 billion ($325 million for Ventor and $700 million for CoreValve). The companies, which develop transcatheter heart valve technologies for the replacement of aortic valves, were purchased to help Medtronic provide “additional momentum” to its growth strategies.
Some of the momentum for Medtronic’s growth during fiscal 2009 came from the Neuromodulation and Diabetes segments, each of which grew 9 percent. Neuromodulation net sales totaled $1.4 billion, while Diabetes products generated $1.1 billion. Within the Neuromodulation segment, sales were robust, with neuro-implantable products earning $1.1 billion (a 7 percent increase compared with fiscal 2008) and gastroenterology and urology devices grossing $289 million (a 19 percent jump compared with fiscal 2008).
The Surgical Technologies segment experienced a growth rate similar to the Neuromodulation and Diabetes sectors, rising 10 percent to $857 million. The most profitable products in that segment were those for the ear, nose and throat, which collected $352 million in fiscal 2009. Conversely, the least popular were navigation devices, which netted $185 million in sales but posted a 16 percent increase compared with the $159 million those products earned in fiscal 2008.
Medtronic’s smallest revenue producer in fiscal 2009 was the Physio-Control segment, which manufactures the LIFEPAK 15 defibrillator/monitor and the LIFEPAK 20e defibrillator/monitor. Sales in this segment grew 4 percent to $343 million.
In an effort to streamline operations and align the firm with its long-term growth outlook, Medtronic announced plans last year to reduce its global workforce by 1,500 to 1,800 employees. The plan cost the company $27 million (in restructuring charges) in the final quarter of fiscal 2009 and $41 million (after taxes) in the first quarter of fiscal 2010.