5. 1960 Was a Seminal Year
The First Implantable
Pacemaker
Potential Bankruptcy
and the Mission
6. An Enduring Mission
To contribute to human welfare
by application of biomedical
engineering …
To direct our growth in the
areas of biomedical
engineering …
To strive without reserve for the
greatest possible reliability…
To make a fair profit …
To recognize the personal
worth of employees …
To maintain good citizenship…
Our founder Earl Bakken with medallion
8. Global Leader in Medical Technology
45,000+ employees, making us the largest
global medical technology company
9,000+ scientists and engineers
around the world
FY12 patents awarded, bringing our
2,060+ total worldwide to more than 23,000
FY12 global sales from continuing
$16.2B operations which generate $3.9B
in free cash flow*
~45% sales from international markets,
representing more than 120 countries
* Free cash flow is operating cash flow minus capital expenditures
10. Diverse Businesses to Treat Many Conditions
Diabetes Spine & Biologics
CardioVascular Neuromodulation
Surgical
CRDM
Technologies
11. Diverse Revenue Sources
RESTORATIVE THERAPIES GROUP CARDIAC AND VASCULAR GROUP
Surgical Technologies
Diabetes
CRDM
Neuromodulation
Spine & Biologics
Cardiovascular
Based on FY2012 revenues of $16.2 billion
12. Serving the World’s Major Geographies
Central/Eastern
Western Europe
Europe/
United Greater
Canada
States China
Middle
Asia
East/Africa
Latin
America India
Countries 120+ Locations 300+
13. Future Growth Driven by Emerging Markets
Central & Eastern Percent of Revenue Estimated Percent of Revenue
Europe in FY12 in coming years
Middle East
Africa 90% 10% 80% 20%
Latin America
Asia
(Excluding Japan and Korea)
15. A Broad Platform of Core Technologies
Targeted Drug Delivery
Raw Materials
Power Sources
Miniaturization
Electrical Stimulation
Closed Loop Systems
Sensors
Connected Care
Imaging Navigation
16. Products and Therapies to Address Many Chronic Conditions
Hydrocephalus
Sinus Diseases Parkinson’s Disease Cranial Repair
Sinus Augmentation Essential Tremor Brain Tumors
Sleep Disordered Breathing Dystonia*
Cervical Degenerative Disc Disease Obsessive-Compulsive Disorder*
Thyroid Conditions
Otologic Disorders
Atrial Fibrillation
Heart Failure Meniere’s Disease
Congenital Heart Disease Aortic Disease
Heart Rhythm Disorders
Severe Spasticity associated with Multiple
Coronary Artery Disease
Sclerosis, Cerebral Palsy, Stroke and Spinal
Heart Valve Disease
Cord and Brain Injuries
Scoliosis Chronic Pain
Spinal Fracture Nausea and Vomiting associated with Gastroparesis*
Lumbar Spinal Stenosis
Diabetes
Degenerative Disc Disease
Overactive Bladder and Urinary Retention
Pelvic Trauma
Fecal Incontinence
Peripheral Vascular Disease
Tibial Fractures
* Humanitarian Device in the United States – the effectiveness
for this use has not been demonstrated
17. Cardiac and Vascular Group Overview
Cardiac Rhythm Disease Management
Endovascular Therapies
CARDIAC
AND Structural Heart
VASCULAR
GROUP
Coronary and Renal Denervation
19. Endovascular Therapies
Aortic aneurysms Stent grafts
Peripheral arterial disease Stents and other angioplasty technologies
For full safety information, visit medtronic.com
20. Structural Heart
Surgical and minimally-invasive valve replacement (tissue)
Valve disease Surgical valve replacement (mechanical)
Surgical valve repair products
Conditions requiring cardiac surgery such as
Cardiopulmonary, revascularization, and pediatric perfusion
coronary artery bypass grafts or
products
cardiopulmonary bypass
For full safety information, visit medtronic.com
21. Coronary and Renal Denervation
Angioplasty technologies, including drug-eluting
Coronary artery disease
and bare metal stents and balloon catheters
* Not approved for commercial distribution in the United States
For full safety information, visit medtronic.com
22. Restorative Therapies Group Overview
Spine and Biologics
Neuromodulation
Restorative
Therapies
Group Diabetes
Surgical Technologies
23. Spine and Biologics
Spinal deformities Fusion systems, powered surgical tools, navigation and imaging systems
Herniated discs Minimal access spinal technologies (MAST), artificial discs
Fusion systems, MAST procedures, artificial discs, bone morphogenetic
Degenerative disc disease
proteins, powered surgical tools, navigation and imaging systems
Balloon kyphoplasty, powered surgical tools, navigation
Vertebral compression fractures
and imaging systems
Acute, open tibial fractures Bone morphogenetic proteins
Certain oral-maxillofacial conditions Bone morphogenetic proteins
Lumbar spinal stenosis Interspinous process decompression devices
For full safety information, visit medtronic.com
24. Neuromodulation
Movement disorders Implantable deep brain stimulation systems, drug-infusion systems
Obsessive-compulsive disorder* Implantable deep brain stimulation systems
Chronic pain Implantable neurostimulation systems, drug-infusion systems
* Humanitarian Device in the United States – the effectiveness for this use has not been demonstrated
For full safety information, visit medtronic.com
25. Neuromodulation
Overactive bladder/urinary
Implantable sacral neuromodulation systems
retention/chronic fecal incontinence
Nausea and vomiting associated
Implantable gastric stimulation systems*
with gastroparesis
* Humanitarian Device in the United States – the effectiveness for this use has not been demonstrated
For full safety information, visit medtronic.com
26. Diabetes
Insulin delivery External insulin pumps
Personal and professional continuous glucose
Glucose monitoring
monitoring systems
Online tool that simplifies diabetes management
Therapy management software by providing clear insights into personal glucose
patterns
For full safety information, visit medtronic.com
27. Ear, Nose, and Throat Conditions
Powered surgical tools, navigation and nerve monitoring systems,
Sinus diseases
postoperative packing
Thyroid conditions Intraoperative nerve monitoring equipment and surgical tools
Surgical drills, middle ear prostheses, nerve monitoring and navigation
Otologic and neurotologic disorders
systems, Ménière’s disease therapy
Sleep-disordered breathing Implantable devices for palatal stiffening and tongue suspension
Pediatric conditions Tonsillectomy and adenoidectomy surgical tools; vent tubes
Skull base tumors Powered surgical tools; specialized manual instruments; nerve monitoring
and lesions and navigation systems
For full safety information, visit medtronic.com
28. Surgical Technologies
Plan for and confirm
Surgical imaging systems
advanced surgical procedures
Perform surgeries in parts of the body
Navigation systems
where direct vision is not possible
Implantable valves and shunts, navigation and
Hydrocephalus
imaging systems
High-speed surgical drills and tools, navigation and
Cranial surgery
imaging systems, cranial repair devices
For full safety information, visit medtronic.com
29.
30. Improving Healthcare
“Across the world, we are in a
continuous quest to improve healthcare.
People everywhere want better outcomes,
fewer errors, quicker recoveries, and
fewer side effects. We’re developing
medical technology solutions that not only
improve healthcare, but do so while
delivering better economic value.”
| OMAR ISHRAK, Chief Executive Officer
31. Global Trends Affecting Healthcare
Underserved Populations
Increased Life Expectancy
Increase in Chronic Disease
Rising Cost of Healthcare
32. Many Populations Still Underserved
100%
US Penetration
Int’l Penetration
0
Source: Internal Medtronic analysis
33. Life Expectancy
in 2050
Age 60+ 2 Billion*
Age 80+
440 Million *
Age 100+
5 Million *
Source: U.S. Census Bureau, International Data Base (IDB), June 2011
* Estimated Worldwide Population by the Year 2050
34. Chronic Disease Becoming a Global Epidemic
Number 1 Cause Accounts for Majority of
of Death HealthCare Costs
40%
Other
25%
60% Causes 75% Other
Causes
Chronic, Chronic,
Noncommunicable Noncommunicable
Diseases Diseases
Source: U.S. Census Bureau, International Data Base (IDB), June 2011
35. The Need to Curb Rising Healthcare Costs
U.S. Health Expenditures
36. Expanding the Benefits of Our Work
Economic Value Clinical Societal Impact
We are committed to Outcomes We’re working to
innovative solutions reduce the global
With quality and safety
that help advance burden of chronic
patient care and leading our processes,
we strive toward disease by improving
provide better value treatment, delivery,
for our customers by improved efficacy and
patient outcomes. and access to
driving efficiencies
throughout the therapies worldwide.
healthcare system.
