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Corporate Investment in Start-Ups   Rachael Scherer Vice President, Marketing Medtronic, Inc.
Medtronic Mission “ To contribute to human welfare by  application of biomedical engineering in the research, design, manu...
Medtronic History Founded in 1949 as  a medical equipment  service company
 
Medtronic Solutions Restore Health Heart Valve Disease Heart Failure Atrial Arrhythmias Scoliosis Enlarged Prostate Spasti...
We Diversified Into Attractive Markets Balanced Growth US$12.3 Billion Net Sales (Fiscal Year 2007) Neurological 9% Vascul...
Medtronic Global Reach <ul><li>Sales in 120 Countries </li></ul><ul><li>Offices   in 44 Countries </li></ul><ul><li>36,000...
Ingredients to Drive Growth are in Place In billions US INT’L $12B + $22B - $24B
R&D Spending Continues To Increase FY95 FY07 $1Billion + $191 Million
Productive R&D = New Products 2/3 of revenues are from products  introduced within the past 2 years
Medtronic Mission “ To contribute to human welfare by  application of biomedical engineering in the research, design, manu...
FY ($ in Billions) $1.3 $2.7 $3.1 $3.5 $4.1 $4.7 $2.0 $2.3 $1.5 $1.8 What is Required to Sustain Growth? Annual Incrementa...
We Have Ample Financial Flexibility Free Cash Flow (Operating Cash Flow less Cap Ex) Cumulative Cash Balance Cash Availabl...
We Diversified Into Attractive Markets Balanced Growth US$12.3 Billion Net Sales (Fiscal Year 2007) Neurological 9% Vascul...
<ul><li>“White Space” will augment top growth, diversify business, geographic and payor mix </li></ul><ul><li>Aggressive g...
Business Development Strategy <ul><li>Disruptive technologies in therapeutic areas of interest </li></ul><ul><li>Extension...
<ul><li>Extend eyes and ears for key emerging technologies </li></ul><ul><ul><li>Board seat or board observer seat </li></...
Minority Investment Examples Past & Present <ul><li>Equity Investments: </li></ul><ul><li>Volcano / IVUS </li></ul><ul><li...
Case study: Neurologix Collaboration <ul><li>Neurologix, Inc. And Medtronic, Inc. Agree To Develop Gene Therapy Infusion C...
Case study: Alnylam Collaboration <ul><li>Scope </li></ul><ul><ul><li>Collaboration to develop novel siRNA-device treatmen...
Minority Investment Examples Past & Present <ul><li>Equity Investments: </li></ul><ul><li>Volcano </li></ul><ul><li>Cardio...
<ul><li>Investment Committee </li></ul>Process Medtronic Business Units Corporate Development Investment Committee Several...
<ul><li>Acquire new strategic platforms focused on treatment of chronic disease </li></ul><ul><li>and </li></ul><ul><li>Ac...
Acquisitions Strengthen/Broaden Existing Business <ul><li>BioMedicus 1990 </li></ul><ul><li>DLP  1994 </li></ul><ul><li>Av...
Acquisitions Expand into New Strategic Platforms Heart Valves  –  J&J’s  Tissue Valve Business  (1988) Cardiopulmonary  – ...
Why Would You Want Medtronic as an Investor? <ul><li>Expertise of entire Medtronic science organization available to our p...
 
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Medtronic's Perspective

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  • To understand Medtronic, you first need to understand that we are a company driven by our Mission (Read first Mission statement above …) Mission written by Medtronic founder Earl Bakken and the board of directors in 1960 Six statements total – the other statements call for us to direct our growth where we can maximize our strength, strive without reserve for the greatest quality, make a fair profit , recognize the personal worth of employees and maintain good citizenship as a company. Mission is foundation of our corporate culture - the ethical and practical framework for our operations. Everything we do at Medtronic is done with our Mission as a guide. It’s a common goal supported by our employees around the globe. Unique at Medtronic : Every new employee is invited to participate in a Mission and Medallion ceremony (Medallion pictured above) where our CEO or other senior manager explains the importance of the Mission and presents a medallion to each employee – it’s a chance for new employees to understand the very personal commitment that we share. Medtronic Mission: Well-understood by employees – 90% of employees in recent employee survey responded that they have a clear understanding of the Mission Translated into 10 languages Not one word has been changed in over 45 years!
