Medtronic has called it quits on the ventilator market, citing “increasingly unprofitable” product lines.
The medical device giant is the market leader for ventilator devices in the US and Europe, occupying a 42.5% and 18.4% market share in the two regions respectively, according to a report by GlobalData.
As a result of the move, the remaining businesses in the company’s Patient Monitoring and Respiratory Interventions (PMRI) unit will combine to form a new Acute Care and Monitoring (ACM) business.
Medtronic had originally planned to operate its PMRI business as a separate company after announcing plans of a spin-off in October 2022. Fellow medtech giants, including GE HealthCare, were touted as potential buyers, according to Reuters.
Medtronic did not disclose further details as to why it pulled the plug on its ventilator line, providing no reasons as to why its market position is no longer financially viable. It is no secret that sales of the company’s ventilators have slowed since the soaring demand experienced during the Covid-19 pandemic.
Medtronic stated that the Acute Care and Monitoring (ACM) business unit will benefit from the redirected resources, both in investment and category leadership opportunities.
GlobalData medical analyst Elia Garcia said: "Medtronic's decision to exit the ventilators market and consolidate the remaining PMRI businesses into a new unit named Acute Care and Monitoring is a response to strategically position them to capitalise on market trends showing a growth in the number of Remote Patient Monitoring products with systems integration designs. Key areas driving this trend include internet of things , artificial intelligence (AI), and machine learning."
Whilst Medtronic will no longer be a part of the ventilator market going forward, the company said it will honour existing contracts with its devices.
The company pointed to exiting manufacturers filling the Medtronic-sized whole in the ventilator market – estimated to grow to $2.2bn by 2033 according to GlobalData.
“Given this increased investment along with an improved competitive landscape, the company has strong conviction in driving durable category leadership in this newly combined business,” Medtronic said in a statement while announcing Q3 results.
Garcia added: "I believe the company is confident in its ability to establish leadership within this newly integrated business as they keep their efforts to investing in AI applications to create complex integrated systems."
Medtronic announced the strategic move whilst unveiling its Q3 results for the 2024 fiscal year. The company saw a 4.6% increase in organic revenue, mainly driven by its diabetes and cardiovascular businesses. Medtronic raised its FY24 organic revenue growth guidance to an upper-limit range of 5%, up from a single value prediction of 4.75%.
