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Why Medtronic's CEO Thinks Globalization Should Be Top Of Agenda For Device Firms
In an on-stage interview in Minnesota, Medtronic CEO Omar Ishrak shares just one data point that shows how large the opportunity is in emerging markets.
June 25, 2013
8 Min Read
[Photo Credit: iStockPhoto.com user 4*6]
It's no secret that medical devices firms have lagged counterparts in pharma and companies in other industries to capitalize on the promise of emerging markets.
Just one data point that Medtronic CEO shared at an on-stage interview conducted by MassDevice co-founder and publisher Brian Johnson at the Minnesota Museum of Science on Monday, showed how big the overseas opportunity is. The event was jointly hosted by Washington D.C. trade and lobbying group AdvaMed, MassDevice, an online medical device publication and LifeScience Alley, a Minnesota industry and lobby group. [At the event, Ishrak also provided a glimpse into how his thinking has evolved in the two years he has been running Medtronic.]
Medtronic CEO Omar Ishrak
Ishrak said that in emerging markets a small segment of the population - 15% - can pay for healthcare procedures completely out of pocket. But their healthcare consumption is still quite low. If that can be made comparable to the rates of healthcare consumption in developed markets like the U.S., this phenomenon alone represents a $5 billion a year opportunity.
"You don't need science here to understand this." he said.
But making that happen is not going to be that easy. Ishrak noted that he has been astounded by the fact that patients who have the money for a treatment that is available, for a disease whose diagnosis is understood, still do not get the treatment they need.
Several reasons account for it - lack of awareness; cultural norms that suggest that after a certain age, people slow down automatically and you just accept that; lack of trained physicians and sometimes the infrastructure may not be available.
"You go to China and the level of pacemaker adoption in first tier cities is at the developed country levels and in the 2nd tier cities, it is at 3%," he said. "Our sales reps are not going there ... and there is lack of awareness. But this is low-hanging fruit."
But if the above doesn't convince you to look beyond U.S. borders think about this. The 2.3% medical device tax is on U.S. sales, so the lower your U.S. revenues are as part of overall revenue, the lower your tax burden will be.
-- By Arundhati Parmar, Senior Editor, MD+DI
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