  • A few words about our history: Medtronic started from modest beginnings in 1949. Medtronic pioneered the medical technology business – our founder Earl Bakken invented the first wearable, battery operated, external pacemaker in 1957 – spawning an entirely new industry that today includes hundreds of other companies Earl Bakken, who had been trained as an electrical engineer, and his brother-in-law Palmer Hermundslie set up shop in a 600 sq. ft. garage in NE Mpls – $8 in revenue in first month for repair of a centrifuge – the company was primarily a medical equipment servicer Local doctors began asking Earl to modify equipment or design new devices for special tests. Medtronic responded and moved into the manufacturing business.
  • Everything from heart valve disease, spasticity, chronic pain, ear nose and throat disorders … it’s a very long list We have many initiatives under way but I’d like to present just a few of those today...
  • From our roots as a pacemaker company, we have grown to become a leader in products to treat cardiovascular, neurological, spinal surgery, urological, ear/nose/throat diseases and diabetes. We compete with some of the giant names in the medical technology industry but no other company has the breadth of offerings we do when it comes to treating chronic diseases. In fiscal year 2005, Medtronic did $10 billion in net sales.
  • To understand Medtronic, you first need to understand that we are a company driven by our Mission (Read first Mission statement above …) Mission written by Medtronic founder Earl Bakken and the board of directors in 1960 Six statements total – the other statements call for us to direct our growth where we can maximize our strength, strive without reserve for the greatest quality, make a fair profit , recognize the personal worth of employees and maintain good citizenship as a company. Mission is foundation of our corporate culture - the ethical and practical framework for our operations. Everything we do at Medtronic is done with our Mission as a guide. It’s a common goal supported by our employees around the globe. Unique at Medtronic : Every new employee is invited to participate in a Mission and Medallion ceremony (Medallion pictured above) where our CEO or other senior manager explains the importance of the Mission and presents a medallion to each employee – it’s a chance for new employees to understand the very personal commitment that we share. Medtronic Mission: Well-understood by employees – 90% of employees in recent employee survey responded that they have a clear understanding of the Mission Translated into 10 languages Not one word has been changed in over 45 years!
  • From our roots as a pacemaker company, we have grown to become a leader in products to treat cardiovascular, neurological, spinal surgery, urological, ear/nose/throat diseases and diabetes. We compete with some of the giant names in the medical technology industry but no other company has the breadth of offerings we do when it comes to treating chronic diseases. In fiscal year 2005, Medtronic did $10 billion in net sales.
  • Transcript of "Medtronic's Perspective"

    1. 1. Corporate Investment in Start-Ups Rachael Scherer Vice President, Marketing Medtronic, Inc.
    2. 2. Medtronic Mission “ To contribute to human welfare by application of biomedical engineering in the research, design, manufacture and sale of instruments or appliances that alleviate pain, restore health and extend life.” Medtronic: the Company
    3. 3. Medtronic History Founded in 1949 as a medical equipment service company
    4. 5. Medtronic Solutions Restore Health Heart Valve Disease Heart Failure Atrial Arrhythmias Scoliosis Enlarged Prostate Spasticity Diabetes Hydrocephalus Tachyarrhythmia Incontinence Acid Reflux Chronic Pain Sinusitis Bradyarrhythmia Unexplained Syncope (Fainting) Peripheral Vascular Disease Degenerative Disc Disease Parkinson’s Disease Coronary Vascular Disease Dystonia Essential Tremor
    5. 6. We Diversified Into Attractive Markets Balanced Growth US$12.3 Billion Net Sales (Fiscal Year 2007) Neurological 9% Vascular 8% Diabetes 6% ENT 4% Cardiac Surgery 6% CRDM 47% Spine/Navigation 20%
    6. 7. Medtronic Global Reach <ul><li>Sales in 120 Countries </li></ul><ul><li>Offices in 44 Countries </li></ul><ul><li>36,000 employees world wide </li></ul>USA Canada Europe Latin America Middle East/ Africa/India Eastern Europe Central Asia Asia Pacific <ul><li>International </li></ul><ul><li>Western Europe </li></ul><ul><li>Canada </li></ul><ul><li>Emerging Markets </li></ul><ul><li>Latin America </li></ul><ul><li>Eastern Europe </li></ul><ul><li>Middle East/Africa/India </li></ul><ul><li>Asia-Pacific </li></ul><ul><li>Japan </li></ul><ul><li>Australia </li></ul><ul><li>China </li></ul><ul><li>ASEAN </li></ul><ul><li>Korea </li></ul>
    7. 8. Ingredients to Drive Growth are in Place In billions US INT’L $12B + $22B - $24B
    8. 9. R&D Spending Continues To Increase FY95 FY07 $1Billion + $191 Million
    9. 10. Productive R&D = New Products 2/3 of revenues are from products introduced within the past 2 years
    10. 11. Medtronic Mission “ To contribute to human welfare by application of biomedical engineering in the research, design, manufacture and sale of instruments or appliances that alleviate pain, restore health and extend life.” Medtronic: the Investor
    11. 12. FY ($ in Billions) $1.3 $2.7 $3.1 $3.5 $4.1 $4.7 $2.0 $2.3 $1.5 $1.8 What is Required to Sustain Growth? Annual Incremental Revenue Required to Sustain 15% Growth Where Does This Growth Come From?
