Medtronic plc (NYSE:MDT) Bank of America Global Healthcare Conference 2022 September 15, 2022 9:10 AM ET
Company Participants
Rob ten Hoedt – Executive Vice President & President EMEA & APAC
Conference Call Participants
Travis Steed – Bank of America
Rob ten Hoedt
[Call Starts Abruptly] That is the de novo patients plus the deferred patients should all be treated, then we’re going to get this increase in productivity. That happened in Spain and Italy but it didn’t in France, in the UK and in Germany. So these big markets, they have massive staffing issues. And so we see production coming back to pre-COVID levels, but we — they cannot handle to deferred patients wave that’s coming at them. APAC has not seen any of the issues with staffing. So we are basically just back at the levels that we were before COVID.
Question-and-Answer Session
Q – Travis Steed
In terms of procedural volumes, we’re pretty much back at kind of pre-COVID levels, normalized volumes and kind of that’s the plan from here. Maybe a staffing eases, we could see some recovery.
Rob ten Hoedt
Absolutely, absolutely.
Travis Steed
And then in terms of some of the supply chain issues that Medtronic has had, just curious how you’ve seen that impact your European business and some of the areas where you’ve seen that improve or not improve?
Rob ten Hoedt
No, we’ve had significant supply chain issues. And they were obviously partly driven by the global supply chain issues. But some of them were also self-inflicted within Medtronic that we needed to deal with. One thing we learned very clearly is that before we did this operating model change with the 20-year use, we had supply chain really scattered in manufacturing scattered throughout the organization.
Already before COVID, we decided to create a real focused professional organization around technology development, product manufacturing and supply chain. And we hired the head of supply chain of Walmart to come and help us to really put that infrastructure in place.
And that’s been extremely helpful. I wish we should — we could have started with that a little earlier, so we could have benefited more from it during COVID, but it’s helping us to bring the number of suppliers down. It’s helping us to get a much better grip on our demand planning, manufacturing planning. And you will see dramatic improvements going forward, both in our supply chain, but also in our whole invested capital and the way we deal with that.
I must say that last year, Q4 was probably our most difficult year when it came to supply. Right now, we’re absolutely coming out of that deep hole and starting to get availability of products in a much, much better shape, yes.
Travis Steed
Yes. And I guess there’s the more Medtronic specific issues and that’s also kind of the global supply chain issues as well. Are you seeing — if you look at just the global supply chain issues, like chip shortages and stuff like that, is any of that starting to ease in some of the spot buying …?
Rob ten Hoedt
Well, the big issues, we’re sitting in microprocessors, in resins and in packaging materials, basically. And we see microprocessor starts to become better, much better. Resins, we’re out of it and the packaging is basically we’re out of that, too. So we’re now — we have a bit of backlog to catch up with, but it’s really looking good. Man, it was needed because customers were not happy with us, nobody. You get an overall kind of depressed feeling if you have all that demand out there and you can’t really satisfy the needs of the customers.
Travis Steed
Do you think you’ll recover some of that share that you lost or all the share that you lost during that period?
Rob ten Hoedt
Oh, yes. Yes.
Travis Steed
So confident enough. And going to the European specific issues that we read all the news and the headlines and the pipeline shut down. And just curious how you look at the Medtronic position in Europe manufacturing? Like where Medtronic is exposed? How to think about that and the impact to Medtronic potentially?
Rob ten Hoedt
Yes, I must say we’ve all got scared a few weeks ago when all the gas stopped coming from Russia and there were all these threats that there was not enough gas in Europe, and we’re going to have to shut down certain elements in our industries. I think the world today looks much, much better. The latest report I read earlier this week about European gas reserves is that where basically every country is at the maximum of their reserves. So the next winter, we should not have a problem of electricity or energy supply.
The prices will stay high. But luckily, as Medtronic, we started early with our energy providers to sign new contracts and get agreements for a longer period of time. So we are locked and loaded in that. The fear of having to shut down parts of our manufacturing, those fears are gone. We have backup plans in place if it would happen. But I think the situation is looking much better. The gas price in Europe came down 25% or 30% just a few days ago, because of that news of the reserves being on target.
