Medtronic Endoscopy President Raj Thomas on tech and R&D

Medtronic’s not only the world’s largest medical device company — it’s also the medtech industry’s biggest spender on research and development when ranked by total R&D budget.

Still, there’s always competition for R&D funding among Medtronic’s operating units and businesses.

As Medtronic Endoscopy President Raj Thomas looks ahead to the company’s upcoming strategic planning annual operating plan process with CEO and Chair Geoff Martha and Chief Technology and Innovation Officer Ken Washington, he offered a joke about his strategy for his R&D requests.

“I think I’ll start every presentation with AI,” he said in an interview. “This way I’ve got Geoff’s attention, I’ve got Ken’s attention, we can start to get dollars from there.”

A portrait of Medtronic Endoscopy President Raj Thomas.

Medtronic Endoscopy President Raj Thomas [Photo courtesy of Medtronic]

“Joking aside, we have to think about the value we provide and the opportunity,” he continued. “We’re not renal denervation (RDN) — we’re not Jason Weidman who’s got this huge investment that’s gone and got this billion-dollar market that’s sitting out there, and this is one of the bets that we’ve made — or diabetes, or Hugo the robot. So we have to look at our asks in the framework of what the company can afford to do in the present, but also then get the return a little bit faster than Hugo, diabetes and RDN. Those have been long-term investments. We need to show quicker wins, and that’s where we’re going to have to do the investment. In one to five years, I think it is about market development with the products we have. And then it might be tuck-in investments — but they have to be accretive pretty quickly, because we’ve got enough dilutive things going on at the moment.”

Three months after taking on his new post at Medtronic Endoscopy, Thomas discussed technology, strategy and R&D with Medical Design & Outsourcing. (The following has been lightly edited for clarity and space.)

MDO: How does Medtronic Endoscopy fit within the larger enterprise framework, and have you found a common theme among all the business units?

Thomas: “Great question. There’s about 15, 16 revenue-generating operating units right now within Medtronic — we still call it 20, but I think it’s 16. We all have roles within the portfolio. We are a portfolio of companies. For us, I think it is taking advantage of the greenfield space and growth. While we’re not the largest — we fit within the Medical Surgical portfolio — our ability to grow and grow not only to access more patients, but grow through a technology that is not well adopted or maybe really well understood to apply in medical devices and healthcare, I think that’s our opportunity. I think that’s where you see Geoff and Ken Washington spending a lot of their time with AI: What can we be doing, what can endoscopy do? So we’ll do our part from the financial piece — but from the innovation and technology push piece, that’s how the company is looking at us at the moment.”

MDO: Are you prioritizing smart technology over analog technology, and how does that impact those tuck-in acquisitions or R&D, market share and AI development?

Thomas: “Growing from the base that we are would be great, but can we be a larger player and offer more? Frankly, it’s going to take a combination of those kinds of things. There is a spot right now that is ours within endoscopy for the most part: AI. And there are certain technologies that we have that others don’t play in that aren’t with AI yet, but can — so this is Barrx and EndoFLIP. But then there is how do you play with endoscopic retrograde cholangiopancreatography (ERCP) and other markets that Boston Scientific frankly dominates and how do we get after that? And that is one of the questions that we have to answer for ourselves and then work with our Executive Committee — Geoff and team — and say, ‘This is the strategy. Is this where you want to put your capital?’ And that’s really not up to me. Our job is to offer up the capital investments that may grow and they fit that into the portfolio of companies.”

MDO: How do you think about market development for Medtronic Endoscopy?

Thomas: “AI is one place, the third space might be five years after this one, endoluminal robotics (ELR) is another spot that is being investigated. Those are the spaces where you do technology development and then market development. AI, though, at the moment for endoscopy — at least for us — is a lot of market development.”

MDO: Strategically, are you thinking deeper or wider, and how does that influence your approach to customer discovery?

Thomas: “In order to take up more mindshare of the gastroenterologist, do we have to offer more? The question you balance that with is how does that fit in the overall financial and overall strategy of Medtronic? You’ve talked to other executives — a lot of talk about margin expansion, growth, growing at 5% at the top line or 8% in our earnings, etc. So how do we fit while trying to be broader in, frankly, some products that have lower margins? That’s where you probably used to pivot to depth — where can we go deeper? And that’s where I keep going back to AI. Some physicians I’ve talked to say, ‘Don’t forget that there’s actual hardware that has to go in, we actually have to do something, it’s not just about the AI.’ So I think it’s going to be a balance. And it’s an interesting challenge, where you can’t just go and say, ‘We’re an independent company, this is what we’re going to go do. And we’re going to go broad and deep.’ We have to fit within the paradigm of Medtronic to grow the overall company.”