    12. 13. We Have Ample Financial Flexibility Free Cash Flow (Operating Cash Flow less Cap Ex) Cumulative Cash Balance Cash Available for Investment (Billions) Free Cash Flow (Billions) Free Cash Flow and Cash Available for Investment
    13. 14. We Diversified Into Attractive Markets Balanced Growth US$12.3 Billion Net Sales (Fiscal Year 2007) Neurological 9% Vascular 8% Diabetes 6% ENT 4% Cardiac Surgery 6% CRDM 47% Spine/Navigation 20%
    14. 15. <ul><li>“White Space” will augment top growth, diversify business, geographic and payor mix </li></ul><ul><li>Aggressive global scouting efforts continue to identify new technologies </li></ul><ul><li>Minority investment portfolio provides early access to new technology </li></ul><ul><li>We will identify new business platforms where we add value and leverage Medtronic strengths </li></ul>Evaluating New Growth Platforms, Strengthening Existing Growth Platforms Market Development Indication Expansion Market Share Geographic Expansion New Markets
    15. 16. Business Development Strategy <ul><li>Disruptive technologies in therapeutic areas of interest </li></ul><ul><li>Extension of existing technologies into new therapeutic areas </li></ul><ul><li>Drug partnering </li></ul><ul><li>Procedure solutions (how do we make therapies more efficacious, safer, less invasive and more convenient) </li></ul><ul><li>Sensors and closed loop systems </li></ul><ul><li>Miniaturization </li></ul>
    16. 17. <ul><li>Extend eyes and ears for key emerging technologies </li></ul><ul><ul><li>Board seat or board observer seat </li></ul></ul><ul><ul><li>Membership on scientific advisory board </li></ul></ul><ul><li>Create bonds to enhance ability to negotiate future investments </li></ul><ul><ul><li>Development agreements </li></ul></ul><ul><ul><li>Distribution rights </li></ul></ul><ul><li>Gain certain option rights </li></ul><ul><ul><li>Right of first offer </li></ul></ul><ul><ul><li>Right of first refusal </li></ul></ul>Minority Investment Strategy Medtronic currently has ~$200M in active investments in over 70 companies
    17. 18. Minority Investment Examples Past & Present <ul><li>Equity Investments: </li></ul><ul><li>Volcano / IVUS </li></ul><ul><li>First investment in 2002, Licensing agreement in 2003 </li></ul><ul><li>Equity financing used to develop IVUS products </li></ul><ul><li>Up-front payment for technologies used in Medtronic products </li></ul><ul><li>Volcano completed successful IPO in mid-2006; Medtronic still a shareholder. </li></ul><ul><li>CardioMEMS / Wireless Sensing & Communications </li></ul><ul><li>In 2005, Medtronic made entered into a license and joint product development program. </li></ul><ul><li>Equity investment and series of milestone payments </li></ul><ul><li>Medtronic has overall responsibility & bears cost for clinical and regulatory </li></ul><ul><li>CardioMEMS began IPO process, but has opted to remain private, for now </li></ul><ul><li>Spinal Dynamics / Artificial Disk </li></ul><ul><li>Initial investment in 2001, Medtronic became exclusive OUS distributor of Bryant disc </li></ul><ul><li>In 2003, Medtronic acquired Spinal Dynamics for $270M </li></ul><ul><li>Bryant disc expected to go to FDA Panel this Fall </li></ul>
    18. 19. Case study: Neurologix Collaboration <ul><li>Neurologix, Inc. And Medtronic, Inc. Agree To Develop Gene Therapy Infusion Catheters; Medtronic Makes A Further $2 Million Equity Investment In Neurologix </li></ul><ul><ul><li>Medtronic will manufacture, delivery devices for Neurologix's Parkinson's disease and temporal lobe epilepsy clinical programs </li></ul></ul><ul><ul><li>Two companies will have a revenue-sharing arrangement </li></ul></ul><ul><ul><li>Medtronic increased its equity investment in Neurologix by $2.0 </li></ul></ul>