And so the biggest issue, but that’s more on the social front is the prices are high and there’s people that have difficulty paying their gas bills. And so that’s something that we societies need to solve for. But that’s not going to inhibit the medical business at all. And also the hospitals, they can deal with this, and they get — in most countries, they get partly compensated for their higher energy costs that they will have to absorb during the winter time.
Travis Steed
Okay. And then if things do — that works maybe not this winter but next winter, so it sounds like there’s some backup plans and things that Medtronic can do?
Rob ten Hoedt
Yes. We already looked at that. We have manufacturing in other locations where sometimes a hurricane comes over and you have to make sure that everything stays intact. So we basically looked at those backup plans with generators and other ways to continue the plants up and running. So no issues there.
Travis Steed
That’s great. That’s good to hear. And then potentially like you’re just going in recession, like how do you think about it? That’s obviously different in the U.S., like more of a government-funded hospitals. Like how could a recession potentially impact capital spending and procedures? And are you hearing any pressures from the hospitals at this point?
Rob ten Hoedt
Yes. That’s a great question, Travis. And there’s always the good and the bad about having the socialized healthcare systems. And the good is that these budgets are allocated. They are allocated for this year, they are allocated for next year. There will not be a change in those budgets, no matter what.
So we will not, and we’ve always seen that when you get economic downturns. In Europe, in our business, we don’t feel that because the first years after the economic downturn, the flow of patients and the funding of the system is still there. There is a carryover effect. So it comes a little later when governments need to pull down spending. But you don’t see it at the same time where the economic downturn is. So we’re actually pretty optimistic that patient volumes will continue.
Travis Steed
Okay. We’ve talked a lot about some of the pressures in inflationary costs, but some of the offsets, I guess one of those is pricing. So I’d love to see what Medtronic is caring and doing on pricing, both around the world and the other offsets that you might have as well?
Rob ten Hoedt
If we, as an industry, are not able to increase prices in this window of time, then I don’t know what needs to happen for us as an industry to increase prices. So we have — as Medtronic, we have an aggressive price increase strategy to hand over some of the inflationary costs over to our customers.
Obviously, we are like a lot of us in this industry we are bound to long-term contracts. So we’re going to have to wait until these contracts run out and renew them. But in principle, we have already increased our list prices. So everybody who buys from electronic at list price gets a higher price.
In some tenders, we are allowed to work the inflation into the tender. So we’re doing that. We’re having our strategic pricing and pricing monitoring groups on monthly reports out to see what’s going on with pricing in the company and making sure that we take the opportunity of increasing prices wherever we can.
Travis Steed
And then historically, prices went down 0.5 point, 2 points in the last decade? Or — do you think that stabilizes it flat or do you think that’s…?
Rob ten Hoedt
It stabilizes our minimum achievement. So stabilize is where we absolutely need to get to. I would hope we’re going to get a few bps of improvement.
Travis Steed
Okay. That’s good to hear. And I guess going to more — we touched on this a little bit with the supply chain stuff, but I did want to dig in a little more on some of the organizational changes that the Medtronic has had and the regional ranges in the business units. Just I guess, first of all, like now that you’re in Medtronic — you have been in Medtronic for, I don’t know, quite a while.
Rob ten Hoedt
Yes. 100 years now.
Travis Steed
Yes. I will say a number of years. So how do you think that’s working and how you think it’s changed both like the competitiveness of Medtronic and also the culture of Medtronic?
Rob ten Hoedt
Yes, I’ve worked at Medtronic in days that all the execution was done in the regions and then everything was done through the business units, and then there was some sort of a matrix, and we’ve had all kinds of models as large companies do. But when Geoff took on the helm of the company, we decided to eliminate the groups and go for the 20 OUs that we’ve established. And the 20 OUs we really wanted to create pure-play companies that wake up every morning with their end markets in mind with a focus on innovation that drive their business in the developed world, if you will.
