Medtronic is the world’s largest independent medical technology development company with its market capitalization valued about $100 billion. Medtronic operates in more than 140 countries, employs over 85,000 people and has more than 53,000 patents.
Back in 2014, Medtronic and Covidien shocked the medical device community by announcing a $42.9 billion merger.
The size of the transaction moved Medtronic up to second place on Medical Product Outsourcing’s annual ranking of the 30 largest medical device companies, following Johnson & Johnson and surpassing GE and Siemens. In FY 2015, annual revenue of Medtronic was $20.2 billion.
The transaction truly was transformational, affording shareholders the value upside from the significant strategic synergies the deal creates. On a combined basis, the company now has a dozen billion-dollar-plus franchise.
Medtronic Korea’s headquarters is in the Gangnam area, one of the wealthiest districts in Seoul. Joon Hurh, vice president of Medtronic Korea, talked about various aspects of the merged company in a recent interview with The Korea Bio Medical Business Review.
Question: What has been the biggest change with Medtronic Korea since the integration with Covidien?
Answer: One of the focuses we started with even before the integration was to minimize the changes or the disruptions to the customers and, looking back, we have done a good job ensuring the minimal disruptions. That said we experienced a lot of changes. This is a new office since April last year, and we had to migrate to one operating system. We then completed the integration of former legal entities into one at the end of November. That was our journey for the last 24 months. What seems biggest among these changes is the responsibility that got larger as one of the leaders in the broader healthcare sphere beyond just the medical device industry.
Q: What was the biggest barrier to integration progress?
A: As any merger would, there are challenges of course but we set ourselves on our four guiding principles: First to preserve because both companies were immensely successful and we needed to make sure the relationship would maintain. Second is to create an optimization between the two entities. The third is to accelerate the growth which is why the two companies become one. The last is to transform to become more successful. Through the process, we intensively communicate with the internal stakeholders, employees, as well as the various external stakeholders, gather their feedback and share ideas. That always reminded us of our mission -- Medtronic’s core value system.
Q: What do you believe Medtronic can do more like a bigger player in the industry?
A: As one of the leading companies in the broader healthcare circle, we think our responsibility keeps growing. I consider that one of the responsibilities for us is to make meaningful differences to transform the healthcare system faced with everyday challenges such as improvement of clinical outcomes and their accesses. Korea is very lucky to have a universal health care system to allow access for 99.9 percent of the people, but that is not the case around the world. That said we have to balance and optimize the economic costs required to be affordable. Our global growth strategies to address these challenges are; therapy innovation, access expansion, and economic value delivery.
Q: Please describe your new tagline, by introducing what lies beneath and what you will put into practice.
A: There is an African proverb that goes something like “If you want to go fast, go by yourself. If you want to go further, go together.” We should go “further” by continuing to drive progress in innovation and devise powerful solutions with proven clinical and economic value as the basis of our offerings and value proposition.
And we should do them “together” by forging new, deeper, and stronger partnerships with various stakeholders to achieve everyone’s goal of delivering more seamless, integrated care across the healthcare continuum.
Q: In recent years, value-based health care (VBHC) has been a hot topic around the world. What is your opinion of the representative of VBHC that Medtronic is aiming for?
A: To be able to address the challenges that the traditional health care system have, our technology has to serve the greater public but at the costs where it’s bearable. We believe this will be one of the means to achieve the solution by pricing based on the value; I would even say the guarantee of the clinical outcome. Through this, we can defiantly address the challenges by accessing the technology that would provide containment or even reduction of the cost while maintaining the clinical outcome that is comprisable.
Q: Please refer to Medtronic’s Service & Solution program, including its backgrounds and current progress.
A: As a global organization and one of the leaders in the larger healthcare ecosystem, we are stepping forward to put our full power into technologies, services, resources, our people and our expertise to work with new partners and new ways to usher in the new era of healthcare. We aspire to be a healthcare solution provider, not just a device manufacturer or vendor. To realize this motivation, we are building models in improving patient outcomes and again reduce costs. Medtronic’s Service & Solution program is one of the ways for us to achieve that inspiration.
Q: What is your key area which Medtronic Korea will mainly reach out to improve patients’ health?
A: What has changed is a broader portfolio we now have through integration with Covidien. What remains unchanged is that our therapies have always contributed to alleviating pain, restoring health and extending life. Our focus also remains on how to help the patients and customers, by assessing the needs, bringing more partners to work together and providing right solutions.
Q: What social activities does Medtronic Korea prepare and promote in Korea?
A: Our mission consists of six tenets: First, our contribution to the world through biomedical engineering. Second is the direction of our growth not for profit. Third is to strive without reserve for example honesty, integrity to the customers and patients. The fourth is about fair profit: a slogan that started in 1960 in our company. We take pride in this because every company strives for maximum profit while ours is for reasonable profit. The fifth is personal worth of every employee by creating a working environment that is acceptable. The final tenet is the responsibility of our company as a good corporate citizen; we would like to take two examples – Project 6 and “Miracle of 300” campaign. Every year we have multiple events of going to places with underprivileged children and elders to get ourselves involved rather than giving money away.
Q: Recently there have been changes in the sales marketing environment for the Korean health field due to the “Kim Young-ran Law” -- prohibition of gifts and money and illegal cheating. How does Medtronic Korea respond to these changes?
A: I think it’s a great movement. Going back to the mission, Tenet 2 talks about where to focus on the direction of our growth and that should be within the biomedical sphere. This law puts us on equal footing, so we cherish the law itself, and most importantly the spirit of the law addresses the needs of providing the right enablers to help the Korean healthcare system.
Q: Do you have any messages you would like to convey to overseas readers of the domestic healthcare industry?
A: With our integration with Covidien, we now have a bigger portfolio of innovative products, greater clinical and economic expertise and a larger global footprint. We position ourselves as a stronger partner for physicians, hospital systems, patients, payers, and governments around the world.
Along with our “further, together” mindset, we aspire to drive healthcare transformation in partnership with like-minded players across the industry. We believe we have a transformative opportunity to improve the value we bring to healthcare by working with organizations that want to change the future of healthcare with us.
Our Mission to alleviate pain, restore health and extend life is at the core of why we do what we do to take healthcare further, together.
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