Medtronic 2015 Annual Report Download - page 3

In our Coronary & Structural Heart division, we experienced strong customer acceptance in CE Mark countries for our
CoreValve®Evolut®R next-generation self-expanding transcatheter aortic valve system, which features an option to recapture
and reposition the valve during the procedure and a differentiated 14-French equivalent delivery catheter allowing access to
smaller patient anatomies. In our Aortic & Peripheral Vascular division, we received FDA approval and launched our
IN.PACT®Admiral®drug-coated balloon in the United States late in the fiscal year. This product is an interventional treatment
for peripheral artery disease in the upper leg, a serious and common cardiovascular condition that causes pain in the legs and is
known to be associated with a four- to five-fold increase in risk for heart attack and stroke.
Finally, these FY15 results illustrate how well the CVG team has executed a bold and imaginative turnaround plan first
conceived five years ago. CVG is now embarking on the next phase of their transformation as they organize the Group along
disease states, providing solutions to manage patients across the continuum of care.
Achieving Critical Mass in Services and Solutions
Our Services and Solutions revenue, independent from associated device revenue, more than doubled in FY15. The acquisition
of NGC Medical provided a platform for the acceleration of our Cath Lab Managed Services business in Europe and the Middle
East. As of the end of FY15, we have 50 long-term agreements with providers, representing $1.1 billion in revenue over the life
of these contracts, which typically span five to six years. We also initiated our first Operating Room Managed Services pilot,
combining our existing capabilities in the cath lab with Covidien’s breadth of operating room technology and expertise.
Cardiocom also continued to grow both in the number of accounts as well as capability. We added heart failure data generated
by our implantable devices to the Cardiocom platform, creating a comprehensive heart failure management service offering.
Late in the fiscal year we also added Diabeter, a unique Netherlands-based diabetes integrated care solution that we intend to
introduce and grow globally. These efforts increasingly address the evolving needs of our customers for delivery system
efficiency and integrated care models for patients around the world.
Realignment of our Diabetes Group and Restorative Therapies Group
At the beginning of the year, we named Hooman Hakami as the new Executive Vice President and Group President of our
Diabetes Group. Under his leadership, the Group delivered strong financial performance for the year and set a new, exciting,
and transformative vision for the future. The team has charted a course to increase the number of patients served from 1 million
today to 20 million by 2020. The Group has been re-organized into three customer centric divisions to achieve these goals. The
new focus has enabled us to begin the shift from being solely a pump and sensor company to becoming a holistic diabetes
management company. Technology leadership was strengthened through successful new product launches, as well as significant
progress along the roadmap to develop a fully closed loop diabetes management system. In select international countries, we
began the launch of the MiniMed®640G System, which features a new insulin pump design, the Enhanced Enlite™ continuous
glucose monitoring sensor, and SmartGuard™ technology, which can automatically suspend insulin delivery when sensor
glucose levels are predicted to approach a low limit and then resume insulin delivery once levels recover. At the same time, we
moved into integrated patient care with the acquisition of Diabeter, and enhanced our data and analytics capabilities with
innovative partnership arrangements with IBM Watson Health and Glooko.
Our Restorative Therapies Group (RTG) performance, although the best in five years, was below our expectations. Surgical
Technologies had a good year with expanded product offerings and continued growth, but we narrowly missed our goal of
returning to growth in our Spine division. At the field level, sales management in both the U.S. and Europe has recently been
realigned along disease states; this will optimize our focus on our Neuroscience, Integrated Pain, and Surgical Synergy
strategies. This realignment is expected to help our performance in Spine, allowing us to take greater advantage of our breadth
of products and services.
Creation of the Minimally Invasive Therapies Group
The Covidien business was highly complementary with our existing set of businesses, fitting relatively seamlessly into our
disease-based organizational structure. The Peripheral Vascular and Neurovascular businesses were natural additions to CVG
and RTG, respectively; the remainder of the Covidien business (representing approximately 90 percent of revenue) became a
separate, fourth group: the Minimally Invasive Therapies Group (MITG). MITG’s charter is to enable less invasive, more
successful procedures through early diagnosis, better treatment, and faster recovery in the following clinical areas: obesity,
gastrointestinal tract, pelvic region, and kidneys. This approach adds diversity to our overall profile both clinically and by
creating economic value for providers during the hospital stay. The new structure has been well received by employees, and we
have maintained business accountability and focus during the transition period, avoiding distractions. The stability contributed
to MITG’s strong performance in the fourth quarter of FY15, the first quarter as part of Medtronic. The Peripheral Vascular and
Neurovascular businesses also contributed solid growth to CVG and RTG.