Medtronic

Medtronic Public Limited Company

Type	Public
Traded as	NYSE: MDT S&P 100 Component S&P 500 Component
Industry	Medical equipment
Founded	1949 (1949)
Headquarters	Dublin, Ireland (principal executive office) Fridley, Minnesota (operational headquarters)[1]
Key people	Omar Ishrak, Chairman and CEO
Products	Medical devices
Revenue	US$ 28.83 billion (2015)
Operating income	US$5.29 billion (2015) [2]
Net income	US$ 3.24 billion (2015)
Total assets	US$ 99.64 billion (2015)
Total equity	US$ 52.06 billion (2015)
Number of employees	98 000 (2015)[2]
Website	www.medtronic.com

Medtronic Public Limited Company is a medical device company. Its headquarters are in Dublin, Ireland.^[1][3][4][5] Its operational headquarters are in Fridley, Minnesota.^[1][6] Medtronic is the world's largest standalone medical technology development company.^[7]

In 2015, at the time of its acquisition of Covidien, its market capitalisation was about $100 billion.^[8] Medtronic operates in more than 140 countries.^[1] It employs over 85,000 people and has more than 53,000 patents.^[9]

History

Early history

Medtronic Operational Headquarters in Fridley, Minnesota, a suburb of Minneapolis.

Medtronic was founded in 1949 in northeastern Minneapolis by Earl Bakken and his brother-in-law, Palmer Hermundslie, as a medical equipment repair shop.^[10]

Through his repair business, Bakken came to know C. Walton Lillehei, a doctor of heart surgery at the University of Minnesota Medical School. The deficiencies of the pacemakers of the day were made painfully obvious following a power outage over Halloween in 1957, which affected large sections of Minnesota and western Wisconsin.^[11] A pacemaker-dependent paediatric patient of Lillehei died because of the blackout. The next day, Lillehei spoke with Bakken about developing some form of battery-powered pacemaker. Bakken modified a design for a transistorised metronome and created the first battery-powered external artificial pacemaker.

Medtronic's old headquarters in St. Anthony, Minnesota

The company expanded through the 1950s, mostly selling equipment built by other companies but also developing some custom-made devices. Bakken built a small pacemaker that could be strapped to the body and powered by batteries. Work in the new field later produced an implantable pacemaker in 1960. The company built headquarters in the Minneapolis suburb of St. Anthony, Minnesota, in 1960^[12] and the company moved to Fridley in the 1970s. Medtronic's main competitors in the cardiac rhythm field include Boston Scientific and St. Jude Medical. In 1998, Medtronic acquired Physio-Control for $538 million.^[13]

Animal rights

In 2005, 2008, and 2010 PETA threatened to submit a shareholder resolution to improve animal welfare standards in the company. In 2005, PETA attempted to stop five specific animal experiments that it deemed "crude and cruel". In 2008, PETA protested the outsourcing of animal testing to countries with lax animal welfare laws, such as China. In 2010, PETA attempted to stop Medtronic's reported use of live animals in testing and training. In response, Medtronic conducted a feasibility study that found that banning the use of live animals was impractical. Medtronic continues to use live animals for testing and training but has said that it will look for alternatives in the future. In each case, PETA withdrew its shareholder resolution after talks with Medtronic's leadership.^[14][15]

Recent history

After 2008 and the global financial crisis, its stock value dropped dramatically. Despite sales and gross margins well above the average of most industries, with steady revenue growth since 2008 and a gross margin above 60%, Medtronic initiated a series of restructurings in 2008, 2009, 2010 and 2011, including Physio-Control's spin-off for $487 million.^[16] Its stock price now approaches pre-recession values.

In May 2014, Medtronic agreed to pay over $1 billion to settle patent litigation with Edwards Lifesciences, after years of protracted legal battles.^[17]

In June 2014, Medtronic announced its acquisition, the largest in its history, of Covidien, plc of Ireland, for $42.9 billion in cash and stock.^[18] Following the acquisition, Medtronic ceased to be a Minnesota-based company. It moved its headquarters to low-tax Ireland, allowing it to avoid taxation on more than $14 billion held overseas.^[5][19]

In February 2016, the company announced that it would acquire Bellco from private equity firm Charme Capital Partners.^[20]

In June 2016, the company announced its acquisition of HeartWare International Inc. for $1.1 billion.^[21]

Acquisition history

The following is an illustration of the company's major mergers, acquisitions and historical predecessors:

Business units

Medtronic has six main business units, which develop and manufacture devices and therapies to treat more than 30 chronic diseases, including heart failure, Parkinson's disease, urinary incontinence, Down's syndrome, obesity, chronic pain, spinal disorders and diabetes.

