How Edwards is Winning With Focus, Not Diversification

Edwards Lifesciences made a strong case for choosing focus over diversification during the company's presentation at the J.P. Morgan Healthcare Conference, while several of its peers touted diversification. Which strategy seems to be working better in medtech?

While most of the big medtech companies are touting diversification as a strength during this week's J.P. Morgan Healthcare Conference, Edwards Lifesciences made a strong case on Monday for taking the opposite approach with its portfolio.

"We have a strategy that's become more and more differentiated in the medtech space," CEO Michael Mussallem said during his presentation. "We choose focus over diversification."

Edwards is singularly focused on unmet needs for structural heart disease and the critically ill, Mussallem said. 

"And that focus helps us," he said. "It helps us with investment decisions and prioritization. It helps us with being deep in terms of understanding the disease burden around the world. It helps us have a deep understanding of the options."

Another key characteristic of Edwards' portfolio strategy is its formula of leadership in those markets that it does compete in, like transcatheter heart valves.

"We like to go first," Mussallem said. "That has obvious risks associated with it. As a trailblazer there are risks, but it also allows us to play a formative role in the development of new technologies.  It allows us to have deep and trusting relationships with payers, and regulators, and especially clinicians, thought leaders around the world. And we think that formula allows us to create meaningful value by transforming patient care."

The strategy certainly seems to be paying off for the Irvine, CA-based heart valve maker. Mussallem noted during his presentation that Edwards has a record of growing its sales by more than 10% each year for the past 10 years. 

"We've got a track record of developing the triple win – it’s the ultimate for people in our space," he said. "Can you improve those important clinical measures like mortality and morbidity, and improve the quality of life of these patients, and have something that’s cost-effective and even lowers costs? And when we get that right we’re able to drive growth."

Another notable difference between Edwards and many of its peers is that most of its sales growth is organic.

"We do acquire exciting new technologies from time to time, but by and large this is from what we have developed internally," Mussallem said.

 

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Smart. Would you rather be the leader in a specific area or mediocre at a wide range of things? There isn't much low hanging fruit out there in regards to medical challenges. As we tackle ever more complex challenges, the need increased and specialized knowledge will continue to grow. It takes a long time to build that knowledge base, both individually and as an organization. Having an entire organization that is aligned and focused in one space is huge advantage for innovation to occur.