And I’m really happy with that, A, we could put more R&D dollars into it, so that’s helpful. We didn’t have the risk of creating three different types of Medtronics, which you have when you — the groups get very big, you have a tendency to drift away a little bit from the core, and that’s not happening anymore. But more importantly, we now have these 20 OUs as the backbone of our organization. We’re building this real powerhouse of technology development, manufacturing and supply chain on one side, that’s servicing all these OUs. So these OUs don’t have to worry about supply chain. They don’t have to worry about manufacturing and where and how. That’s all been done by a professional organization.
And on the other side, we have developed a strategic account management, global approach, where all the OUs benefit from the total Medtronic offering. And we have an emerging markets focused growth engine where all the OUs are benefited from. So we’ve created two bookends of value creation for the OUs, where you’ve heard us talk about play big and play small. This is exactly what we’re meaning with that. That means focus on product development and end markets, focus on some of the crucial operational elements of the company to develop or to manufacture products and distribute, focus on a very fast-growing segment of strategic accounts that require a different approach and a different offering and double down on the growth in emerging markets, and they all benefit from that in the middle. And above is the Medtronic brand name, which just carries its own weight and credibility.
Travis Steed
And how do you think of this, like the scale and having the Medtronic brand name? And how has that helped Medtronic or has it helped Medtronic?
Rob ten Hoedt
Listen, I’ve done a few start-ups for Medtronic way back when — at the moment you hang and I don’t want to make this sound arrogant in any way, shape or form. But the moment, the technology gets the Medtronic brand name, it lifts that technology up from a perception perspective. That is the brand that we’ve built with Medtronic, and that’s where the OUs are benefiting from. That’s pretty clear.
And since we are and have created strategically this largest med tech company in the world, also for those strategic accounts that Medtronic — the Medtronic invoice is the invoice they see the most because that’s most of the products that goes through their hospital. So in that sense, it gives us a seat at the table of the decision-makers in hospitals and our ability to create partnerships.
Travis Steed
Are you seeing contracting across like different portfolios? And just I don’t know if there’s any examples you can share of how having the full portfolio has actually helped you win share or hold on to price better?
Rob ten Hoedt
More and more we see that procurement and hospital administration gets involved in the procurement of medical devices. Obviously, they listen to the advisor of physicians, but ultimately, they make the call. And we’ve had multiple negotiations. I can call out a whole range of very large customers where by us saying, okay, if you also include spine, if you also include surgical and you get us to an overall market share of [AGS], we can create a relationship with you on different fronts, they’re very, very open to that.
Now in Europe, we’ve been developing the Integrated Health Solutions offering on top of our products, which makes it that we just don’t have to connect a bunch of products together but we also can squeeze in all kinds of services and consulting elements to our customers that create a lot of value for them.
Travis Steed
Okay. And then in terms of the portfolio review, when Medtronic talked quite a bit this year on strategic portfolio options, I don’t know how involved you are in that process, but would love to see how you’re thinking about it from your Asia Pacific perspective because they’re probably different countries, like different portfolios and businesses matter more to you than they do the other parts of the globe.
Rob ten Hoedt
No, I’m very involved and that’s actually an executive committee activity that we’re doing quite a bit in just assessing our portfolio of products. And the reason we created the 20 OUs was also to create the freedom for us. To be able to say, “Okay, this OU is probably better off outside the Medtronic and we should replace it with something else that has a faster [whang] or whatever.” So we’re having those discussions. And that portfolio management is being actively looked at. But it’s not such a simple decision to make. So we did it with Renal Care, which was an investment we did for a number of years, significant investment to develop that system. But we felt this is not — Medtronic is not the right place to grow this baby further in. And so we created this new code together with DaVita. So that’s an example of portfolio management.
But sometimes you have a business unit who is not growing that fast. And so you could basically decide there’s not a real dynamic future. But if you want to grow in emerging markets, that business happens to be really important.
