Medtronic, the world's biggest medical device maker, has a new CEO.
The appointment of Omar Ishrak, a veteran leader at GE Healthcare, comes a day after arch-rival Boston Scientific's CEO shocked Wall Street by announcing he'll be stepping down.
Medtronic hopes Ishrak will re-energize its sales in the midst of an industry-wide slump. As CEO of GE Healthcare Systems, a $12 billion division of GE Healthcare, Ishrak transformed that division's ultrasound business, quadrupling sales to $1.8 billion over 12 years. Before his stint at GE, Ishrak worked for three other medtech firms. The 55-year-old Ishrak has a doctorate in electrical engineering.
Medtronic spokesman Brian Henry says Ishrak will succeed retiring CEO William Hawkins on June 13.
"Omar Ishrak is an outstanding leader with a strong global perspective," said Henry. "And his strong technical expertise and understanding of the customer really allowed him to excel at driving successful innovation."
Ishrak takes the reins as Medtronic and other device makers face sluggish sales, reduced reimbursement from insurers and tighter regulation by the federal government.
Medtronic's two biggest businesses -- implantable defibrillators and spinal implants -- have faced weakening sales due to safety recalls and the loss of health insurance for unemployed workers. As a result, the company announced some 2,000 layoffs in February and slashed its 2011 earnings expectations.
But Morningstar medtech analyst Debbie Wang figures Ishrak will make a big difference at Medtronic. She said Ishrak had been pegged as a rising star at GE.
"He has a very good track record there both in terms of pioneering and pushing out new technologies but also working on new strategies," she said.
Wang said one of Ishrak's greatest challenges at Medtronic will be commercializing products that are now in development. She said the company has been falling behind rivals on a key heart valve product, as well as stents, devices that prop open clogged arteries.
Wang said Ishrak could really help Medtronic better penetrate China's medtech market, as he did with GE. "He was the one who sort of figured out a way they could broaden their product portfolio and come up with lower cost products. They could actually go in there and compete against the local Chinese companies. That has really allowed GE to get ahead of Siemens and Philips in that market."
Wall Street has not been very happy with Medtronic lately. The company's share price is down about 1 percent over the past year, but is rebounding after a substantial dip.
"I think this positions them to hopefully make some changes that everyone in the investment field has been waiting for out of Medtronic," said David Heupel, an analyst with Thrivent Financial.
Heupel said those changes could include further job cuts to boosts profits, new products to drive sales and perhaps spinning off some businesses. Heupel said Ishrak is the kind of leader the investment community believes can make those hard decisions.
"Someone with a deep background in health care, someone who has led a large organization and, most importantly, someone outside of the Medtronic board and senior management," Heupel said.
While Medtronic is gaining a CEO, rival Boston Scientific is losing one. Boston Scientific CEO Ray Elliot shocked Wall Street on Tuesday by announcing his retirement. The company's stock plunged 9 percent on the unexpected news, and didn't budge today.
Elliot's decision came less than two years after he was tapped to guide the struggling company back to profitability.
Heupel said investors expected him to stay.
"They thought he would be there for at least another couple of years, until we had some tangible evidence things were improving," Heupel said. "So, not ideal for Boston. They're obviously going to have to find another CEO. And given the issues they're going though: share loss, product issues, divesting of businesses, debt, it's going to be a task that's going to be daunting for whoever takes it."
Boston Scientific employs some 5,000 Minnesotans. Like Medtronic, it has been cutting jobs.
Analysts say the turnover in leadership at the two medical device companies underscores the challenges facing device companies. It's not easy being a medical device company CEO, given the industry's troubles and Wall Street's demands for quick results.