Medtronic 2013 Annual Report Download - page 27

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75732me_10K.indd 12 6/25/13 6:39 PM
Table of Contents
The charts below set forth net sales of our Surgical Technologies products as a percentage of our total net sales for each of the last
three fiscal years:
7%
93%
Fiscal Year 2011
(dollars in millions)
Surgical Technologies
$1,036
All Other
$14,472
8%
92%
Fiscal Year 2012
(dollars in millions)
All Other
$14,930
Surgical Technologies
$1,254
9%
91%
Fiscal Year 2013
(dollars in millions)
All Other
$15,164
Surgical Technologies
$1,426
Customers and Competitors
The primary customers for our products relating to ENT diseases and conditions are ENT surgeons and the hospitals and clinics
where they perform surgery. Competitors in this part of our Surgical Technologies business include Gyrus ACMI (a group company
of Olympus Corporation), Stryker, and Johnson & Johnson.
The primary customers for our neurosurgical products are neurosurgeons, spinal surgeons, and the hospitals and clinics where
they perform surgery. Competitors include Johnson & Johnson, Stryker, Zimmer, and Integra LifeSciences Holdings Corporation.
The primary customers for our image-guided surgery and intra-operative imaging systems are hospitals and clinics. Competitors
include BrainLAB, Inc., Stryker, GE Healthcare, Siemens Medical Solutions USA, Inc., and Philips Medical Systems.
The primary customers for our advanced energy products are orthopedic surgeons, spinal surgeons, neurosurgeons, and the hospitals
and clinics where they perform surgery. Competitors include Covidien Plc, Johnson & Johnson, and ArthroCare Corporation.
Research and Development
The markets in which we participate are subject to rapid technological advances. Constant improvement of products and introduction
of new products is necessary to maintain market leadership. Our research and development (R&D) efforts are directed toward
maintaining or achieving technological leadership in each of the markets we serve in order to help ensure that patients using our
devices and therapies receive the most advanced and effective treatment possible. We remain committed to developing technological
enhancements and new indications for existing products, and less invasive and new technologies for new and emerging markets
to address unmet patient needs. That commitment leads to our initiation and participation in many clinical trials each fiscal year
as the demand for clinical and economic evidence remains high. Furthermore, we expect our development activities to help reduce
patient care costs and the length of hospital stays in the future. We have not engaged in significant customer or government-
sponsored research.
During fiscal years 2013, 2012, and 2011, we spent $1.557 billion (9.4 percent of net sales), $1.490 billion (9.2 percent of net
sales), and $1.472 billion (9.5 percent of net sales) on R&D, respectively. Our R&D activities include improving existing products
and therapies, expanding their indications and applications for use, and developing new products. During fiscal year 2013, we
have focused on optimizing innovation, including improving our R&D productivity. We have made efforts to reallocate resources
into driving growth in emerging markets and in evidence generation for our growth platforms, and are assessing our R&D programs
based on their ability to deliver economic value to the customer.
Acquisitions and Investments
Our strategy to provide a broad range of therapies to restore patients to fuller, healthier lives requires a wide variety of technologies,
products, and capabilities. The rapid pace of technological development in the medical industry and the specialized expertise
required in different areas of medicine make it difficult for one company alone to develop a broad portfolio of technological
solutions. In addition to internally generated growth through our R&D efforts, historically we have relied, and expect to continue
to rely, upon acquisitions, investments, and alliances to provide access to new technologies both in areas served by our existing
businesses as well as in new areas and markets.
We expect to make future investments or acquisitions where we believe that we can stimulate the development of, or acquire new
technologies and products to further, our strategic objectives, and strengthen our existing businesses. Mergers and acquisitions of
medical technology companies are inherently risky and no assurance can be given that any of our previous or future acquisitions
9