So there’s all kinds of different trade-offs that you will need to make whether something should stay with us or not. But at least, we have that discussion on an ongoing basis. And we’re seriously holding the OUs against the light whether issue stay with us or not.
Rob ten Hoedt
And on the other side, like we’ve talked a lot about portfolio Medtronic has on getting out of businesses, but what about adding business through M&A? Is that something that you’re still focused on? And in what areas are you looking at?
Rob ten Hoedt
Well, listen, in the cardiology space, we — obviously, that is our home base, and we’re always looking into those areas than on the surgical side of the equation, which has become a large stronghold for us there’s a lot of innovation going on. That’s highly interesting. So on mapping and imaging are places where we would like to grow. And then let’s not forget the digital and AI world.
Staffing shortages are there, they will get resolved to some level, but to a large extent, healthcare delivery will need to change. And healthcare delivery change will happen through digital solutions. And right now, these digital solutions are all in the hands of multiple startup companies. There’s not 1 hospital IT person that enjoys the thinking of having 60 different solutions for all kinds of diseases.
So ultimately, a company like Medtronic is going to play a very large catalyzer role in bringing those kind of solutions integrated into the market. And so the world — I think the world is asking for larger players to come into the digital and AI space, and Medtronic is seriously looking at that.
Travis Steed
And before we move into some of the products questions, like Medtronic kind of held it up out longer term being a 5%-plus growth. And how do you think about the OUS growth overall? I think you’ve been from the emerging markets, you benefit from some of the new products as well. Just from a high level to where long term from a growth?
Rob ten Hoedt
We’re — obviously, the international markets are part of that 5% growth. Our emerging markets is just a flat out success, I would say. We’re growing double digit in all our emerging markets. And I actually think with a little bit more effort and focus, we can even get more out of that. Western Europe has been growing very nicely in that 5% or more percent range, the same for APAC. So I’m — we’re going to be completely aligned with the growth of the company and contribute to that. So that 5% is real.
Travis Steed
What about China and China VBPs? I don’t know how much you — when do you think that actually is going to be done and how impactful that’s going to be?
Rob ten Hoedt
Yes. I have a perspective on the — first of all, China, there’s no discussion. We need to be in China. We want to be in China. We will be in China, VBP or not. VBP is painful, and you’re going to have to take that nose dive on pricing, but there’s good news to it. The good news is it squeezes out the middleman, which is an important driver of cost for hospital. And it gives us access to the total market instead of the import market that we’re playing in right now. And access to the whole market also means we can do our market development work, which we know how to do. We can do our training and education with physicians, which we know how to do.
So — the other good news about the VBP is it’s coming in as a staggered way. So you have one, then you — price goes down, then the next one comes. So by the time you annualize the first one, the second one comes. So you’re able to financially deal with it to a large extent. If we take the example of pharma, who went through this already, it took them a few years, but they took the nose dives, they got the access. Now they’re growing really fast, and they are able to increase their prices again when innovation comes along.
So our view is, China, we want to be successful in and we will be successful in. We’re going to have to accept the realities of that VBP but we’re going to maximize the opportunity after that.
Travis Steed
And some of the benefits of that are being closer to your customers and…
Rob ten Hoedt
Oh, yes. Yes. Because these middlemen are really not helpful in developing the market. So having that direct access and then going also ourselves into the rural markets, so outside of the metropolitan areas, there is so much opportunity for growth.
Travis Steed
And then I think Hugo is probably the first product I’ll start with. And curious what the demand has been like? Have you actively started placing more systems lately or where things stand on Hugo?
Rob ten Hoedt
Yes. Well, the short answer is, I wish we could just make — we could make as much Hugo that we have demand. Demand is phenomenal. I’ve been a long time in medtech. But the enthusiasm for us to bring a robot to the market and the reaction of customers and their willingness to sign a contract with us without even having seen the device or having a device in the house, has been remarkable.
