Medtronic to Cut Another 25% from Production Costs
BY LAUREN UZDIENSKI, NOVEMBER 29, 2011
Seeking to improve efficiency and make the company more competitive in emerging markets, Medtronic CEO Omar Ishrak plans to reduce cost-of-goods-sold by 25% over the next five years. This announcement comes in the last year of a prior five-year program to lower product costs, which has saved the company around $1 billion. The new effort is expected to save another $1.2 billion.
As we've reported previously, Medtronic is committed to growth in emerging markets, particularly China. The company has called globalization their "biggest growth opportunity", noting that sales in emerging markets are annualizing at over $600 million and grew 24% in F2Q:11, which marks 11 straight quarters of greater than 20% growth in China. The ongoing cost-reduction programs help demonstrate Medtronic's commitment to growth in these regions, where prices are historically lower.
