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Medtronic reorg could open door to more contract manufacturers

December 4, 2020 By Tom Salemi

Medtronic CEO Geoff Martha shares insights on this week’s DeviceTalks Weekly Podcast

Medtronic’s recently announced reorganization plan may provide quicker decision times for companies looking to work with the medtech giant’s new business groups.

In an exclusive interview in this week’s DeviceTalks Weekly podcast, CEO Geoff Martha said the reorganization would “collapse the matrix” established by its $42.9 billion acquisition of Covidien in 2015. The mega-merger left Medtronic with a centralized operation that required approval from the “mothership” for many day-to-day decisions.

Under the reorganization, the 20 smaller business leaders will “have the business, the P&L, their own sales force,” Martha said. “They have all the levers to pull… We really cut out a lot of meetings that we had these people coming to that really weren’t tied to their end markets and the businesses that they were running.”

Martha said the new structure provides business managers with a “clear line of sight” to customers, competitors and the potential for growth. Business leaders will set targets for research and development as well as M&A and partnership opportunities.

Medtronic still expects the smaller units to use company manufacturing plants and distribution channels. Martha believes a centralized approach can maintain high quality and manage costs, but if the unit leaders see higher efficiencies working with contract manufacturers or independent distributors, they can make a case.

“I’d like to understand why, because maybe we’re missing something in our existing operational footprint,” he said. “Still, the decisions are made by the business. If they don’t like it, they can just [operate] like a startup.”

Medtronic also intends to maintain centralized technology hubs — like a robotics center of excellence — that any business unit with robotic technology can tap into. “They have the option to pool robotics technology from these centers of excellence, but they don’t have to,” he said. “We’re making it more of an opt-in, with very few exceptions.”

In the interview, Martha also covered:

  • Why a competitive approach is critical to the company’s mission.
  • What he considers Medtronic’s most important metric.
  • When Martha decided to shift his career into health care.
  • What he said to convince Omar Ishrak to hire him at GE Healthcare.
  • Where institutions like Medtronic fit into the future.

Podcast co-host Chris Newmarker, executive editor of life sciences, also shares his Newmarker’s Newsmakers, drawing from coverage of Medtronic, Vectorious Medical Technologies, GE Healthcare, Stryker and Butterfly Network.

DeviceTalks by MassDevice ·

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  • Home
  • Medical Device Business
    • Mergers & Acquisitions
    • Financial
    • Regulatory
  • Applications
    • Cardiovascular
    • Devices
    • Imaging
    • Implantables
    • Medical Equipment
    • Orthopedic
    • Surgical
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    • Supplies and Components Index
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    • Components
    • Electronics
    • Extrusions
    • Materials
    • Motion Control
    • Prototyping
    • Pumps
    • Tubing
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