Last week, Medtronic (NYSE:MDT) broke ground on a new $14 million facility in Jacksonville, Florida.
It marks an expansion of one of the few growing business segments of the Minnesota device maker — surgical technologies. The new 75,000-square-foot addition is expected to create 175 new full-time jobs by the end of 2015, according to the Jacksonville Business Journal.
A look into Medtronic’s financial performance, especially that of the surgical technologies business, explains why Medtronic is plowing millions of dollars into it.
In the third fiscal quarter that ended Jan. 28, surgical technologies revenue of $319 million grew 22 percent. And it is not the first time that the business reported such strong growth.
The $319 million in revenue includes $31 million from Medtronic’s advanced energy business, which is the name for the combined business that came about following the acquisitions of Peak Surgical and Salient Surgical Technologies for a cumulative $620 million.
But even excluding the impact of the acquisitions, surgical technologies had organic growth of 10 percent, a feat that other lumbering divisions of the giant device maker — read cardiac rhythm disease management and spine — can only dream of imitating.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Yet, it’s not clear if such performance in its surgical technologies will be enough to overcome the challenges that Medtronic faces in its larger divisions. After all, surgical technologies is the smallest business within the company, just behind its diabetes business, and accounted for only 7 percent of the company’s overall $15.9 billion revenue in fiscal year 2011.
[Photo Credit: sheelamohan]
Correction: An earlier version of the story said Medtronic broke ground this week. It actually happened on April 9.
