MassDevice.com sat down with Stacy Enxing Seng, executive in residence at Covidien (NYSE:COV), just a week after the company announced it had agreed to be acquired by Medtronic (NYSE:MDT) for $43 billion.
The interview, part of MassDevice.com’s DeviceTalks Minnesota event in St. Paul, Minn., focused on several topics critical to the medical device industry, including the marriage of these 2 medical device giants.
Here are some highlights of the interview:
On the news of the Medtronic merger:
"I was thrilled because my background is vascular. I’ve spent 21 years in the vascular space and I’m so proud of all the organizations I’ve been part of, SciMed, Boston Scientific, starting ev3, Covidien. It’s a completion of a circle. … Specific to vascular, if you believe in the changing dynamics of healthcare as it relates to vertical integration and the power of the portfolio, as a vascular player without cardiovascular, I think long-term that would have been a real issue for a business that I’m really proud of. Truly, my first thought was this is fantastic…Then you go through and you think just about that on a broader scale the facts that the portfolios are so complimentary that the opportunity for further globalization is so strong, the elements of expertise that Covidien brings to the table and that Medtronic brings to the table, just the strategy behind bringing these 2 organizations together. Not to mention we are here in Minnesota, and I just think it’s fantastic from a Minnesota perspective."
On the keys to a successful merger:
"I think it’s very important for the acquirer to actually give the freedom to the entity that they have interest in acquiring. … I was pleased to hear in the announcement with Medtronic and Covidien the concept of an integration office, because I think it allows you to really focus on the vital few things that we need to get right."
On whether medtech is entering an era of consolidation:
"I think that independent of the Covidien-Medtronic piece, to me it’s very much about how the healthcare landscape has changed. Vertical integration – that concept is not a new concept. I just think the magnitude with which it’s being applied globally and the sophistication which is necessary to really grow and build businesses is a big part of why you’re seeing these types of acquisitions. … There’s no question that when you talk with the payers, when you talk with hospital systems which have consolidated over the last number of years, when you talk to governments which are contracting for their populations, they want to work with not just necessarily 1 supplier, but they want to work with a partner, a partner that’s now going beyond product and moving into services and solutions and you really can’t do that unless you have scale. … I don’t know that it’s that the Covidien-Medtronic integration acquisition is starting something new. I think it’s that both organizations, like others, have been fairly sophisticated in reading the tea leaves over the last number of years and recognizing that the paradigm has shifted, it has changed. If we want to be the leader – which, of course, I’m sure all of us with all the companies, that’s our desired state – if that’s what we want to do, then you’ve got to take action over that and recognize the way you’re conducting your business today is not what’s going to get you there down the road, and that critical mass is power."