Medtronic's new CEO, Omar Ishrak told shareholders today that the company must become better at developing products that provide both medical and economic value to customers and patients and focus more on overseas markets.
The company's greatest growth opportunities are overseas, Ishrak said. He foresees that within a decade, Medtronic's sales in both China and India could exceed its sales in the U.S.
At a shareholder's meeting Thursday in Fridley, Ishrak laid out his vision for reviving the medical device maker's sales, stock price and innovation.
Medtronic has been plagued by ethics investigations, weak stock price, falling sales for some key products, and an inability to get a sales boost out of new products introduced in the past year.
Ishrak vowed to shareholders he would turn Medtronic around, and promised to run the business with a hands-on approach.
"When we do something well, I want to understand how and how we can replicate that performance across our business," Ishrak said. "If something goes wrong, I want to know why and how we intend to fix it."
Ishrak is the former head of General Electric's health care unit. He joined Medtronic in June, and is the second CEO in the company's 60-year history to come from outside its ranks.
He said he was drawn to Medtronic because of the medical device maker's sense of purpose. He said Medtronic should be perceived as a company whose products — some of which cost tens of thousands of dollars — can help control medical costs.
"Through the Medtronic mission to alleviate pain, restore health and extend life, we are unified and aligned behind a single goal," Ishrak said. "This sense of purpose motivates us to do our very best because we know millions of lives depend on it."
The company's returns from its investment in research and development are disappointing, Ishrak said. In 2010, Medtronic invested more than $1.5 billion in research and development and introduced 60 new products, more than any other prior year, but only grew two percent.
That indicates that the company needs more products that help hospitals and physicians control costs while improving the patients' health, Ishrak said.
The new CEO also said he's determined to grow foreign markets, paying close attention to China and India. Although the U.S. is the company's biggest market, Ishrak said the market in China will exceed the U.S. in ten year's time.
"We must take action today so we can be leaders in this enormous change," Ishrak said.
Thursday's message was similar to one Ishrak delivered to Wall Street during a conference call earlier this week. The reviews were generally positive.
The company's outlook may look different in a year, but Ishrak and Medtronic have had a good week. The company's share price is up almost 9 percent since Ishrak spoke to analysts on Tuesday, triple the gain of the S&P 500 over the same time.