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How Cordis Got Its Groove Back
Cordis CEO Shar Matin joins us in the Let's Talk Medtech studio for a candid conversation about transforming a storied cardiovascular brand into a stand-alone company with a promising future.
February 24, 2023
15 Min Read
Over a beer, Shar Matin would have a lot of advice to give a peer about how to take a business like Cordis and essentially rebuild it as an independent company.
We don't have any beer in the Let's Talk Medtech studio (something we should perhaps rectify), but the Cordis CEO still brought his A-game in terms of candid conversation about the brand's history, early successes since Cardinal Health sold Cordis, and his vision for the company. He even drew parrallels between Cordis and Guidant, where he spent his formative years learning the ropes of the industry from legendary leaders like Ginger Graham and Ron Dollens.
Today, when the name Guidant comes up in conversation, most people in the industry think about all the legal drama Boston Scientific faced after shelling out $27 billion for the troubled cardiovascular company in 2006. After all, there's a reason Fortune magazine named Boston Scientific's Guidant purchase the second-worst merger of all time, eclipsed only by AOL's purchase of Time Warner in 2000.
Boston Scientific spent a decade settling extensive legal troubles inherited from Guidant, not to mention paying more than $6.2 billion in goodwill impairments since the deal closed in April 2006. The company's stock didn't recover from that M&A blunder until last year. The company also agreed last year to pay $600 million to settle a lengthy legal battle with Johnson & Jonson. After J&J lost a brutal bidding war over Guidant, it accused the company of feeding due diligence information directly to Abbott. Abbott then bought some of the divested pieces of Guidant, which in turn helped Boston Scientific seal the deal.
But if you set aside everything that went wrong in the end, Guidant's leadership accomplished some amazing things with the company after Guidant spun out of Eli Lilly in 1994. And it makes sense that Matin would see the parallels between that spinout and what Cordis has gone through.
"They had four different disparate medtech companies that they put together. And if you talk to them about the stories of how they started, it wasn't necessarily the organization, the way that they needed it to be. They had to do a full transformation. They had to bring these just different pieces together and figure out how they could build a great cardiovascular company," Matin tells MD+DI during this episode, which kicks off the second season of Let's Talk Medtech. "And they did it. If you look at what they did from 1994 to 2006 when the final sale was closed, they created over 24X in value."
Now all Cordis needs to do is mimic that transformation that Guidant went through in the '90s.
"If I could mimic them, I think that would be the best form of flattery for those years that they taught me how to do those things," Matin said.
Season 2, Episode 1 Transcripts
Shar Matin: This has been an organization that has been part of either a pharmaceutical company or a supply chain company. And this is the first time where we are a medtech company, totally focused, and all of our priorities are on our customers.
Amanda Pedersen: You're listening to Let's Talk Medtech. I'm Amanda Pedersen, senior editor at MD+DI, and in the studio with me today is Shar Matin, CEO of Cordis. Cordis, as you may recall, was originally a Johnson and Johnson company, but J&J sold the business to Cardinal Health in 2015. But the business was stunted by integration problems and frankly, it just didn't do that well under Cardinal Health. So, Cardinal Health ended up selling Cordis in 2021 to private equity firm Hellman and Friedman. And that's when Shar came into the picture. Shar, why don't you tell us a little bit about your history with the company and how you came to be involved.
Shar Matin: Yeah, officially started August of 2021. I did partner up with Hellman and Friedman and KKR, the two private equity firms that won the auction for Cordis. So, I was there with the diligence team, shoulder to shoulder, as well as with our executive chairman. So, he and I, Duke Rohlen, our executive chairman and I partnered up with these PE firms to really with, I would say, a vision that was different from a typical private equity investment thesis of getting a storied brand like Cordis that has the infrastructure, the commercial reach around the world, and marrying that with an innovative way of doing innovation. That is, I'll say, an accelerator that has a symbiotic relationship and we call that Cordis X. So, the combination of Cordis and Cordis X was really the thesis that allowed us to essentially win the deal and start executing on, I'll say, this new adventure that I've been on.
Amanda Pedersen: How would you characterize the past year in terms of leading the effort to take Cordis private and drive innovation at this storied brand?