    19. 20. Case study: Alnylam Collaboration <ul><li>Scope </li></ul><ul><ul><li>Collaboration to develop novel siRNA-device treatments for neurodegenerative diseases </li></ul></ul><ul><ul><ul><li>Begin with exploration of one target/disease: huntington in Huntington’s Disease (HD) </li></ul></ul></ul><ul><li>Roles </li></ul><ul><ul><ul><li>Discovery and early development of siRNA component </li></ul></ul></ul><ul><ul><ul><ul><li>To “Clinical Proof of Concept” ≈ completion of Phase IIa </li></ul></ul></ul></ul><ul><ul><ul><li>Late-stage development of siRNA component </li></ul></ul></ul><ul><ul><ul><li>All development of Device component </li></ul></ul></ul><ul><ul><ul><li>Commercialization of siRNA-Device combination </li></ul></ul></ul>Alnylam Medtronic
    20. 21. Minority Investment Examples Past & Present <ul><li>Equity Investments: </li></ul><ul><li>Volcano </li></ul><ul><li>CardioMEMS </li></ul><ul><li>Spinal Dynamics </li></ul><ul><li>Neurologix Collaboration (case study) </li></ul><ul><li>Alnylam Collaboration (case study) </li></ul><ul><li>“ Larger than Life” deals: </li></ul><ul><li>Minimed </li></ul><ul><li>Vidamed </li></ul>
    21. 22. <ul><li>Investment Committee </li></ul>Process Medtronic Business Units Corporate Development Investment Committee Several Sources Strategy Committee Clear fit with MDT business White Space Opportunities Ideas Opportunities Ideas Opportunities Ideas Opportunities Ideas Opportunities
    22. 23. <ul><li>Acquire new strategic platforms focused on treatment of chronic disease </li></ul><ul><li>and </li></ul><ul><li>Acquire businesses or product lines complimenting or supplementing existing businesses </li></ul><ul><li>Enhance Revenues! </li></ul>Acquisition Goals
    23. 24. Acquisitions Strengthen/Broaden Existing Business <ul><li>BioMedicus 1990 </li></ul><ul><li>DLP 1994 </li></ul><ul><li>Avalon 1994 </li></ul><ul><li>Electromedics 1994 </li></ul><ul><li>Carbon Implants 1994 </li></ul><ul><li>Avecor 1999 </li></ul><ul><li>Coalescent 2004 </li></ul><ul><li>Instent 1996 </li></ul><ul><li>AVE 1999 </li></ul><ul><li>PercuSurge 2001 </li></ul><ul><li>TVI 2003 </li></ul><ul><li>Radius 2004 </li></ul><ul><li>AngioLink 2004 </li></ul><ul><li>Vitatron 1986 </li></ul>Cardiac Surgery Vascular CRDM <ul><li>Midas Rex 1998 </li></ul><ul><li>Intelex 2000 </li></ul><ul><li>Odin 2005 </li></ul><ul><li>PaceArt 2001 </li></ul>Neuro Surgery Patient Mgmt Surgical Navigation
    24. 25. Acquisitions Expand into New Strategic Platforms Heart Valves – J&J’s Tissue Valve Business (1988) Cardiopulmonary – J&J’s Oxygenator Business (1988) Coronary Vascular – Versaflex (1989) / IMI (1989) Neuro/Gastro/Uro Diagnostics – Synectics/Dantec (1994) Peripheral Vascular/AAA – MIS (1995); AneuRx (1997) External Defibrillators – Physio Control (1998) Spinal – Sofamor Danek (1999) Neurosurgery – PS Medical (1995), SNT (1999) ENT – Xomed (1999) Diabetes – MiniMed/MRG (2002) BPH – VidaMed (2002) GERD – Endonetics (2002) Artificial Discs – Spinal Dynamics (2003) Prior Acquisitions Current Interests Biotechnology Cancer Dental Hearing Hypertension Obesity Ophthalmology Orthopedics Urology/Gynecology Stroke
    25. 26. Why Would You Want Medtronic as an Investor? <ul><li>Expertise of entire Medtronic science organization available to our partners (with/without CDAs) </li></ul><ul><li>Medtronic will keep ownership below control position (unless investment moves to acquisition) </li></ul><ul><li>Medtronic invests for strategic reasons. We don’t like to lose $$, but generally run our portfolio to learn about technology and markets </li></ul><ul><li>Medtronic won’t tell you how to run your business; generally looks to be Board observer, not Board member </li></ul>
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