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How is Medtronic’s Economic Value Strategy Driving its Growth?

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Jul. 5 2016, Updated 11:08 a.m. ET

Overview

Medtronic (MDT) has established three key growth strategies, focusing on therapy innovation, globalization, and economic value. Its economic value strategy drives growth through cost optimization and efficiencies. The strategy is expected to contribute 40–60 basis points to revenue growth, at a 36% CAGR (compound annual growth rate) by fiscal 2021. US medical device companies such as Johnson & Johnson (JNJ), Becton, Dickinson and Company (BDX), and Thermo Fisher Scientific (TMO) are some of Medtronic’s major competitors. Medtronic accounts for ~0.84% of the total holdings of the iShares Edge MSCI Min Vol USA ETF (USMV).

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Value-based healthcare

The healthcare industry has seen a shift to value-based healthcare, which makes it imperative for medical device companies to evolve their business models and adapt to the change for sustainable business growth and profitability. Medtronic is on the forefront of these efforts. The company has actively pursued initiatives and projects to develop and establish services and end-to-end treatment solutions for its customers. Higher efficiency at a lower cost has become a prime concern for healthcare providers.

Medtronic’s services and solutions

Medtronic offers various services and solutions that provide therapy optimization benefits to customers, such as its CathLab Managed Services, orthopedic solutions, and chronic care management.

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