Medtronic Inc. has hired a veteran health care executive from General Electric Co. as its chairman and CEO -- the company's first external hire for the top spot in 26 years.
Omar Ishrak, 55, will replace William Hawkins, who announced last year that he would retire after less than four years in the top job. Many analysts said Ishrak's outsider status could help rejuvenate the Fridley-based medical technology giant.
"It's not a turnaround story -- yet," said Aaron Vaughn, an analyst with Edward Jones. "But he's going to have to tap all of his skills to revitalize the company."
Ishrak was president and CEO of GE Healthcare Systems, a $12 billion division with some 20,000 employees worldwide whose products use technologies such as magnetic resonance, tomography and ultrasound.
It was the flagging ultrasound business that lured Ishrak to GE's fold in 1995. He directed new clinical applications for the diagnostic technology and broadened its global reach, as revenue ultimately grew from $400 million in 1998 to $1.8 billion in 2010.
In 2005, he became president and CEO of Clinical Systems, a portfolio of point-of-care medical devices. The division almost doubled its revenue to about $5 billion between 2004 and 2009 under his watch. He was named president and CEO of Healthcare Systems in 2009, and promoted to senior vice president of GE in July 2010.
Employees and investors are hoping Ishrak can work the same magic at Medtronic, which has seen sales in two key markets -- spine surgery and heart defibrillators -- seriously erode in recent years.
"Omar is an enormously talented executive with a truly global perspective and a proven track record of driving innovation and growth in the medical technology industry," said Ken Powell, lead independent director of the Medtronic board and chairman and CEO of General Mills.
The company declined to make Ishrak available for interviews.
Medtronic spokesman Brian Henry said Ishrak's early focus "will be on our employees, customers and overall assessment of the business. Among other things, we anticipate that he will focus on driving the innovation pipeline and accelerating our international expansion." His base salary is $1.3 million.
Morgan Stanley analyst David Lewis said he's resisting "the temptation to overstate the importance of the event. Medtronic is facing structural headwinds, and the success of the firm and the new CEO facing these dynamics will be measured in years, not months."
Nuveen Asset Management analyst Tim Nelson said Ishrak's transition to Medtronic, which has $16 billion in annual sales and 40,000 employees worldwide, shouldn't be difficult because the two businesses are similarly sized.
Ishrak is particularly known for introducing GE Healthcare products in emerging markets such as China and India. A 2009 article in the Harvard Business Review by GE CEO Jeffrey Immelt and two others gives credit to Ishrak for developing a compact ultrasound machine for the Chinese market that sold for $15,000. The device was a hit in rural clinics, and the business grew to $278 million in sales six years later.
Both China and India are promising markets for Medtronic, too, as med-tech companies face excise taxes in the United States related to the 2010 health care law, pricing pressure and increasing regulation from the Food and Drug Administration. In fiscal 2010, international revenue represented 41 percent of total company revenue.
In addition, analysts expect Ishrak to continue to focus on cost cutting and expense management. Earlier this year, the company eliminated 2,000 jobs -- 268 of them in the Twin Cities.
Medtronic shares fell 60 cents Wednesday to close at $42.05.
Former Pillsbury executive Win Wallin was the last Medtronic CEO to be hired from outside, in 1985. Wallin, who died in December, was widely credited with positioning Medtronic for spectacular growth in the following two decades.
Janet Moore • 612-673-7752