Medtronic 2013 Annual Report Download - page 29

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Table of Contents
applications. For additional information see “Item 1A. Risk Factors” and Note 17 to the consolidated financial statements in “Item
8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Markets and Distribution Methods
We sell most of our medical devices through direct sales representatives in the U.S. and a combination of direct sales representatives
and independent distributors in markets outside the U.S. The three largest markets for our medical devices are the U.S., Western
Europe, and Japan. Emerging markets are an area of increasing focus and opportunity as we believe they remain underpenetrated.
Our marketing and sales strategy is focused on rapid, cost-effective delivery of high-quality products to a diverse group of customers
worldwide - including physicians, hospitals, other medical institutions, and group purchasing organizations. To achieve this
objective, we organize our marketing and sales teams around physician specialties. This focus enables us to develop highly
knowledgeable and dedicated sales representatives who are able to foster strong relationships with physicians and other customers
and enhance our ability to cross-sell complementary products. We believe that we maintain excellent working relationships with
physicians and others in the medical industry that enable us to gain a detailed understanding of therapeutic and diagnostic
developments, trends, and emerging opportunities and respond quickly to the changing needs of physicians and patients. We
attempt to enhance our presence in the medical community through active participation in medical meetings and by conducting
comprehensive training and educational activities. We believe that these activities contribute to physician expertise.
In keeping with the increased emphasis on cost-effectiveness in health care delivery, the current trend among hospitals and other
customers of medical device manufacturers is to consolidate into larger purchasing groups to enhance purchasing power. As a
result, transactions with customers have become increasingly significant and more complex. This enhanced purchasing power
may also lead to pressure on pricing and increased use of preferred vendors. Our customer base continues to evolve to reflect such
economic changes across the geographic markets we serve. We are not dependent on any single customer for more than 10 percent
of our total net sales.
Competition and Industry
We compete in both the therapeutic and diagnostic medical markets in more than 140 countries throughout the world. These
markets are characterized by rapid change resulting from technological advances and scientific discoveries. In the product lines
in which we compete, we face a mixture of competitors ranging from large manufacturers with multiple business lines to small
manufacturers that offer a limited selection of products. In addition, we face competition from providers of alternative medical
therapies such as pharmaceutical companies.
Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts, and
publications about our products; reflecting the importance of product quality, product efficacy, and quality systems in the medical
device industry. In addition, in the current environment of managed care, economically motivated customers, consolidation among
health care providers, increased competition, and declining reimbursement rates, we have been increasingly required to compete
on the basis of price. In order to continue to compete effectively, we must continue to create or acquire advanced technology,
incorporate this technology into proprietary products, obtain regulatory approvals in a timely manner, maintain high-quality
manufacturing processes, and successfully market these products.
Worldwide Operations
For financial reporting purposes, net sales and property, plant, and equipment attributable to significant geographic areas are
presented in Note 19 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this
Annual Report on Form 10-K.
57%
43%
Fiscal Year 2011
(dollars in millions)
United States
$8,872
Outside the U.S.
$6,636
55%
45%
Fiscal Year 2012
(dollars in millions)
Outside the U.S.
$7,356
United States
$8,828
55%
45%
Fiscal Year 2013
(dollars in millions)
Outside the U.S.
$7,531
United States
$9,059
Consolidated Net Sales $15,508
Consolidated Net Sales $16,184
Consolidated Net Sales $16,590
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