Medtronic's Ishrak confident in face of Medicare, device tax and slow CRM market
|Medtronic CEO Omar Ishrak said he's confident in the company's model despite a tough climate for devicemakers--courtesy of Medtronic|
Medtronic ($MDT) CEO Omar Ishrak said that despite a lagging cardiac rhythm management market, worries over Medicare reform and the impending medical device tax, his company is prepared to stay successful amid a tough time for devicemakers.
In an interview with CNBC, Ishrak said that while the market for implantable defibrillators and other heart techs remains shaky the world over, Medtronic has started to stabilize its cardiac sales. To be fair, the company's CRM revenue declined in the last quarter, but at a lower rate than the market as a whole, a discrepancy Ishrak attributes to Medtronic's product line, including the Sprint Quattro ICD. Ishrak said Medtronic expects the CRM market to remain largely flat, but the company hopes to gain a larger share on the strength of its devices.
It certainly doesn't hurt that St. Jude Medical ($STJ), Medtronic's biggest competitor in the CRM game, has faced recalls and mounting concerns over its line of ICDs and leads. Ishrak declined to take a jab at his rivals, saying instead that Medtronic cannot rely on the failure of others, but must instead win customers with its own offerings.
Ishrak is also confident that any cost-cutting Medicare reforms--like those favored by Rep. Paul Ryan (R-WI)--would not slash into Medtronic's sales. It's impossible to know what the future holds for Medicare's financing, Ishrak said, but what Medtronic can control is the value proposition it presents. "We want to make sure that all the products we have have demonstrable economic value in the eyes of our customers," he said. "If that is present, and the devices truly have clinical value as well, then there will be use."
As for the impending 2.3% excise tax on device sales mandated by the Affordable Care Act, Ishrak echoed what Medtronic has been saying all along: The company has modeled the tax into its business plans and is prepared to absorb the charge. "We have lots of pressures that come our way, and this one of them which we have to manage," Ishrak said.
- watch the CNBC interview