With 46 percent of its $16 billion in annual revenue hailing from foreign shores, Medtronic, the world’s biggest medical devices company has an ambitious goal to develop new and cost-effective products such as pacemakers for the poor, while simultaneously selling its existing ones to the growing middle classes in emerging markets.
The company’s new CEO, 55-year-old Syed Omar Ishrak was raised in South Asia (Bangladesh) and believes that Medtronic can expand its reach even more, particularly in the emerging markets of India, China and Latin America. “Huge opportunities,” he says. “Huge.” How exactly Ishrak’s globalization strategy will play out remains to be seen according to the Minneapolis Star Tribune last year.
At the Davos World Economic Forum last month, Ishrak, who was recruited from General Electric and has a PhD from King’s College in London, continued the theme, “One has to be realistic about affordability in the under-served segment,” he said adding that the new generation of simpler devices should be five to 10 times cheaper than current high-specification products.
“To accelerate healthcare access one has to think about disruptive methods — disruptive technology and disruptive delivery mechanisms,” he said. While the work is still at an early stage, Ishrak has already identified heart pacemakers as the most likely area for initial research and development.
“I’d like to challenge all our businesses to start thinking this way but the area where we are furthest ahead is perhaps pacemakers, where we’re thinking of real disruption in terms of cost and simplicity,” he said.
What this means
At my company, Amritt, we have been advising our clients to look at emerging markets such as India, in exactly this manner not only in medical devices but in many other sectors that affect consumers. I had the good fortune to get to know the late legendary Professory C.K. Prahalad of the University (the man who first became famous for coining the term “core competence”). “CK” as he was know to all friends and acquaintances later wrote the ground-breaking “Fortune at the Bottom of the Pyramid” where he pointed out dozens of examples of profitable business models that address wallet sizes different from the American middle class.
It is good to see that Medtronic has aspirations to address the needs of consumers beyond the richest 1 billion global citizens. They are early in their journey, but doubtless the GE and Bangladesh heritage will carry Ishrak’s vision. We will watch this closely.
