Medical devices: Heart to heart

Appealing to the head as well as the heart

WHEN Medtronic, a maker of stents, pacemakers and other medical devices, said on June 15th that it would buy Covidien, a competitor, for $43 billion, it gave a variety of reassurances to anxious American politicians. To be sure, the deal will let Medtronic reap the benefits of being based in Ireland for tax purposes, as Covidien already is (see article). But Medtronic is promising that its operational headquarters will stay in America and that it will invest an extra $10 billion to develop new technology there, supporting local jobs. And, beyond the tax gains, there are good business reasons for Medtronic to want to buy Covidien. The medical-device industry has a growing number of customers, thanks to patients who are ageing (particularly in America, Europe and Japan) and newly rich (in China, for example). Yet firms also face less lucrative trends. For many years, they made small improvements to existing gadgets, then hawked their marginally…

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