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What Investors Can Expect from Medtronic

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Part 6
What Investors Can Expect from Medtronic PART 6 OF 15

Medtronic Aims to Become a Holistic Diabetes Management Company

Holistic diabetes management company

Medtronic (MDT) is currently a leading supplier of insulin pumps and sensors to type one diabetes patients in the US. However, the company aims to transform itself into a holistic diabetes management player that serves the entire diabetes population globally. The company also plans to move beyond being a product-oriented company to an outcomes-based company that provides integrated care. These transformations are expected to expand the company’s diabetes patient base from 1 million to 20 million and increase the diabetes business revenues from $2.0 billion to $4.0 billion in future years. As a holistic diabetes management company, Medtronic could present tough competition to other diabetes device players such as Insulet (PODD), Johnson & Johnson (JNJ), and Roche Holdings (RHHBY).

If Medtronic manages to achieve this long-term target, it may have a positive impact on the company’s share prices as well as those of the SPDR S&P 500 ETF (SPY). Medtronic makes up about 0.52% of SPY’s total portfolio holdings.

Medtronic Aims to Become a Holistic Diabetes Management Company

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Diabetes Group structure

The above diagram shows the structure of Medtronic’s Diabetes Group. The division includes three patient-centric organizations such as Intensive Insulin Management (or IIM), Non-Intensive Diabetes Therapies (or NDT), and Diabetes Service & Solutions (or DSS).

The IIM business is the company’s core diabetes business and is focused on the type one diabetes patient population. To boost revenues of this business, Medtronic has been mainly targeting the endocrinologist community. The company aims to establish closed-loop automated insulin dosage technology as a standard of care for this patient group.

The NDT business is focused on type two diabetes patients, a new focus area for Medtronic. The company has been targeting primary care physicians (or general practitioners) to drive demand for its products in this segment. Medtronic aims to create awareness about the significance of glucose monitoring in managing this condition.

The DSS business aims to transform Medtronic’s product-based diabetes business to an outcome-based company that offers services and solutions to diabetes patients on a global level. Through this segment, the company interacts with payers, integrated delivery networks, and ministries of health.

In the next article, we’ll discuss Medtronic’s Diabetes Group’s strategy in greater detail.

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