Now we’ve had our set of issues from a supply perspective and a technology perspective to get that product to market. The good news is, we’re there. So we are, at this point in time, manufacturing Hugos and they are leaving the factory, and they are being installed. So I’m extremely — it’s an extremely promising technology. The physicians like it a lot because of its modular approach, but the fact that they can sit straight up and don’t have to have their head in a binocular. The fact that the anti-factors are the same anti-factors they are using every day if they do laparoscopic or open surgery. So they’re very used to them. And the fact that we have committed that we want robotic surgery to be able to be done at the same price as a laparoscopic surgery. It shouldn’t be more expensive. It doesn’t have to be, and it shouldn’t be.
So we have a whole range of creative financing offerings to our customers that will absolutely cater to the need of the different places in the world.
Travis Steed
And these hospitals that are already buying, are they Intuitive customers? Are they new to robots?
Rob ten Hoedt
Some of them are, some of them are not. So some of them are Intuitive users, and they are extremely interested to also have another roll out next to it and basically compare the two in daily use. We also have customers who said, okay, I want — I’m a first time robotic user, but I’m going to choose Medtronic over Intuitive.
Now listen, right now, 3% of the cases are being done by — in the world done by robotic surgery. We believe that, that number is going to grow to 20% in the next years. This is not a competitive discussion with Intuitive and Medtronic. This is about growing the market in a healthy way with two players that will just improve the outcomes and the ability of surgeons to treat patients, they’ve had difficulties treating today.
Travis Steed
Yes. And there was — I think there was a little bit of a delay in Hugo partly due to supply chain. It sounds like that’s mostly or completely fixed at this point.
Rob ten Hoedt
Yes. Well, supply chain has been a challenge, both on the microprocessors. But just as an example, one of the main cables we’re using in the robot was manufactured in the Ukraine. And so the war started, we couldn’t get access to that cable anymore. Now you need to source a new cable. Finally, you find a new cable, then you need to validate that. You lose three, four months just by one issue like that. So we’ve had a number of those, but we’re out of it, yes.
Travis Steed
And so I guess that’s why you’re — in the last quarter, you were confident enough to announce that you’re moving towards the U.S. trial.
Rob ten Hoedt
Exactly.
Travis Steed
And the new leader in robotics came in, I think, in April. I don’t know how much you’ve interacted with him at this point, but yes, let me figure it. Curious like what — how the interaction has gone, like kind of his focus now that he’s taken over the robotics program?
Rob ten Hoedt
Yes, Mike Marinaro is an absolute phenomenal leader, and Medtronic has done a great job in cardiology, has managed multiple technologically challenging initiatives, is a clear headed person that asks the right questions at the right moment in time. So that leadership change has made a profound impact in the robotics group. So his combination of just technological clearness and commercial sense, that is what robotics needed, and we see the effect of that.
Travis Steed
Okay. That’s good to hear. Switching gears to diabetes and 780G. So you have access to it in your markets. So maybe we’ll start there and kind of see now that that’s been approved and internationally Diabetes growth has actually been pretty healthy. I don’t know if that’s new patients coming into the market or are you actually taking share? But maybe just start off with 780G in international markets?
Rob ten Hoedt
780G has been a revelation for us. It’s unbelievable. I’m — obviously, in all my years I have been very close to the diabetes business. And our pump was always a great help. But this pump is basically giving patients full freedom back. It is the artificial pancreas that we’ve been striving for.
So we had some worries when we introduced the product. We thought it was technologically challenging for the patients to manipulate and deal with and program. So we have put together this very large handholding program for new patients to come on board. The reality is, it’s more intuitive than we actually thought it was and patients are dealing with it extremely well.
We are moving away from A1C, which was the big measurement that we always did to see what the impact of a pump and insulin delivery is to Time in Range. This technology, this pump is getting patients up to 80% Time in Range. I tell you, 80% Time in Range on your glucose levels. That is better than when you and I are sitting on the beach in the summer vacation there, we probably cannot get to that 80%.
