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Continued: Schafer: Medtronic’s $1B fumble could chill risk-taking

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: January 23, 2014 - 8:56 PM

It was already tough enough: Venture investing in the industry was projected to be down in 2013 more than 40 percent from 2007. Venture capital partnerships have limited lives, usually 10 years. One reason medical technology investing has declined is that the venture partners worry that their funds won’t live long enough to ever see a return.

Ardian got its first venture funding in 2003 and agreed to be acquired at the end of 2010. More than three years later, its product was still grinding toward FDA approval.

Larger medical device companies have been busy harvesting the companies seeded by the venture capitalists five or 10 years ago. With venture capital investing down, it remains to be seen how many promising companies won’t be available for them to buy in three or five years.

Medtronic, through a spokeswoman, referred to comments that CEO Omar Ishrak made last week to investors at the annual JPMorgan health care conference in San Francisco.

Ishrak told investors that the failed Symplicity trial “does not change our overall outlook, our strategic outlook, for Medtronic.” He quickly moved on to deliver an upbeat talk on the themes of improving operational excellence, building simpler products for emerging markets and focusing innovation on the economic value of Medtronic products.

These are sound ideas but still not quite the kind of inspiring notion that animated a CEO’s talk in the past, when the company was inventing a device to save lives and then making a lot of money by selling it.

That old model is slowly dying, and a flop like Symplicity is more a symptom of what’s killing it rather than a cause. It’s one that will be very well remembered.

 

lee.schafer@startribune.com • 612-673-4302

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