Cardiac rhythm disease management

Cardiac rhythm disease management is the oldest and largest of Medtronic's business units. Its work in heart rhythm therapies dates back to 1957, when Bakken developed the first wearable heart pacemaker to treat abnormally-slow heart rates. Since then, it has expanded its expertise in electrical stimulation to treat other cardiac rhythm diseases. It has also made an effort to address overall disease management by adding diagnostic and monitoring capabilities to many of its devices. An independently-operating Dutch pacemaker manufacturer, Vitatron, acquired by Medtronic in 1986, is now a European subsidiary of the unit.^[50] Medtronic and Vitatron pacemakers are interrogated and programmed by Medtronic Carelink Model 2090 Programmer for Medtronic and Vitatron Devices; they use separate interfaces.^[51]

In 2007, Medtronic recalled its Sprint Fidelis product, the flexible wires, or leads, which connect a defibrillator to the interior of the heart. The leads were found to be failing at an unacceptable rate, resulting in unnecessary shocks or no shocks when needed; either can be lethal. The scope of the problem continues to be a matter of research. Studies since the recall, disputed by Medtronic, suggest that the failure rate of already-implanted Sprint Fidelis leads is increasing exponentially. Medtronic's liability is limited by various court decisions.^[52]

Spinal and biologics

Spinal and biologics is Medtronic's second-largest business. Medtronic is the world leader in spinal and musculoskeletal therapies. In 2007, Medtronic purchased Kyphon, a manufacturer and seller of spinal implants thst are necessary for procedures like kyphoplasty.^[53]

In May 2008, Medtronic Spine agreed to pay the US government $75 million to settle a qui tam lawsuit after a whistleblower alleged that Medtronic committed Medicare fraud. The company was charged with illegally convincing healthcare providers to offer kyphoplasty, a spinal fracture repair surgery, as an inpatient, not an outpatient, procedure to make thousands of dollars more in profits per surgery.^[54]

A "special report" by writer Steven Brill in Time showed that according to Medtronic's quarterly SEC filing of October 2012, the company had, on average, a 75.1% profit margin on its spine products and therapies.^[55]

Cardiovascular

Medtronic's cardiovascular therapies span the major specialities of interventional cardiology, cardiac surgery and vascular surgery. The products are used to reduce the potentially debilitating effects of coronary, aortic and structural heart disease.

Neuromodulation

Neuromodulation is the second-oldest and third-largest department of Medtronic. Its products include neurostimulation systems and implantable drug delivery systems for chronic pain, common movement disorders and urologic and gastrointestinal disorders. It relies on innovative development methodologies to build cutting-edge medical technology devices, with embedded software. The department's revenues in 2014 amounted to $1.9 billion, or 11% of Medtronic’s total revenues.^[56]

Diabetes

The diabetes management manufacturing and sales division of Medtronic is based in Northridge, California.^[57] The original company, Minimed Technologies, was founded in the early 1980s by Alfred E. Mann and spun off from Pacesetter Systems to design a practical insulin pump for lifelong wear.^[58] Most devices then were either too large or impossible to program and were extremely unreliable. The release of the lightweight, menu-driven MiniMed 500 series changed the landscape, and it was a major factor in bringing insulin pump usage to the mainstream.

In 1996, the MiniMed was redesigned by the innovation consulting RKS Design to look both more flashy and more elegant and to resemble a beeper. The friendliness of the device boosted adoption rate, and sales increased by 357%.^[59] In the early 2000s, Medtronic purchased Minimed, to form Medtronic Minimed.^[60]

On 11 May 2009, Medtronic announced it had chosen San Antonio, Texas, for the location of its new Diabetes Therapy Management and Education Center. The company announced that it expected 1400 new jobs would be created to staff the 150,000-square-foot (14,000 m²) facility.^[61]

In September 2016, the FDA approved a device, MiniMed 670G, which automatically pumps insulin to a diabetic patient's body on sensing its absence or reduction.^[62]

Surgical technologies

O-arm Surgical Imaging System. Federal Center of Neurosurgery in Tyumen, 2013

The surgical technologies business group designed and manufactured products for the diagnosis and treatment of ear, nose and throat (ENT) diseases and cranial, spinal and neurologic conditions. It also encompassed a surgical navigation division to design "StealthStation" systems, software and instruments for Computer Assisted Surgery (CAS) and a special intraoperative X-ray imaging system, known as the O-arm Imaging System. Many of the products are used for minimally-invasive surgical procedures. In 2016, the business unit was dissolved, and each site folded into new business groups.

Technology safety

In 2011, Jay Radcliffe, an independent black hat security researcher, revealed a security vulnerability in a Medtronic insulin pump, allowing an attacker to take control of the pump. Medtronic responded by assuring users of the full safety of its devices.^[63]

In 2008, a team of computer security researchers was able to take remote control of a Medtronic cardiac implant. The team, using an unused implant in a lab, was able to control the electrical shocks delivered by the defibrillator component and even glean patient data from the device.^[64]

References

External links

• Official website

• • Business data for Medtronic: Google Finance
  • Yahoo! Finance
  • Reuters
  • SEC filings