So to be able to have a pump that gives them all the security during the 24 hours a day, during the night and during the day for hypo and hypers, and keep them in that bandwidth is remarkable. So we’ve been seeing tremendous growth, double-digit growth in Europe for the last — since we launched a year ago, more than a year ago. It’s not stopping. It’s a lot of de novo patients.
And obviously, we are taking some share back from some business we lost in specifically France and Germany. France and Germany, both we got reimbursement on that product pretty recently and up went our growth again. So in the U.S., it’s a matter of coming out from under the warning letter. We have basically dealt with 100% of the findings. We have remediated them. We think we have good answers to all of them. So we’re now discussing with the FDA to come back for a reaudit. And now it’s an answer of the FDA when they come and whether they’re happy with our remediation that we have against the findings. And then we should be able to launch the product in the United States, with I’m 100% sure of the same success.
Travis Steed
The same will hold true in a different competitive market in the U.S. with different competitors, different products with the CGM?
Rob ten Hoedt
Yes. Well, the CGM as standalone, I don’t think we’re competitive there. But from a — for the more complicated insulin-dependent patients, we have absolutely, by far, the best solution in the world.
Travis Steed
Are you working on the standalone CGM market at some point?
Rob ten Hoedt
Yes. We have a development plan to also come with a wafer scale manufactured low-cost sensor to ultimately be able to participate in that market. Nobody knows where that market is going to be. I mean, in two, three years from now, that market might have become a race to the bottom of pricing and might not be interested to participate in at all. But it might still be very interesting for us to be active in, so.
Travis Steed
Yes. And I did want to clarify the FDA issues with the warning letter. And so it sounds like Medtronic has done everything they need to do, just inviting the FDA back at this point.
Rob ten Hoedt
Yes. Exactly.
Travis Steed
Okay. It’s good to hear. And then I guess the third big product is RDN. And curious how you think that will post the data in November. Depending on how the data comes out, like how do you think the rollout will go in international markets?
Rob ten Hoedt
RDN, when we acquired RDN the only market that was open for RDN was Europe. And in Europe, quite a large number of physicians were using RDN already with lots of enthusiasm, lots of good results in their patients.
Then we did the clinical trial in the United States, the FDA trial, which came out, not the way we had expected. Actually, the doctors in Europe were very surprised because they said, “That’s not what we see in our practice. This is a very different outcome.” So we knew there was something wrong because that’s normally not what you see.
Now anyway, we redid the trial. We all know where we are right now. So by the end of this year, we should be able to publish the results of the trial. What that means, for example, in Europe is that regulatory approval is not going to be a big problem.
ESC has said, “Okay, this technology should only be used under clinical evaluation.” We believe that the data — if the data are positive, that will change the view of the ESC. But at the same time, we have an ability in Western Europe to sell under a registry these products immediately in the market, and then we also fulfill the guidelines of the European society. So it’s going to be a race to try and get reimbursement as fast as possible based on the data in the U.S. and then launch the products.
The big thing about RDN is, is that a direct-to-consumer business? Or is that a traditional cardiology-focused business. And we believe that we’re going to have to be more aggressive directly to the patient. This is typically a product where we need to wake up patients and say, there’s another solution than taking your pills and you should ask for that.
Travis Steed
And the ESC is involved in the reimbursement process, right? That’s the…
Rob ten Hoedt
No, that’s local.
Travis Steed
Okay. All right. What’s the pathway for getting reimbursement in Europe?
Rob ten Hoedt
You do that country-by-country. So country-by-country, the requirements are a bit different but we have an FDA clinical trial finished, that means you have sufficient clinical data in most of the markets to build your file for reimbursement.
Travis Steed
Okay. And then what about in China, do you think there’s some opportunity in China?
Rob ten Hoedt
There is actually a good pathway in China to be very quickly after the U.S. approval to be able to have approval in China.
Travis Steed
Is that something that is going to be a priority for Medtronic though with RDN or we to focus more on Europe and the U.S. at first?
Rob ten Hoedt
No, I think hypertension is a real problem in China. So we definitely want to make sure that product gets placed in the Chinese market.
