New Medtronic CEO discusses a plethora of topics
In an interview with the Star Tribune Monday, Medtronic's new chairman and CEO Omar Ishrak touched on a number of topics, ranging from his upbringing in Bangladesh to the way most medical devices are approved by the Food and Drug Administration. Here are a few outtakes:
You've talked about Medtronic providing economic value in the devices you make. What does that mean?
The first thing you have to do is to make sure that everyone understands that the financial health of our customers is an important ingredient for our own success. That with any kind of offering, whether it be technology or a service, we need to make sure that it improves the financial health of our customers. The industry in general hasn't done that in a rigorous fashion.
Whom do you consider your customers?
The people who buy products from us -- hospitals.
In med-tech, the traditional model has been to add on to existing devices and then charge more. Is that sustainable?
I think you can charge more, but there has to be a way to clearly point out that by charging more, customers are also benefitting financially. It could well be you charge more for a particular offering, but that could lead to better utilization of the hospital facilities. At the same time, charging more may result in a brand new procedure that is freshly reimbursed, which would increase the revenue levels for a customer.
Another stakeholder is the payer, the insurance companies and the reimbursement agencies, Medicare and so on. We've got to make sure that in the end, whatever we do has a benefit to the payers.
How do you determine economic value of a medical device? Would that be built into clinical trials?
We'll look into that, yes.
What do proposed changes in the 510k approval process at the FDA -- which would likely require more clinical studies before a device is approved -- mean for Medtronic?
We can deal with it more easily than some companies because we have an infrastructure in place. However, [approvals] may take longer. I think FDA should apply the right level of judgment in deciding when to employ a longer approval process. In some cases it may be appropriate, there may be instances where 510k-approved devices have resulted in some issues, and if that's a common theme and processes have to be tightened up, then that's reasonable. On the other hand, applying rules broad brush for everything may not be the most reasonable thing to do.
There are lots of stories about venture capital money drying up for small, innovative, med-tech start-ups. How does that affect Medtronic?
A lot of our technologies we get through partnerships; we can't do everything. The fact that there's a spirit of innovation in this country with innovators coming up with ideas is healthy. We've been rewarded because of it. For that to dampened in any way is not a good thing.
Where do you see opportunities for growth?
Right now, I look at penetration of existing therapies. If I look at China, our [existing] therapies would give us revenues of $7 billion. Today our business in China is $500 million. The same thing in India would give us $3 billion and our business is $100 million now. Even in the U.S. there are a number of therapies that are significantly under-penetrated. People who need them aren't getting them.
What's in the pipeline at Medtronic now that you find exciting?
Renal denervation [treating high blood pressure]. [Minimally invasive] transcatheter [heart] valve technology. Different technologies in [the heart condition] atrial fibrillation. We have a number of technologies that are ground breaking, game-changing and exciting.
How is it different running a publicly traded company as opposed to a division of General Electric, also a publicly traded company?
The key difference obviously is I'm much more directly involved in investor relations, and with the board. The board is an important constituent. Very important. At GE there were other businesses to look after. On the other hand, the corporate management team at GE acts in some ways like a board. So I'm used to working with different stakeholders and different interests.
The other thing which is different, is that Medtronic is a health care company and every decision you make is driven by health care considerations. While GE Healthcare was health care only, the corporation overall had other factors which determined other tradeoffs, good or bad.
Who was your mentor at GE?
Probably [Chairman and CEO] Jeff Immelt, who I worked for directly for five years. I was in close touch with him, and he has probably influenced me more than anyone else.
Did you expect to stay at GE for 16 years?
Frankly, I wasn't sure when I first went there. Because I went there from a small company and moved from California to Milwaukee, all of those were big shocks to my system. (Laughs.)
I had a pretty clear goal when I joined GE, which was to take the ultrasound business to be the leader in the field. And they gave me the autonomy to do that, and that was my own sense of purpose. Which brings me back to Medtronic. One of the main things I find at Medtronic is a strong sense of people, amongst the people and the corporation. I find it tremendously inspiring.
How are you transitioning to Minnesota from Milwaukee?
Although I liked Milwaukee quite a bit, Minneapolis is different. It's bigger and a little more cosmopolitan. I'm still getting to know it and I'm looking forward to the winter. (Laughs.)
The fact that you're an engineer probably plays well in Minnesota with all the engineers around here.
I think it may help connecting with a large piece of the employee base, yes.
Why did you choose engineering as a career?
In the education system that I was brought up in, which is the British education system, you have to choose your major or areas of concentration fairly early in life, even before university. I picked math and physics. I liked it, although my highest grades were in geography and English literature.
I think for an engineer to be successful in business going beyond math is really important. Being able to communicate, to articulate, because there's a difference between inventiveness and innovation. Inventiveness is coming up with technologies. Innovation is broader than that. It's providing a solution that people adopt.
Janet Moore • 612-673-7752