Medtronic’s MDT emerging market stratum recently came up with a major investment plan for India. Going by several media reports in the country on Aug 11, this medical device stalwart has made a plan to invest INR 1200 crores (more than $160 million) to expand its existing R&D center in Hyderabad, India known as MEIC or Medtronic Engineering & Innovation Center.
This 5-year long investment plan will upgrade MEIC into a state-of-the-art engineering and innovation center. Proper execution of this plan will make Hyderabad the medical device hub of India.
MEIC at a Glance
In this regard we note that, MEIC was established in Hyderabad in June 2011 to build collaborative relationships to provide innovative and reliable healthcare solutions. This center also works on improving procedural outcomes while enhancing the quality of life for patients. The center provides advanced engineering R&D support to the Global Business Units in the areas of design, analysis, hardware, software development and testing, while developing a footprint for future product development for the country.
The Add Ons
Per Medtronic management, the newest expansion plan of MEIC will help Medtronic to advance its devices particularly in the field of pain alleviation and restoration of health. The engineering and innovations under the new investment plan will not only work to meet the huge market demand in India but also globally. This is going to be a path-breaking development by Medtronic in the emerging economy as with the investment, MEIC will become the largest R&D base of Medtronic outside the United States. This will also create more than 1000 job opportunities.
Moving a step closer to execution of this plan, Medtronic has leased about 1.5 lakh space at the DSR Infratech in the financial district of the city.
Amid the pandemic-led global economic crisis, because of which many of Medtronic’s businessed are dealing with issues like massive procedural delays and supply-chain disruptions, this decision to capture the huge and underpenetrated device market of India seems to be a strategic move for Medtronic.
Emerging Market Prospects Bright
According to a report by BCG, emerging markets account for less than one quarter of the MedTech industry’s global revenues but are estimated to reach nearly one-third by 2022. Meanwhile, India’s MedTech market, which is currently the fifth largest globally, could pose a serious threat to Japan and Germany in terms of size by about 2022.
Medtronic is currently executing well on its strategy of emerging market diversification, leading to consistent delivery of double-digit growth every quarter, overcoming economic cycles over the years in the different countries. Despite the coronavirus outbreak significantly denting emerging market revenues, overall, Medtronic remains confident and enthusiastic about its long-term outlook. According to the company, its differentiated strategies of public and private partnerships and optimization of the distribution channel are paying-off and making a real difference in emerging markets around the world.
In this regard, in 2019, the company launched the MedTech Innovation Accelerator at Pujiang International Science and Technology City in Minhang District, Shanghai.
Shares of the company have gained 12.2% in the past year compared with the industry’s 6.2% rise.
Zacks Rank & Stocks to Consider
Currently, Medtronic carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are QIAGEN N.V. QGEN, PerkinElmer, Inc. PKI and Thermo Fisher Scientific Inc. TMO.
QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PerkinElmer’s long-term earnings growth rate is projected at 17.4%. The company sports a Zacks Rank #1.
Thermo Fisher’s long-term earnings growth rate is estimated to be 15%. It currently carries a Zacks Rank #2 (Buy).
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Medtronic PLC (MDT) : Free Stock Analysis Report
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