Medtronic plc manufactures and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. The company's Cardiac and Vascular Group segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; diagnostics and monitoring devices; mechanical circulatory support, TYRX, and AF products; and remote monitoring and patient-centered software. It also provides transcatheter heart valves, percutaneous coronary intervention stents, surgical valve replacement and repair products, endovascular stent grafts, peripheral vascular products, and products to treat superficial and deep venous diseases. Its Minimally Invasive Therapies Group segment offers surgical care, wound closure, electrosurgical, hernia mechanical device, mesh implant, ablation, interventional lung, ventilator, capnography, airway, sensor, monitor, compression, dialysis, enteral feeding, wound care, and medical surgical products; stapling, vessel sealing, fixation, and hardware instruments; and gastrointestinal, temperature management, inhalation therapy, and renal care solutions. The company's Restorative Therapies Group segment offers products for spine, bone graft substitutes, biologic products, trauma, implantable neurostimulation therapies, and drug delivery systems for the treatment of chronic pain, movement disorders, obsessive-compulsive disorder, overactive bladder, urinary retention, fecal incontinence, and gastroparesis, as well as products to treat conditions of the ear, nose, and throat; and systems that incorporate energy surgical instruments. It also provides image-guided surgery and intra-operative imaging systems; and therapies for vasculature in and around the brain. The company's Diabetes Group segment offers insulin pumps and consumables, continuous glucose monitoring systems, and Web-based therapy management software. The company was founded in 1949 and is headquartered in Dublin, Ireland.
Business Analysis of Medtronic
The Life Sciences Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Medtronic compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Medtronic to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Medtronic with an interactive chart.
- Revenue Growth: Medtronic reported a revenue growth of 42.3% year-on-year during 2016. Medical Devices Industry grew at 20.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Medtronic spent 31.7% of its total revenues on COGS. Medical Devices industry average (COGS share of revenue) in the same period was 41.0%
- R&D share of Revenues: As a percentage of revenue, Medtronic spent 7.7% of its total revenues on R&D. Medical Devices industry average R&D spending in the same period was 7.2%
- SG&A share of Revenues: As a percentage of revenue, Medtronic spent 32.8% of its total revenues on Sales, Marketing, and General Administration (SG&A). Medical Devices industry average SG&A spending in the same period was 33.2%
- Inventory share of Revenues: As a percentage of revenue, Medtronic spent 12.0% of its total revenues on Inventories. Medical Devices industry average Inventory spending in the same period was 14.8%
- Accounts Payable share of Revenues: As a percentage of revenue, Medtronic invested 5.9% of its total revenues on Accounts Payable (A/P) Medical Devices industry average Accounts Payable investment in the same period was 9.1%
- Accounts Receivable share of Revenues: As a percentage of revenue, Medtronic invested 19.3% of its total revenues on Accounts Receivable (A/R). Medical Devices industry average Accounts Receivable investment in the same period was 17.3%
- PP&E share of Revenues: As a percentage of revenue, Medtronic invested 16.8% of its total revenues on Property, Plants, and Equipments (PP&E). Medical Devices industry average PPE investment in the same period was 22.2%
- Intangibles share of Revenues: As a percentage of revenue, Medtronic invested 237.2% of its total revenues on Intangibles. Medical Devices industry average Intangibles investment in the same period was 124.7%
- Net Margins: Medtronic Net Margins in the year 2016 were 12.3%. Medical Devices industry average Net Margins in the same period were 11.7%
Sector and Industry Association of Medtronic
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Medtronic is associated with Healthcare Sector Group, Life Sciences Sector, and Medical Devices Industry.
Life Sciences sector is comprised of the following industries: Pharmaceuticals; Medical Devices; Biotechnology; Diagnostics & Scientific Instruments. The definitions for each of the industries is as follows:
- Pharmaceuticals industry includes companies that discover, develop, manufacture, and market medicines licensed for use as medications. In general these companies offer pharmaceutical products that can be described as prescription or over-the-counter medicines. Many Pharmaceutical companies also offer a diverse portfolio of animal health products, services and solutions. Many diversified pharmaceutical companies operate in more than two operating segments like consumer health products, medical devices and pharmaceutical.
- Medical Devices industry includes manufacturers and distributors of medical equipments and medical supplies. Medical equipments include large scale capital equipmets such as X-Ray machines and MRI scanners and other nondisposable medical devices like stents and pacemakers. Medical supplies include makers of contact lenses, eyeglass lenses, bandages and other disposable products.
- Biotechnology industry includes Biotechnology product companies, subscription companies, and service companies. Biotechnology product companies offer pharmaceutical drug products that are manufactured in, extracted from, or semi synthesized from biological sources. Subscription-based companies develop genome databases, which can be used to develop medicinal drugs. Service companies offer solutions based on a common technology or generic tool of other large pharmaceutical or biopharmaceutical companies.
- Diagnostics & Scientific Instruments industry includes companies that provide testing products, diagnostic reagents, instruments and diagnostic services to aid in the detection and treatment of a wide range of diseases. It also includes molecular diagnostic and genetic testing companies that develop, manufacture, market and provide diagnostic tests, diagnostic systems and related products and services. Also included are companies that manufacture and market analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics.
Industry Ranking of Medtronic
With $28.8 billion revenues, Medtronic ranked number 1 of all the companies in the US Medical Devices industry. There were a total of 81 public companies in the US Medical Devices industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Medical Devices industry by revenues during 2016 were:
- Medtronic ($28.8 billion)
- Becton Dickinson ($12.5 billion)
- Stryker ($11.3 billion)
- Baxter International ($10.2 billion)
- Boston Scientific ($8.4 billion)
- Zimmer Biomet ($7.7 billion)
- Dentsply Sirona ($3.7 billion)
- C. R. Brad ($3.7 billion)
- Varian Medical Systems ($3.2 billion)
- Edwards Lifesciences ($3 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.