Medtronic, Covidien and what it might mean for digital health

“This acquisition will allow Medtronic to reach more patients, in more ways and in more places,” Medtronic Chairman and CEO Omar Ishrak

Cover the Earth? While the healthy Medtronic offer ($42.9 billion in cash and stock) for Ireland-headquartered Covidien plc is not a ‘digital health deal’, it does point to Medtronic’s strategy which includes digital health. There is of course the obvious: growth by acquisition and integration. Acquisitions require cash, and the highly controversial change of domicile to Ireland via ‘tax inversion’ will fatten the exchequer in two ways. First is through the lower overall Irish corporate tax versus the 35 percent US tax, one of the highest in the world. Second is much more flexibility in repatriating plentiful foreign earnings at lower Irish corporate rates rather than the high US rates which Medtronic has avoided. Third is increasing dividends, which can drive up stock price and investor interest. Of interest to the latter is also that Covidien adds horizontal (and global) competitive strength to Medtronic in the clinical area–surgical, vascular, respiratory and wound care.

More Ways-More Places. Not just staples and sutures, Covidien has developed its own advanced in-hospital mobile patient monitoring in Vital Sync as well as several hospital monitoring devices in their Nellcor line. In addition to technology collaboration, the next point of integration could then be with Medtronic’s post-acute telehealth devices from Cardiocom, purchased less than one year ago. We noted at the time that it gave Medtronic entreé into the “chronic condition management continuum– not only into telehealth via Cardiocom’s devices and hubs, but also their clinical and care management systems.”

Approval will take time. Both the US and UK, through various regulatory agencies, scuppered the Pfizer-AstraZeneca deal on similar tax domiciling and competitive grounds. If it does go through, there will be a lot of reorganization. But while it digests, this Editor will be watching Medtronic for its usual pattern of making smaller ‘more ways/more places’ deals in the interim with an eye to diversifying past US-taxable medical devices. One pointer is their just-announced partnering with Sanofi to develop drug delivery-medical device combinations and care management services for diabetes patients (MedCityNews).

Related reading: Medtronic hints at more acquisitions following $43 billion Covidien deal (MedCityNews); The Medtronic, Covidien Inversion Deal Is More About Dividends Than Tax (Forbes); Medtronic agrees to buy Covidien for $42.9b in cash, stock (Boston Globe); Medtronic’s $43B Covidien deal—and Irish tax move (CNBC)

 

Medtronic and Aetna: the good and bad implications

A break in the ‘Perpetual Battle of Stalingrad’ that is also a Pointer to the Big2Big Future

Last week US insurance giant Aetna announced a partnership with medical device Gargantua Medtronic to pilot a program for uncontrolled Type 2 diabetes. Aetna will use claims data to identify 300 members who meet candidate standards for insulin pump therapy, Medtronic will reach out to them through their physicians to enroll them in the Getting2Goal program–as long as the insulin pump is Medtronic’s. The two-year program’s metrics will evaluate overall health outcomes and medical costs such as reduced ER and hospital stays. This is a fairly solid, albeit small N program for both. Other Aetna/Medtronic partnerships are a program for congestive heart failure (CHF) detection announced at HIMSS14, where Aetna plans to monitor device data to track the extra water retention that is usually an indicator of progressing heart failure; and an implanted glucometer program to monitor insulin levels for diabetics to avoid hypoglycemia.

Is this a Pointer to a Limited Future for Small, Innovative Independent Companies? Is this now signalling the US’s Big Payers only want to deal with Big Medical Device? “Value-based arrangements with companies like Medtronic” (release) make it ‘one-stop shopping’ for payers when it comes to physician relationships, IT implementation, data sharing and analysis. Will the end result be that payers stifle the revenue opportunity for small to midsize innovators by saying ‘don’t bother to knock”? Are these financially and technologically the best solution for the patient and for outcomes? (It’s like specifying only one hip or knee implant for all, and may sound familiar to our UK readers who have been following our recent articles on a certain telecare provider.) Aetna release, MassDevice, MedCityNews

Another ‘bionic pancreas’ in test

Another possible weapon against the Continuing Battle of Stalingrad faced by diabetics is in test in the Boston area. A system developed by associate professor of biomedical engineering at Boston University Dr. Edward Damiano (whose son has Type 1 diabetes), and assistant professor at Harvard Medical School Dr. Steven Russell has a sensor inserted under the skin that relays hormone level data to a monitoring device which sends data to an app on the user’s smartphone every five minutes. The app calculates required dosages of insulin or glucagon to maintain optimal blood sugar levels, and communicates the information to two corresponding hormone infusion pumps worn by the patient. Their target for FDA approval and rollout is 2017. Gizmag. Previously Editor Charles and this Editor have written about Diabetes Assistant and two other systems in clinical trials, which also are bringing this to a closer reality [TTA 20 Aug, 5 Aug]

Dick Cheney’s defibrillator and medical device hacking

The news this week that former US Vice President Dick Cheney and his cardiologist decided to turn off wireless access to his implanted defibrillator (ICD) in 2007 based on fears of radio-based attacks underlines the increased awareness of security threats to wireless interfacing or programmable devices. The fear of ‘death by malicious hacking’ could very well lessen the sales and acceptance of new wireless-dependent designs in pacemakers, diabetes management/artificial pancreas and even medication ingestion tracking (Proteus). One proposal outlined in medical device supplier blog Qmed is interesting: “Since most proposed attacks would take place from a distance, researchers believe that using a patient’s heartbeat signature as a password could offer an adequate level of security. Using a heartbeat signature password, pacemakers and other devices would only unlock when “fed back” an individual’s heartbeat in real time.”  Yet beyond that, an advanced ‘white hat’ hacker like the late Barnaby Jack envisioned bugs in programming which could negate this to create murdering pacemakers as well as killer insulin pumps. (A look back at Barnaby and his still mysterious death in the Daily MailDick Cheney: Heart implant attack was credible (BBC News) Hat tip to TANN Ireland’s Toni Bunting. Previously in TTA: A ‘mobilized’ artificial pancreas breakthrough included the increased awareness of hack attacks in the medical mainstream and Contributing Editor Charles on compromised smartphone apps.