Travis Steed
All right. And then what about the — kind of just starting off overall EP market in general, but there’s been a lot of focus on pulsed field ablation and some competitors in Europe already in that area. So I’m curious what you’re seeing on the ground from a competitive standpoint now that there’s somebody out there with pulsed field deflation?
Rob ten Hoedt
Yes. AF is just a very exciting dynamic field. But it continues to grow. So even though there is competitors coming with pulsed field ablation and it really hasn’t impacted us dramatically on our cryo business or anything. So we’re really excited that we also move in that space and that we also have these products available because it’s just more options for different patient populations. But the AF franchise is a very exciting franchise that I believe will continue to grow pretty significantly in the coming — and the combination of mapping and therapeutic solutions is going to be the key.
Travis Steed
Is there a buzz in the clinical community on the pulsed field ablation?
Rob ten Hoedt
Sure, yes. Yes. Yes, because it is almost unbelievable technology, how you can actually destroy tissue with just a very benign way of energy delivery. So it’s very intrigued.
Travis Steed
And then, I guess, switching over to the TAVR market, there’s been a bit of a debate lately on growth in that market. It’s been a little slower with staffing issues. But Europe’s been holding in better actually than the U.S. So want to know what you’re seeing around the world in TAVR?
Rob ten Hoedt
Yes. No, TAVR for Latin America, for Europe and for APAC has been phenomenal. We are a market leader in almost all the markets we’re in. And the growth of that business is not stopping, and that’s partly because of maturity in different countries. But even in a country like Germany, which was one of the early adopters, which went really fast to more — to lesser burdened patients, we’re still growing very rapidly in that market. So the growth of aortic has certainly not gone yet. And we’re now bringing our new Evolut FX to the market, which has been receiving extremely good results. And obviously, mitral is coming in the slipstream of all that. So TAVR, in general, transcatheter valve replacement is going to continue to be a huge growth driver.
Travis Steed
Yes. Any major products that I didn’t talk about, you think could have a material impact on international markets?
Rob ten Hoedt
No, I think you called out all of them, although I think let’s never underestimate the combination of Mazor, navigation and our Spine business. We’re starting to build a really interesting integrated offering where our screws and our rods are communicating to our nav systems and in combination with the robot and with the acquisition we did on planning and imaging. I think that is an offering that has an enormous amount of promise to it. And I know sometimes we’re looking at this spine market as a bit of a drag, but this could reinvigorate that by market pretty dramatic.
Travis Steed
Interesting. While we have your EU MDR process, like that’s something we just hear complaints about but don’t have a lot of visibility on so.
Rob ten Hoedt
Yes. Well, next to my role in Medtronic, I’m also the Chairman of Medtech Europe. So I’m representing the medical device industry in Brussels. And if I wake up sweating at night, it’s often about MDR because it’s been a horrible journey since the PIP scandal, which was just an awful criminal company that did stuff that you only deserve to be in jail for. They flipped the whole in principle, good regulatory system, upside down. Pushed governments and policymakers into the corner of having to strengthen the regulatory hurdles. The initial plans were completely horrible, if I ever look at those again. Where we are now is probably a middle ground, which is reasonable. It means that it’s taking a little bit more time to get to the European market, which is unfortunate for patients. It’s unfortunate for companies because it’s going to just drag along a little bit more your go-to-market.
But at the end of the day, it’s also not a drama. It’s not going to inhibit — because people say, “Oh, it’s going to inhibit innovation.” It’s not going to inhibit innovation. Innovation is disconnected from regulatory cycles. It’s going to inhibit the focus on Europe as being the first market where you launch those products. That might be true. But innovation in medtech will continue as usual. And I’m just sure that people — both companies and regulatory bodies will kind of adjust into a workable situation.
Travis Steed
That’s great. Well, we’re out of time now, but thanks a lot, it was a helpful conversation, and thanks for coming.
Rob ten Hoedt
Well, thanks, Travis. It was a pleasure. Thank you.
Travis Steed
Yes.
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