Medtronic's incoming CEO has run a similarly sized medical technology business in terms of sales for the past two years, albeit with a focus on diagnostic and monitoring tools rather than therapeutic technologies.

The device giant announced the hiring of Omar Ishrak as chairman and CEO May 11.

Ishrak, who starts his new job June 13, is leaving his post as president and CEO of GE Healthcare Systems, the largest unit of GE Healthcare, which makes imaging, patient monitoring and home health equipment, among other offerings.

The news comes five months after Bill Hawkins announced his plans to retire as chairman and CEO of Medtronic, a post he held for about three and a half years. And it comes just one day after Medtronic's major cardiac device competitor, Boston Scientific, announced that its short-tenure CEO Ray Elliott would be stepping down at the end of this year. (See in this issue, " Also see "Ray Elliott Retiring: Is Boston Scientific On Or Off Track?" - Medtech Insight, 16 May, 2011. ")

Medtronic's First External CEO Hire In 25 Years

Ishrak's general ability to lead, drive growth and cut excess costs will be more important in his new position than familiarity with any particular device markets, analysts stressed, and early feedback suggests he has appropriate skills and experience.

The last CEO Medtronic hired from the outside was Win Wallin in 1985.

"What Mr. Ishrak does to create value with this asset has more do to with how he manages the platform than the platform itself," Morgan Stanley analyst David Lewis said. "Focus, urgency and execution will be critical."

In the short term, simply the fact that Medtronic's board has hired someone for the top post is being viewed as a positive by some, as it removes uncertainty that has persisted since Hawkins announced retirement plans last December.

Also, the company's decision to go with an external candidate rather than hiring from within is getting some encouraging response. The last CEO Medtronic hired from the outside was Win Wallin from Pillsbury in 1985. The subsequent three appointments – Bill George, Art Collins and Hawkins – moved up from the chief operating officer post.

"We believe investors will react positively to the appointment, particularly given the fresh perspective [Ishrak] can bring to [Medtronic] as an outsider," said Larry Biegelsen, an analyst with Wells Fargo.

But in the long term, the challenges remain steep.

More than 60% of Medtronic's revenue comes from cardiac rhythm management, stents and spine devices, but those units are expected to experience very slow growth in the coming years and are also facing significant pricing pressures. The struggling global economy is further impacting the company's bottom line.

Hawkins grappled with these issues with a focus on diversifying the business through acquisitions and cutting costs by restructuring. His retirement may reflect the company's desire to further accelerate big changes. (See " Also see "Medtronic’s Hawkins To Retire; Company Sets External Search For New CEO" - Medtech Insight, 3 January, 2011. " – "The Gray Sheet" Jan. 3. 2011.)

Medtronic is emphasizing Ishrak's growth bona fides, highlighting the doubling of sales in GE's Clinical Systems Division during his time leading that group from 2005 to 2009, and a more than quadrupling of GE Ultrasound revenue from 1998 to 2010, during a period in which he was either general manager of that business, head of the broader Clinical Systems group, or CEO of the entire GE Healthcare Systems division, a position he took in 2009.

Perhaps the most substantive technology overlap between Ishrak's former portfolio and the one he will oversee at Medtronic is in the field of remote patient monitoring.

GE Healthcare Systems is a $12 billion-a-year business, compared to about $16 billion for Medtronic. The GE unit also has about 20,000 employees, compared to about 40,000 at Medtronic.

Remote Monitoring Experience

Perhaps the most substantive technology overlap between Ishrak's former portfolio and the one he will oversee at Medtronic is in the field of remote patient monitoring, although this was not an area emphasized in Medtronic's May 11 hiring announcement.

In January, GE Healthcare and Intel launched a joint venture, Intel-GE Care Innovations, focused on developing tools to monitor patient health from the home, with particular emphasis on chronic diseases. (See " Also see "GE-Intel: Corporate Powerhouses Create Global Home Telehealth Firm" - Medtech Insight, 9 August, 2010. " – "The Gray Sheet" Aug. 9, 2010.) Ishrak has served as chairman of that new company, and will be relinquishing that role with his move to Medtronic.

Remote monitoring is already an important business focus of Medtronic as part of its CRM and diabetes management businesses, and it is expected to be a significant long-term growth driver.

Medtronic, GE Healthcare and Intel are all member companies in the Continua Health Alliance, a non-profit group of firms focused on developing standards for interoperability in telehealth and remote monitoring.

Focus On Emerging Markets

Medtronic also pointed to Ishrak's focus at GE in transforming the firm's strategic processes, with a particular emphasis on growth in emerging geographical markets.

Ishrak, who holds a Ph.D. in electrical engineering, spent about 16 years at GE. Prior to that, he held senior posts at Philips Ultrasound, Diasonics and Elbit Ultrasound.

Separately, GE announced May 11 that Tom Gentile, current VP of the firm's Aviation Services unit, would replace Ishrak at GE Healthcare Services.

By David Filmore

Medtronic Mines GE For New Chief; Omar Ishrak Starts In June

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