Medtronic Inc. (NYSE: MDT) could be best described as a company focusing on the "daunting medical device" market. The company excels in the production and marketing of implantable devices, principally those with an electrical component - various types of pacemakers, implantable drug delivery pumps, a device for deep-brain stimulation to treat Parkinson's disease, an electrical impulse for bladder control, and others.
Wherever appliances can be electrified, Medtronic (a combination of the words electronic and medical) will be there worldwide - the company's devices are being implanted in people worldwide every five seconds.
Today, nearly 60 years after it was founded, Medtronic has revenue totaling $13 billion. Over the years, the company also expanded into other fields such as diabetes, orthopedics, and stents.
William (Bill) Hawkins, the CEO of Medtronic Worldwide, is a pleasant and modest man who displays virtually none of the typical mannerisms of a CEO. But he displays no modesty when it comes to Medtronic's capabilities or its ambitions. From his exclusive interview with "Globes" it is clear that he is very well-informed on the latest details about his company including developments overseas. Hawkins talked about the company's strategy, his forecast for the healthcare market, and the Israeli medical device market. But the first question we wanted an answer to was how long will Medtronic remain the standard bearer for the bionic man.
Globes: In an era of wireless communications, wouldn't it be possible to carry out the same procedures as you do - internal biological signal monitoring, electro-cardiac stimulation, and altering electrical activity in the brain - without implanting electrical devices, but through biological products or external devices instead?
Hawkins: "We don't yet see a future where there will be no need at all for implantable devices. However, in the future we're already beginning to plan, the principal part of the device will be outside, and it will communicate with a miniature component implant inserted into the body in the most non-invasive manner possible. It may well be that in future, product implants will be more biological, perhaps on a stem cell basis, but we believe the development of this will take another ten years at least."
Hawkins joined Medtronic in 2002. He was appointed CEO in 2007, after serving as president and COO since 2004 and as president of Medtronic's vascular business before that. He received a B.Sc. degree in electrical and biomedical engineering from Duke University in 1976, and an MBA from the Darden School of Business, University of Virginia, in 1982. Before joining Medtronic, he served, among other things, as president of Johnson & Johnson surgical device unit Ethicon Inc., founder of the Eli Lilly unit Ivac Corp. and president of devices for vascular intervention and US Operations, at Guidant Corp.
The areas Medtronic specializes in correspond to a large extent with those in which Israeli medical device companies excel, and Hawkins shows his familiarity with, and appreciation of, the local market. "Israel is an important market for us, despite its small size. A lot of people in the medical world have set their sights on this market," says Hawkins. "Over the past few years we appointed scouts whose job is to get to know Israeli technology and bring it to us. We're very happy with the investments we've made in Israel so far - including, of course, InStent, which was a pioneer in stents, and Odin which specialized in in-vivo navigation, which enables us to navigate inside the brain. We couldn't have gotten near that market without the company's devices."
Odin was acquired two years ago and is now called Medtronic Israel.
You recently acquired Kyphon, which bought most of the activity of Disc-O-Tech several months earlier. Are you happy with the inheritance?
"Unfortunately, we had to sell part of Disc-O-Tech's activity for anti-trust reasons, but the products we still have contribute to our expected expansion in the orthopedics market."
And on the other hand, you invested in Rimon Medical, and it was Boston Scientific that acquired it. Do you regret this?
"We had to choose between several options for heart failure monitoring. We didn't feel Rimon's solution was the best."
Your line of business looks like a perfect match with the activity of the Israeli serial entrepreneur Yossi Gross. He also likes devices that generate electrical stimulation.
"I'm sure I've heard that name before. It certainly is our field. We recently acquired a company, for example, which we thought had developed an electrical device for preventing obesity by stimulating the stomach, but we found that it didn't work that well. Getting hold of a product like this which does work is very high on our agenda."
What else is on your shopping list?
"We'd be happy to have a product that regulates atrial fibrillation. Likewise, we'd also be happy to hear about solutions for stroke - one of the most severe, and as yet untreated, diseases.
"Medtronic is making a transition from a medical device treatment company to a disease management company, that is to say our devices will also play a role in disease diagnosis and monitoring, and provide treatment when necessary. These changes have been made possible thanks to the increasingly closer links between communications, computing, and biology."
It was recently reported that someone hacked into a device of yours and tampered with its functioning.
"The devices are encoded and protected. No device implanted in someone has ever been hacked into. To do that, the hacker would have to spend hours right next to the person with the implanted device. The chances are slim."
Israel - a country with education and training
"Israel is a key country for us," says Medtronic VP emerging markets Jo Merkun, who joined in the interview. "The doctors in Israel are highly innovative and creative, so this is frequently the first place in the region where we launch our products.
"We very often bring Israeli doctors to our training facility in Switzerland, so they can explain to other doctors how to use our products. We recently arranged a visit by a delegation of doctors from Kazakhstan to receive training in Israel.
"Israel tops the list of locations where we conduct clinical trials - and woe to us if we don't, since the Israeli doctor will not hesitate to call and make sure he's on the list. At the end of trial he will not flinch from telling you the truth about your product. For me, that is a big advantage."
What is your view on the products of Israeli start-ups?
"Israelis have excellent ideas. Obviously, it's a very long road to production, but entrepreneurs have recently begun finding the right commercial partnerships. We will be sending our senior VP Stephen Oesterle to the Biomed Israel 2008 conference in Israel in May, so he'll be looking for new partnerships as well."
Hawkins doesn't forget to point out at the end of the interview that he continues to look forward to the next development. "Don't forget to encourage entrepreneurs in Israel to keep up the excellent work."
Direct connection to the heart
Medtronic is currently in the middle of a commercial launch of CareLink, a unique disease and telemedicine monitoring system. The system is based on capabilities integrated in Medtronic's implantable devices, which measure biological signals inside the body and then transmit them to external communications devices, which then relay the information directly to the physician without any action on the part of the patient.
This monitoring system is suitable for use with any chronic disease whose attacks create signals inside the body before or during the presentation of symptoms. This will enable precious time to be saved during an emergency, until the patient gets to hospital, undergoes tests, and is given treatment. At a more complex level, the device can support the entire treatment cycle. In a case of heart failure, for instance, the device diagnoses early signs of heart failure, and sends an electric shock which reactivates the heart.
But it may well be that the device's main advantage could actually be its efficiency in routine monitoring. Transmitting data directly to doctors saves patients the need to attend surgery for check-ups. A survey conducted by Medtronic shows that patients using the device feel closer to their doctors, even if they have moved further away from them.
Of equal importance is the contribution the device has made to efficiency at hospitals, by preventing queues, treating emergencies before hospitalization, and saving expensive tests. The question that remains unanswered is whether hospitals will be able to adapt to the new technology and provide a fast and accurate response to data transmitted by email, rather than just to agitated patients shouting in the corridor.
The writer was a guest of Medtronic in Lausanne, Switzerland.
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2008
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