Medtronic (MDT) is actively pursuing new innovations and spending a lot on R&D (research and development). Innovation is a key growth driver for Medtronic. As discussed previously, the company has a huge product pipeline. New therapies’ contribution to revenue growth has increased in the last few years, from 150–250 basis points to 200–350 basis points. The company expects to register a 2%–4% CAGR (compound annual growth rate) over the next five years through therapy innovation.
Emerging markets present a significant growth opportunity to Medtronic. The company is already positioned well in several countries in emerging markets. The immense untapped potential provides the company with the opportunity to explore new segments and advance. Emerging markets’ contribution to the company’s revenue growth is estimated to be in the range of 150 to 200 basis points. The company expects to register a 10%–13% CAGR over the next five years through emerging markets.
Services and solutions
Medtronic is a well-diversified company with a strong product portfolio. It is a leading provider of integrated services and solutions for a large number of treatment areas. The company has a number of end-to-end solutions and cost-effective services for customers. The contribution of services and solutions to revenue growth is estimated to be in the range of 40 to 60 basis points. The company expects to register a 27%–36% CAGR over the next five years through services and solutions.
Other major players in the US medical device industry include Johnson & Johnson (JNJ), Boston Scientific (BSX), and Abbott (ABT). The Vanguard Dividend Appreciation ETF (VIG) is one of the major dividend ETFs with exposure to Medtronic.