Medtronic’s (MDT) acquisition of Covidien has produced a combined company that’s a force to be reckoned with in medical technology. Pairing Medtronic’s diversified product portfolio aimed at a wide range of chronic diseases with Covidien’s breadth of products for acute care in hospitals has bolstered Medtronic’s position as a key partner for its hospital customers.
Medtronic has historically focused on designing and manufacturing devices to address cardiac care, neurological and spinal conditions, and diabetes. All along, the company has remained focused on its fundamental strategy of innovation. It is often first to market with new products and has invested heavily in internal research and development efforts as well as acquiring emerging technologies. However, in the postreform healthcare world where there are higher hurdles for securing reimbursement for next-generation technology, Medtronic has slightly shifted its strategy to focus on partnering more closely with its hospital clients by offering greater breadth of products and services to help hospitals operate more efficiently. By partnering more closely and integrating itself into more hospital operations, we think Medtronic is well positioned to take advantage of more business opportunities in the value-based reimbursement environment.
Debbie S. Wang does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.