Medtronic's maneuvers may signal long-term struggles for industry

August 28, 2013 by Arezu Sarvestani

Wall Street analysts warn that Medtronic's moves into disease management signal "challenging times ahead for device manufacturers."

Medtronic's maneuvers may signal long-term struggles for industry

When Medtronic (NYSE:MDT) announced that it paid $200 million in cash for chronic disease management firm Cardiocom the medical device giant said the acquisition was indicative of a broader vision for the company's future, but Wall Street analysts are warning that it may also suggest "challenging times ahead" for the device industry.

In a company statement and in a conference call earlier this month Medtronic CEO Omar Ishrak said the company could reach a much larger swath of patients by widening its scope to include more healthcare services and solutions, starting with heart failure patients. Ishrak also acknowledged that Medtronic needs some new moves to keep up with new trends in healthcare in the U.S. and abroad.

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"The necessity for change is unmistakable," Ishrak said during a conference call with analysts. "The good news for Medtronic is that, in this time of uncertainty, there will be a premium placed on those who can innovate. And no one is positioned better to innovate and find solutions to tough healthcare problems around the world than Medtronic."

Device makers must prepare to expand their vision of innovation beyond new technologies and FDA approvals, Ishrak added. Leaders need to broaden their horizons to target the entire continuum of care, rather than remain focused on devices alone.