Shar Matin: Yeah, great question. I would say tons of excitement, a bit of chaos, and in the combination of that, what a unique opportunity to build upon the shoulders of the organization that is here, that has the pride and passion of all the things that Cordis has done as a leader in innovation, in cardiovascular and peripheral vascular. And really to your point, perhaps was getting a level of underinvestment in innovation in the past that we're making right now. And so, I would say building any organization or company, it takes grit, it takes hard work, but I'd say the foremost element of it, it's to have talented teammates that are leaning in and excited about the vision and the mission of the company. And that's made it super exciting for all of us that are locking arms and really building Cordis to a unique place.
Amanda Pedersen: That people component is so important. We talk so much in this industry about the innovation, but we don't talk enough about the people behind the innovation. Let's talk about some of your early successes with Cordis. In October, you announced the acquisition of MedAlliance, which looks like a really exciting M&A. Are you still looking to develop the portfolio and make additions and subtractions perhaps?
Shar Matin: Absolutely. I would say this is one of the major public moves that you've seen. I would essentially characterize what we're doing as there's five value drivers for us. The first one is, as you can imagine, we were a division of Cardinal Health. So, we've got to separate completely from Cardinal Health and optimize our infrastructure for an independent Cordis that creates a ton of value, in my view, for our customers, for our teammates, and our shareholders. We also have a unique opportunity to optimize our commercial organization, again for Cordis. This has been an organization that has been part of either a pharmaceutical company or a supply chain company. And this is the first time where we are a medtech company, totally focused, and all of our priorities are on our customers. And so that allows us to do things differently, to really serve them and delight them in a different way. And then the point of innovation that plays, I'll say different roles, if it's internal or M&A, and we look at it as we've got three shots on goal there. We've got the opportunity to develop and innovate internally with the current team that we've got, and we're refreshing our current portfolio with our current team. And that unique business model I talked about with Cordis and Cordis X, that gives us another shot on goal of what we're doing there is we've got $300 million in a fund that our investors put, and Duke and his team are essentially wherever we see an unmet need, they're building a development company, just an independent startup and spinning it out, building it, so we're taking advantage of the speed and the nimbleness of a startup to do innovation essentially off balance sheet. And then once that product gets close to FDA approval, we can bring that into Cordis and launch that globally with our strengths of our brand, our global infrastructure, and our ability to scale. And then third, not all the ideas will come from us internally. It's always looking at the marketplace and seeing if there's partnerships or acquisitions that we can do with the ultimate goal of building out a unique and differentiated portfolio for our current customers and our future customers. So, we're super excited about having the ability to really rebuild Cordis’ innovation pipeline with these three different value drivers as we move forward. So, what you're seeing with MedAlliance, we also made an investment in Adient at E2, and we've spun out so far about three development companies. You're just seeing a cadence of innovation, really betting on innovators that are doing something uniquely different that will bring better patient care to the marketplace in the future. And we're just super excited about doing this today and in the future.
Amanda Pedersen: Yeah, that sounds great. That's very exciting, and I'm sure that – you make it sound easy, but I'm sure that there's been some challenges along the way and lessons learned. Can you share any of those challenges and how you've overcome them, or any lessons learned so far in this adventure?
Shar Matin: Yeah, absolutely. As I always tell folks, it's not a straight line to building a company and you take two steps forward and one step back and as you come with the right grit and the right team to really just plow ahead, ultimately, you're going to create a ton of value, and that's what we're doing here. And I would bucket it into two different buckets as far as some of the challenges that we faced. One part of it is separating from Cardinal. Any sort of separation – and you're starting to see more and more divestments in metech, it's just a new trend, and it's a skill set that I would say the team has been building. It's great to partner with consultants that have done it before across industries, but there's always unique elements associated to medtech, and I'll say the regulatory environment of how do you carve out and yet ensure that you've got product supply around the world has been an interesting challenge that we've all faced. And then the second area is just in a way to visualize it. It's almost like we're doing spine surgery or total spine replacement because our ERP system we're transferring to one that Cordis has away from one that Cardinal has. And that has such implications to every aspect of the business. So, it's having the right, I'll say IT organization, having the right consultants that help you do that, and doing it in a cost-effective manner, I'd say those are some of the big, big challenges that we faced becoming an independent company. And then from an innovation perspective, the biggest one is we all want products faster. So, it's how do you build that cadence of, I'll say, singles and doubles in the near term to keep your commercial organization excited with some new product launches as you work on those uniquely differentiated products that really will change the care continuum. And that's been everyone's got a lot of ideas, but getting down to what's the cadence, what's the select few that really are going to have an impact and transform the trajectory of the company? And I think there's good news in our field. There's so many opportunities, it's just which ones are we going to make the call straight out of the gates to do? And that's been both a challenge and an opportunity for us.