38. Innovation Platform to Address Healthcare Issues
Smarter Connected
Solutions Care
Better Therapies for Linking Patients and
Better Outcomes Physicians for Better Care
Open Borderless
Collaboration Commitment
Better Practices for Pushing Boundaries for
Healthy Business Better Access
39. Providing Therapies Across More of the Care Continuum
Targeted Treatment Chronic Disease
Diagnostics Management
Better selection of patients Earlier intervention and Better long-term management
who need therapies individual treatment plans to improve lives and
control costs
45. Offering More Therapies Through Acquisitions
1949-1984 1985-1989 1990-1994 1995-1999 2000-2004 2005-Today
Acumen
Setagon
United States Catheter and
Instrument (USCI)
Nobles Medical
Image-Guided Neurologics
(IGN)
AneuRx Paceart Transneuronix (TNI)
Avalon Laboratories Atreo
Cameron-Miller Surgical Endonetics
Instruments CardioRhythm Midas Rex
Jolife
PercuSurge Restore Medical
Medical Data DLP Physio-Control PEAK Surgical
Systems Vitatron VidaMed Lifelink MD
Synectics Medical
Bio-Medicus Osteotech
Cardiocare Johnson & Sofamor Danek Spinal Dynamics Kyphon
Johnson’s Tissue Valve Carbon Implants Medical Designs
and Oxygenator Micro Motion Sciences Vertelink
International Medical Biophan
Corporation Business Electromedics Xomed Restoragen
MiniMed/MRG
Breakaway Imaging
Interventional Medical PS Medical Avecor Transvascular
Andover Medical Inc. Invatec
Arterial Vascular CoreValve
The Eliminator from Versaflex Micro Interventional Engineering (AVE) Radius Medical Odin Medical
American Edwards Systems (MIS) Ardian
Laboratories Division Instent Coalescent Surgical
Natrix
Bio Tech Surgical Navigation Angiolink Millenium Biologix
Technologies InfluENT Medical
TUR Intelex Salient Surgical Technologies
Ablation Frontiers
Ventor Technologies
CryoCath
PreciSense
Axon Systems
ATS Medical
48. Partnering with Physicians to Enhance Solutions and Quality
Product Research & Development
Training & Education
Advisory Services
Royalties
49. Corporate Citizenship is Central to our Mission
Global
Leadership in Collaborative Responsibility Total Progressive
Addressing Culture of in the Employee Environmental
Chronic Innovation Marketplace Engagement Stewardship
Disease
This is an exciting time in the medical technology industry and it’s especially exciting to be at Medtronic. Our innovations are truly changing lives … and helping improve healthcare around the world.
The story of Medtronic began … like so many great entrepreneurial companies … in a garage.
This garage was in Minneapolis, Minnesota, where brothers-in-law Earl Bakken and Palmer Hermundslie started a medical equipment repair business in 1949. Earl was an electrical engineering student at the time. He was repairing medical equipment at nearby hospitals … just as a favor to physicians, because they had few other options. He realized there was an unmet need that matched his skills, and Medtronic was born.
Increasingly, Earl was asked to not just repair equipment, but to make it more effective. Being an inventor at heart, Earl was more than happy to collaborate and come up with something better. One of Medtronic’s most famous collaborations was in 1957. Well-known University of Minnesota cardiac surgeon Dr. C. Walton Lillehei asked Earl to create a battery-operated pacemaker. At the time, pacemakers were bulky, external boxes that sat on a cart and had to be plugged into a wall socket. But what happened if there was a power outage? Dr. Lillehei wanted a more reliable pacemaker, and Earl created one … making history and transforming Medtronic from a medical equipment REPAIRER to a MANUFACTURER.
