Devices & Diagnostics

Medtronic CEO Omar Ishrak talks healthcare reform, Infuse and beyond

Medtronic CEO Omar Ishrak sat down with MedCity News last week for a wide-ranging interview that touched on topics that included the Infuse controversy to healthcare reform to the future of underperforming businesses like Kyphon. Here are edited excerpts from that interview: Q. Your response to the Infuse controversy in having Yale review past clinical […]

Medtronic CEO Omar Ishrak sat down with MedCity News last week for a wide-ranging interview that touched on topics that included the Infuse controversy to healthcare reform to the future of underperforming businesses like Kyphon.

Here are edited excerpts from that interview:

Q. Your response to the Infuse controversy in having Yale review past clinical data does not really address the issue of off-label use of the product, which has been problematic in the past. What do you think the Yale review will achieve?

A. I think there is a very specific issue which was raised regarding patient safety. It was not about off-label or on-label use. We really feel that the product is safe, but we didn’t think it to be sufficient just for us to say that.

So we felt that if we provide the data in the most transparent way possible with completely hands-off third party jurisdiction, that would be the most objective way for the market and us to learn the true safety profile. Through this we may find that we may have to provide more clinical data or do some IDEs in particular areas. When the Yale studies are published, we will be in a better position to judge.

Q. What is your plan for non-performing businesses like Kyphon?

A. Obviously, Kyphon revenue still fell last quarter. That’s what the facts are. But we have some new products in the works and certain expectations as to what those will do. We have taken restructuring actions before. If we are surprised by the performance based on what we thought and we have to take restructuring actions, we will. But I am not going to take random action without the appropriate data.

Q. Is the time for billion-dollar acquisitions like Kyphon over?

A. I am not going to rule out (large acquisitions). I have certain principles when it comes to acquisitions whether they are big or small. First of all, I need to have a clear value proposition that is financial in nature and granular in content as to why we do a certain acquisition. Why are we buying something and what do we expect from it? Second, since this is a plan laid out by a business team, they have to prove to me a certain track record of business credibility.

I will be more disciplined about acquisitions.

Q. Medical device investing is flat, according to recent venture capital reports. Do you worry you won’t have as many innovative startups to acquire down the road?

A. No, I think we will still see a lot of innovation in the U.S. Frankly entrepreneurs who come up with these ideas don’t worry about those things. They have an idea and they get the thing done.

I don’t see any amount of policies squashing that. If they have good ideas, people will try it and others will fund it.

It might take it a little bit longer than it used to. We can help in that process by making partnerships with entrepreneurs. We have a much broader view about how to take things to market. I think the seed of entrepreneurship is still strong in the U.S.

I think the accessibility of the technology will take longer in the U.S. – it is already the case. Some of our products reach the market sooner in other countries. Now the U.S. has its own reasons for why it’s done the way it’s done and I don’t want to pass judgment on that. There are good reasons for some of that but that issue of patient accessibility (to new technologies) is different from ideas being generated.

Q. How do you view President Obama’s healthcare overhaul? What would you do if you were in charge?

A. There are three things that all health systems in the worlds want to achieve with varying degrees of priority. First, they all want to provide better care – so better outcomes, fewer errors, less time spent at the hospital.

People also are very sensitive about cost. In the U.S. it is blatant as the cost as a percentage of the GDP is exceedingly high. But in other countries they are concerned about cost because some of their populations may not be able to afford healthcare.

Third is you need to be able to provide healthcare for people who don’t have healthcare because otherwise it becomes a social and political problem.

How you achieve these three things depends on the political atmosphere and history of that country.

As far as we are concerned, as long as we work on programs that provide better quality, lowers cost at the same time and provide technologies that improve access, then those are the right strategies to win in any healthcare system. The specifics of the U.S. are the specifics of the U.S. and it’s complex. But at the end of the day these three things need to be achieved in the U.S.

Q. What is your strategy toward group purchasing organizations?

A. For a start, we want to look at these things on a case by case basis. When each contract comes up for renewal, we want to look at the merits of what we are getting and what we are giving the same way our customers do. We look at the value exchange. So, on GPOs we are not making a broad sweeping statement about anything.

Q. How important is the artificial pancreas to the future of Medtronic Diabetes?

A. I think independent of Medtronic Diabetes, the artificial pancreas is very important to the future of treating diabetes. I think if one can really come up with an artificial pancreas, that is a revolution in healthcare, which people should be striving for. If there’s anything that is halfway credible in developing an artificial pancreas, it’s absolutely our responsibility to fund it.

Read from the interview with Omar Ishrak: