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| Medtronic CEO Omar Ishrak said his company needs to focus on presenting a strong case for its products' value--image courtesy of Medtronic |
In the face of pricing pressures at home and abroad, Medtronic ($MDT) needs to focus not only on the clinical value its devices provide, but also the economic benefit, CEO Omar Ishrak said.
Ishrak sat down with Forbes for a long-form Q&A about a year into his tenure at Medtronic, reaffirming his commitment to expanding the company's emerging markets sales and continuing to unveil cutting-edge treatments. However, Ishrak said the company needs to make sure all of its efforts--whether in R&D, manufacturing or commercialization--account for a new environment in which payers, physicians and patients are more cost-conscious than ever.
Medtronic's core principles are strong, Ishrak said, pointing to its market leadership in virtually all of the businesses it's in. But in order to ensure future growth, it needs to add "a comprehensive, structured, detailed understanding of how clinical value translates to economic value in the context of all the stakeholders we serve," he said. "That is something new. It's innovative in its own way. It hasn't been done before, certainly not in healthcare, and I doubt even in other industries at the level of comprehensiveness we're looking at."
Ishrak said the company is especially applying that paradigm to its R&D operations, vetting every project for its potential economic value before putting significant money into its development. The result, Ishrak said, is that by the time Medtronic has taken a device from the lab to the FDA, it can make a convincing case to customers that the tech is a worthy purchase.
Since taking the reins last year, Ishrak has said he wants Medtronic to get 20% of its revenue from emerging markets by 2016, and he told Forbes that Medtronic's operations in places such as China and India will be the most important drivers of growth over the next 10 years.
- read the Forbes interview