In 1960, there were two events that further changed the face of Medtronic. Earl obtained the rights to manufacture and distribute implantable pacemakers. In the same year, Medtronic overextended itself and essentially went bankrupt. So Earl went to the Board of Directors to ask for help and the Board, in its wisdom, required that Earl write down what the company was about and how to refocus efforts.
What came out of this process was the Medtronic Mission. To contribute to human welfare by application of biomedical engineering … To direct our growth in the areas of biomedical engineering … To strive without reserve for the greatest possible reliability… To make a fair profit … To recognize the personal worth of employees … And To maintain good citizenship… Not a word of the Mission has changed since Earl wrote it. Nearly a half-century later, the Mission continues to serve as our ethical framework and an inspirational goal for employees around the world.
Over the years, we’ve expanded our capabilities and started serving many more countries, growing into the world’s largest medical technology company. So let’s look at who we are today.
Here’s a quick snapshot of Medtronic today.
We’ve had consistent sales growth over the years, which gives us the financial resources needed to continue to fulfill our Mission.
We’re in several diverse businesses that span major technology platforms and allow us to treat a broad range of medical conditions.
Our revenue comes from many different therapy areas, which address a wide range of the world's most pressing chronic conditions.
We serve 120 countries from more than 300 locations, and most of our business outside the United States is in developed countries … like Japan and the European Union nations.
But in the future, as we make a concerted effort to help fight chronic disease in emerging markets like China and India, we see more of our growth coming from those countries.
Let’s look closer at exactly what Medtronic does.
With our broad platform of core technologies, we’re able to alleviate pain, restore health, and extend life.
Our core technologies are the foundation of our therapies, which address many of the world’s most pressing chronic diseases ... including Parkinson’s disease, heart failure, coronary artery disease, and diabetes.
Our Cardiac and Vascular group includes these key businesses.
Our Cardiac Rhythm therapies address heart rhythm disorders, such as a slow or fast heart rate. Some of our solutions include atrial fibrillation diagnostic and remote heart device monitoring.
Our endovascular products include stent grafts for treating aortic aneurysms and balloon angioplasty therapies for treating peripheral arterial disease.
Our structural heart therapies include products for repairing and replacing heart valves and innovative products for coronary artery bypass surgery.
We have products on the market for treating coronary artery disease.
Our Restorative Therapies Group includes these businesses.
Our Spine and Biologics products include mechanical and biological therapies for spinal conditions like scoliosis and decaying discs, as well as other musculoskeletal issues such as tibial .. or shin bone fractures .. and jaw bone restructuring.
Our Neuromodulation therapies address conditions including movement disorders and chronic pain.
We also have Neuromodulation therapies to treat urinary disorders, like incontinence.
Our Diabetes business provides insulin pumps and related products … such as glucose monitoring systems and information technologies … to help manage diabetes over the long term.
ENT products are within our Surgical Technologies business, providing surgical tools for addressing major ear, nose, and throat conditions, including sinus diseases, ear disorders, and tonsillectomies.
Our Surgical Technologies business also provides Navigation and Imaging tools that help surgeons plan for surgeries and see inside the body during surgeries.
So what motivates us to continually develop new medical innovations? If you look at global healthcare trends, you can see the new realities we’re dealing with as a society.
As our CEO, Omar Ishrak, says: “ Across the world, we are in a continuous quest to improve healthcare. People everywhere want better outcomes, fewer errors, quicker recoveries, and fewer side effects. We’re developing medical technology solutions that not only improve healthcare, but do so while delivering better economic value.”
There are current healthcare trends that are affecting global economies and undermining the development of emerging countries, including underserved populations, increased life expectancy, increase in chronic disease, and the rising cost of healthcare.
There are still many underserved patient populations around the world, especially outside the United States, and for certain conditions, such as abdominal aortic aneurysm, diabetes, and neurological conditions.
Our aging society will continue to drive demand for medical technology across the globe. By the year 2050, it’s projected there will be more than 5 million people worldwide who are age 100 or older.
