Medtronic is rebranding itself for the second time in as many years amid the rising influence of consumers and tech giants, also pledging to boost research and development spending by 10%.
A year after CEO Geoff Martha said that Medtronic was "putting the tech into medtech," the world's biggest pure play medical device company is trying again to change its corporate, perhaps stodgy, image.
"Medtronic will no longer be known as just a medical device company. We're going beyond devices to help technology serve more people in more ways," Martha said during Tuesday's live LinkedIn event announcing the new brand strategy.
Martha and other execs this week walked investors through its "refreshed brand" which they said would include advances in artificial intelligence, data analytics and robotics, among other healthcare technologies.
The move comes as tech giants such as Apple and Google look to carve out spaces within the healthcare technology market.
Martha acknowledged consumers are getting more engaged in healthcare, adding Medtronic is still "building out that direct-to-consumer muscle — that's not something that we've done a lot of in the past, but as our technologies are improving they're moving up in the care continuum."
Apple is using products like Apple Watch and iPhone with the addition of health-related features, to partner with providers, payers and medical researchers. At the same time, Google (Alphabet) Healthcare is using its expertise in AI and data storage to drive the industry-wide push for predictive analytics and precision medicine, as well as its acquisition of wearable company Fitbit for health-tracking capabilities.
When asked about Medtronic's relationship with tech giants like Apple and Google, which are making inroads into healthcare, Martha said the dynamic is still evolving.
"I tend to think it's going to be a little bit of partnering and maybe some healthy competition," Martha said. "The speed of the tech companies are a good benchmark for us and the impact, how ubiquitous some of these technologies are."
The company pledged to up research and development spending by 10% over fiscal year 2021 — the largest boost in the company's history. In fiscal year 2022, the forecasted organic R&D spend is more than $2.7 billion.
As for the timing of the rebranding, whose tagline is "Engineering the Extraordinary," Martha called the pandemic "a wake-up call" for chronic diseases that kill 41 million people annually, nearly three-quarters of all deaths globally, which have taken "a backseat" to the coronavirus.
Indeed, many medtechs lost revenue because of a drop in elective procedures and patients suffered as essential procedures were crowded out by overwhelmed hospitals.
Martha, who has been CEO of Medtronic since April 2020, laid out a major reorganization strategy last October, including a new operating model.
The CEO said Medtronic must do more to reach milllions of additional patients around the globe by investing in data and artificial intelligence to accelerate and achieve new scale, combined with advancements in robotics, telehealth, sensors, cloud, 5G wireless technology and computational power. Martha noted that wearables and under-the-skin sensors can remotely monitor a patient's health condition and notify clinicians before the situation escalates.
"Imagine a world where lung cancer can be identified, diagnosed and treated in a single minimally invasive event. A world where, regardless of where you live, you have access to the best surgeon for your case and they can perform it from half a world away," Martha said.
Under the company's reorganization, Medtronic's business units are divided into cardiovascular, medical surgical, neuroscience, and diabetes portfolios, with control of product development and clinical resources as well as the ability to set R&D priorities. Martha said the company has been reorganized into 20 decentralized operating units designed around specific therapy areas so they can move faster.
"We're still in the early innings of this but I'm convinced that this is going to speed up our time to market," according to Martha.