||This article needs additional citations for verification. (December 2008)|
|Type||Public (NYSE: MDT)
S&P 500 Component
|Key people||Omar Ishrak, Chairman & CEO|
|Revenue||$15.93 Billion (2011)|
Medtronic was founded in 1949 in a garage in northeast Minneapolis by Earl Bakken and his brother-in-law Palmer Hermundslie as a medical equipment repair shop. They originally wanted to sell basketball pumps due to a shortage in the Midwest in the 20th century. Bakken began as a graduate student in electrical engineering at the University of Minnesota before he gave up his studies to focus on Medtronic.
Through their repair business, Bakken came to know C. Walton Lillehei, a pioneer in the field of heart surgery then at the University of Minnesota Medical School. Lillehei was frustrated with the pacemakers of the day, which were quite large, applied electrical current externally requiring higher voltages, and had to be plugged into a wall outlet to operate. The deficiencies of such pacemakers were made painfully obvious following a power outage over Halloween in 1957 which affected large sections of Minnesota and western Wisconsin. As a direct result of this blackout, a pediatric patient of Dr. Lillehei who was pacemaker-dependent died. The next day, Lillehei spoke with Bakken about developing some form of battery-powered pacemaker. Stemming from this need, Bakken modified a design for a transistorized metronome to create the first battery-powered external artificial pacemaker.
The company expanded through the 1950s, mostly selling equipment built by other companies, but also developing some custom devices. Bakken built a small transistorized pacemaker that could be strapped to the body and powered by batteries. Work into this new field continued, producing an implantable pacemaker in 1960. It built a headquarters in the Minneapolis suburb of St. Anthony in 1960. It moved to Fridley by the 1970s. Medtronic's main competitors in the cardiac rhythm field include Stryker Corporation, Boston Scientific and St. Jude Medical.
|“||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.||”|
Since 2008 and the global financial crisis, Medtronic stock value dropped dramatically. Despite sales and margin 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 and the stock price now approaches pre-recession values.
Medtronic is composed of 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, downsyndrome, obesity, chronic pain, spinal disorders, and diabetes
CRDM (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 co-founder Earl Bakken developed the first wearable heart pacemaker to treat abnormally slow heart rates. Since then, CRDM has expanded its expertise in electrical stimulation to treat other cardiac rhythm diseases. CRDM 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 was acquired by Medtronic in 1986, and now it is a European subsidiary of Medtronic CRDM unit. Medtronic and Vitatron pacemakers are interrogated and programmed by Medtronic Carelink Model 2090 Programmer for Medtronic and Vitatron Devices, using separate interfaces.
Spinal & Biologics
Spinal and Biologics is Medtronic's second largest business, and Medtronic is the world leader in spinal and musculoskeletal therapies. In 2007, Medtronic purchased Kyphon, a manufacturer and seller of spinal implants necessary for procedures like kyphoplasty.
In May, 2008, Medtronic Spine agreed to pay the U.S. government $75 million to settle a qui tam (whistleblower) lawsuit alleging 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 rather than outpatient procedure, thereby making thousands more in profits per surgery.
A "special report" by writer Steven Brill in Time showed that according to Medtronic's quarterly SEC filing of October 2012 the company has on average a 75,1% profit margin on its spine products and therapies.
Medtronic's therapies in this business span the major specialties 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.
In 2007, Medtronic recalled its Sprint Fidelis product, consisting of the flexible wires, or leads, which connect a defibrillator to the interior of the heart. The Sprint Fidelis leads were found to be failing at an unacceptable rate, resulting in unnecessary shocks or a failure to administer a shock when needed; either can be lethal. The scope of this problem continues to be a matter of research. Studies since the recall, disputed by Medtronic, suggest the failure rate of already-implanted Sprint Fidelis leads is increasing exponentially. Medtronic liability in this matter is limited by various court decisions.
Products include neurostimulation systems and implantable drug delivery systems for chronic pain, common movement disorders, and urologic and gastrointestinal disorders.
Medtronic Diabetes is the diabetes management manufacturing and sales division of Medtronic, based in Northridge, California. The original company, Minimed Technologies, was founded in the early 1980s and spun off from Pacesetter Systems in order to design a practical insulin pump for lifelong wear. Most devices at the time were either too large or impossible to program and extremely unreliable. The release of the lightweight, menu-driven MiniMed 500 series changed the landscape, and 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 more flashy, more elegant, and resemble a beeper; the friendliness of the device boosted adoption rate and sales increased by 357%. In the early 2000s Medtronic purchased Minimed to form Medtronic Minimed.
Current models consist of the MiniMed Paradigm 523/723 and Paradigm Real-time Revel system and Guardian Real-time system. It is the first insulin pump which integrates continuous blood glucose monitoring, allowing patients to see in real time their glucose level. As well as insulin pumps, Medtronic Diabetes also makes Continuous Blood Glucose Monitoring Systems (CGMS) for use as stand alone systems or integrated into its Minimed Paradigm 523/723 series pumps. The company also makes and/or markets a large range of accessories and components for its insulin pump and CGMS products.
As of March 2007 the MiniMed name has begun to be absorbed into the parent company, Medtronic. Medtronic has kept the MiniMed name to brand their insulin pumps, for example the MiniMed Paradigm 722. As Medtronic frequently uses Medtronic Diabetes as the name for the division, it is unclear to the extent the division will be integrated into Medtronic. Although Medtronic MiniMed has its own website, and many products and marketing material still bear its name, the brand is being phased out.
On May 11, 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 1,400 new jobs would be created to staff the 150,000-square-foot (14,000 m2) facility.
The Surgical Technologies business designs and manufactures products for the diagnosis and treatment of ear, nose, and throat (ENT) diseases and cranial, spinal, and neurologic conditions. It also encompasses a surgical navigation division that designs "StealthStation" systems, software and instruments for Computer Assisted Surgery (CAS) and a special intraoperative imaging system known as the O-arm® Imaging System. Many of the products are used for minimally invasive surgical procedures.
Jay Radcliffe, an independent security researcher presented a speech at the BlackHat 2011. He revealed a security vulnerability in the Medtronic brand insulin pump, allowing an attacker remote control of that pump. Medtronic responded by assuring users of the full safety of their devices. 24
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