Another issue driving healthcare demand is the increase of chronic, noncommunicable diseases such as diabetes and cardiovascular diseases. They account for more deaths than any other cause and total 75% of healthcare costs. We must develop new, more efficient ways of managing chronic disease over the long term in order to reverse this devastating global trend.
With the rise in chronic diseases comes a rise in overall healthcare costs. It’s been estimated in the United States that healthcare costs will continue to compound at 7 to 8%. By focusing our efforts on improving the largest contributor to healthcare costs … chronic disease treatment … we can make a significant impact on healthcare.
To do that, we’re addressing these new realities head on … by expanding the benefits of our work. We’re developing therapies with demonstrated economic value, clinical outcomes and positive impacts on society.
So how are we helping address all these major healthcare issues?
We’re helping advance the way the world treats chronic disease through these four key innovation platforms: Smarter Solutions is about developing innovative therapies that restore, enhance, and save lives. Connected Care is about using information technologies to better link patients and physicians so they can make better decisions and improve care. Open Collaboration is about collaborating across the entire healthcare industry to implement better practices, business models, and policies. Borderless Commitment is about pushing boundaries for better access to needed therapies around the world.
Historically, our therapies focused on treatment of an existing medical condition. But we’re branching out to cover more along the patient care continuum … to help healthcare providers identify individuals who need therapies earlier … and using information technologies to help physicians and patients better manage chronic disease and control costs over the long term.
To expand our offerings further along the care continuum, we’re combining our core technologies in new ways.
By combining our medical devices with medications and biologics, we can deliver the medications to precise areas of the body where they’re needed. Our drug-coated stent is used to treat patients with coronary vascular disease. The stent keeps the artery open and the drug coating is slowly released to help prevent the artery from re-clogging. A pain pump delivers a therapeutic drug to a fluid-filled area around the spinal cord to treat chronic pain. And a bone morphogenetic protein, or BMP, stimulates the body to regrow bone. It’s used for treating certain lumbar … or lower spine conditions.
Most of our procedures involve some sort of surgical intervention. Our objective is to make those interventions shorter, more predictable and less invasive to the body — to shorten the length of surgery and speed healing time. This example compares a traditional coronary artery bypass grafting procedure in the lower right with our minimally invasive alternative that requires a much smaller incision.
We’re also exploring therapies to address many more conditions that we don’t treat today. Note that none of these therapies are approved. We’re just in the very early stages.
To give you an idea of our extensive product development scope, we have more than 1,500 clinical and research scientists working on over 350 clinical trials around the world at any one time, representing more than $300 million in investments.
In addition to developing our own therapies, we also acquire existing therapies where it makes strategic sense. You can see from this chart that acquisitions have increased over the years as a way to help us bring needed therapies to patients sooner.
A good example of how we are advancing our work along the care continuum is our CareLink device monitoring service. By incorporating sensors and monitors into our products, they can send data to a CareLink monitor, which then securely transfers that data to healthcare teams, so they can review it, and better monitor and treat patients.
Any discussion of our solutions isn’t complete without talking about product quality and patient safety. Medtronic’s quality vision is to be the company most trusted to deliver products, processes, services and relationships. As such, we have an enterprise-wide quality strategy, and processes and measures in place to ensure safety at every stage of the product lifecycle.
We partner with physicians and other healthcare professionals to develop better business practices AND better products. In addition to helping us develop products, physicians play an integral role in training other physicians on the safe and effective use of our products. They also serve as advisors when it comes to product reliability or usability. To preserve these valuable partnerships, Medtronic has been leading an industry-wide transparency effort … developing Principles, Standards, and Approaches that guide our physician partnerships and ensure they’re conducted appropriately.
We take our position as a community leader very seriously and use five pillars to guide our global citizenship efforts. In fact, the sixth tenet of the Medtronic Mission is “to maintain good citizenship as a company.” As a sign of our commitment, we report our economic, social and environmental performance annually, using the Global Reporting Initiative framework as our guide.
Because of the focus we put on employees, we’re recognized around the world as being an Employer of Choice … a place where people want to work.
Ultimately, our work is about improving people’s lives through medical technology. In fact, every 4 seconds, another person’s life is enhanced because of a Medtronic product or therapy.