Amanda Pedersen: I can only imagine, and this is kind of along those same lines, but if you were talking to a peer in the industry who was about to take on a similar role at a different company, what kind of advice would you give them?
Shar Matin: Over a beer, I think I’d give a lot of advice. First and foremost, it always comes down to the team and the talent that you've got. So, it's get the right team in place as quickly as possible. I think it is key. And then the second piece is you got to get the vision and the culture right so that as we go on this journey and as we talked about earlier, you take two steps forward and one step back. You're just not in a steady state environment. You need folks that are going to lean in and know that they can get through it and that on the other side there's just what they believe in and what's exciting is out there. And so, to get that culture and get folks excited about that future is imperative so that you can navigate the different challenges, capture the opportunities, and really get to a place where you've got the momentum not just for one year, but for the next five years on the new journey as an independent company.
Amanda Pedersen: That makes sense. And I was curious to hear about if you could talk about some of your influencers, people in the business world, not necessarily – either in medtech or perhaps even just outside of medtech in the business world that you look up to and respect in terms of leadership.
Shar Matin: Yeah, I've been pretty fortunate throughout my career of having great leaders I've worked for and with. And I'll say my formative years were at Guidant. If you remember, Guidant that became part of Boston and Abbott. So, I mean, Ginger Graham was phenomenal. Ron Dollens. There was a gentleman named [indiscernible] that I worked very closely with. I mean, what they did with Guidant – and if you think about it, there's a lot of parallels to what Cordis has gone through – that was a spin out from Eli Lilly. They had four different disparate medtech companies that they put together. And if you talk to them about the stories of how they started, it wasn't necessarily the organization, the way that they needed it to be. They had to do a full transformation. They had to bring these just different pieces together and figure out how they could build a great cardiovascular company. And they did it. If you look at what they did from 1994 to 2006 when the final sale was closed, they created over 24X in value. And so, if we can do the same, really take Cordis and the storied brand here and the great team that we've got and figure out those unmet needs for cardiovascular patients and create that transformation and create that incredible company they did, that would be, I guess, the best way that I could. If I could mimic them, I think that would be the best form of flattery for those years that they taught me how to do those things.
Amanda Pedersen: I'm so glad that you mentioned Guidant just because I started covering the industry in 2006 and around the time of the acquisition. And I think that sometimes there's a lot of focus on all the drama, if you will, that kind of took place after the acquisition. But really when I talk to people in the industry who know the people, the leaders from Guidant that you talk to it's amazing how many times people will bring those same names up as their mentors or people that they respect in the industry and all the good things they did. So unfortunately, that does predate my time covering the industry. But I have learned that there were really some amazing things happening at Guidant before the acquisition.
Shar Matin: Absolutely. And it was an exciting time, right, with cardiovascular. I mean, the stents were coming out there and it was the stent wars, and we would win at one point and I was competing against Cordis at that point. And now if you fast forward and talk about the metal line steel, could we do the same kind of transformation that was done there with stents here with drug eluting balloons? The standard of care today is paclitaxel drug-coated balloons and we're going to be the first to bring a drug eluting balloon that's sirolimus based. So that gets it exciting and there's a lot of parallels there. I'd say the other big thing that we're excited about is the whole shift to a radial approach and we're launching our Radianz product line where it allows peripheral procedures to be done through the radial approach. Very similar to what's happening in cardiovascular, where there's been a trend in the last 10-20 years of just making it better for patients, being able to do it in an office-based setting where the patient can be on the table and off the table on the same day. I think that advancement that's taking place in the portfolio we've built is pretty exciting as well and we see that trend moving forward.
Amanda Pedersen: This has been Let’s Talk Medtech, and thanks again to Shar Matin of Cordis for joining us today. We've got a great lineup of guests and topics for season 2 of the podcast, so make sure to rate, review and subscribe to us on Apple podcasts or wherever you get your podcasts. And as always, visit us at www.mddionline.com for all your medtech news and industry insights.
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