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Medtronic Partners Foxconn to Scale Up Ventilator Production
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Medtronic plc (MDT - Free Report) recently announced that it has collaborated with Foxconn Industrial Internet, a business group within Foxconn Technology Group, to scale up its Puritan Bennett 560 (PB560) ventilator production. The partnership was finalized after Medtronic made the PB560 design specifications public through the ventilator open source initiative, launched in March.
Few Words About PB560
The PB560 ventilator model, which was introduced by Medtronic in 2010, has a strong presence in more than 35 countries. Its design specifications enable it to be used by both adults and children in clinical settings as well as home. It also provides mobile respiratory support.
Foxconn recently completed all the necessary regulatory and quality requirements to start the PB560 production for Medtronic in the United States. The companies are currently targeting to scale up production to manufacture 10,000 PB560 ventilators through the next year at Foxconn’s Wisconn Valley Science and Technology Park in Mount Pleasant, WI.
These ventilators will be marketed and sold by Medtronic.
Rationale Behind the Deal
Via the latest partnership deal, Medtronic aims at strengthening the ventilator business on a global scale, in turn boosting the Respiratory, Gastrointestinal, & Renal segment. As a note for investors, the Respiratory, Gastrointestinal, & Renal business is an arm of the broader Minimally Invasive Therapies Group.
Per Medtronic’s management, the alliance is a significant one, given the current global demand for ventilators amid the pandemic. It is difficult for any single company to successfully meet the entire current demand for ventilators. Thus, by joining hands with Foxconn, Medtronic will be able to immediately increase its production capacity to meet the increased demand. The deal will also create a flexible manufacturing model for Medtronic.
Both the companies will ramp up production capacities to more than double the current Foxconn ventilator commitment, per requirement.
Industry Prospects
Per a report by Fior Markets, the global ventilators market is expected to grow from $1.05 billion in 2019 to $3.02 billion in 2027, at a CAGR of approximately 13.9% between 2020 and 2027. The rising demand for ventilators due to breathing complications associated with the COVID-19 pandemic is expected to be the main factor behind the market’s rally.
Given the market potential, the partnership’s move of scaling up production seems to be a strategic fit for Medtronic’s business.
Recent COVID-19-Related Developments by Medtronic
Of late, Medtronic has been witnessing a slew of developments with respect to its pandemic-related response.
The company, in May, announced an expansion of the Medtronic Assurance program with a new option of supporting diabetes customers who have lost their health insurance due to COVID-19-related job loss.
During fiscal fourth-quarter earnings call in May, the company had confirmed that airways and ventilators production got a boost during the quarter due to increased supply to meet COVID-19-related patients’ needs around the world.
In March, Medtronic announced that the Medtronic Care Management Services (MCMS) business launched two new solutions to help assess, monitor and triage support for patients who may be concerned about COVID-19 and their respiratory symptoms. It has already launched the Respiratory Infectious Disease Health Check for the existing MCMS customers, and is now launching a new COVID-19 Virtual Care Evaluation and Monitoring solution that will be available to U.S. health systems, health plans and employers.
Price Performance
Shares of the company have lost 4.9% in the past year versus the industry’s 6.9% fall and S&P 500’s 5.4% rise.
Zacks Rank & Stocks to Consider
Currently, Medtronic carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space include Quest Diagnostics Incorporated (DGX - Free Report) , Hologic, Inc. (HOLX - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Hologic’s long-term earnings growth rate is estimated at 7%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
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Medtronic Partners Foxconn to Scale Up Ventilator Production
Medtronic plc (MDT - Free Report) recently announced that it has collaborated with Foxconn Industrial Internet, a business group within Foxconn Technology Group, to scale up its Puritan Bennett 560 (PB560) ventilator production. The partnership was finalized after Medtronic made the PB560 design specifications public through the ventilator open source initiative, launched in March.
Few Words About PB560
The PB560 ventilator model, which was introduced by Medtronic in 2010, has a strong presence in more than 35 countries. Its design specifications enable it to be used by both adults and children in clinical settings as well as home. It also provides mobile respiratory support.
Foxconn recently completed all the necessary regulatory and quality requirements to start the PB560 production for Medtronic in the United States. The companies are currently targeting to scale up production to manufacture 10,000 PB560 ventilators through the next year at Foxconn’s Wisconn Valley Science and Technology Park in Mount Pleasant, WI.
These ventilators will be marketed and sold by Medtronic.
Rationale Behind the Deal
Via the latest partnership deal, Medtronic aims at strengthening the ventilator business on a global scale, in turn boosting the Respiratory, Gastrointestinal, & Renal segment. As a note for investors, the Respiratory, Gastrointestinal, & Renal business is an arm of the broader Minimally Invasive Therapies Group.
Per Medtronic’s management, the alliance is a significant one, given the current global demand for ventilators amid the pandemic. It is difficult for any single company to successfully meet the entire current demand for ventilators. Thus, by joining hands with Foxconn, Medtronic will be able to immediately increase its production capacity to meet the increased demand. The deal will also create a flexible manufacturing model for Medtronic.
Both the companies will ramp up production capacities to more than double the current Foxconn ventilator commitment, per requirement.
Industry Prospects
Per a report by Fior Markets, the global ventilators market is expected to grow from $1.05 billion in 2019 to $3.02 billion in 2027, at a CAGR of approximately 13.9% between 2020 and 2027. The rising demand for ventilators due to breathing complications associated with the COVID-19 pandemic is expected to be the main factor behind the market’s rally.
Given the market potential, the partnership’s move of scaling up production seems to be a strategic fit for Medtronic’s business.
Recent COVID-19-Related Developments by Medtronic
Of late, Medtronic has been witnessing a slew of developments with respect to its pandemic-related response.
The company, in May, announced an expansion of the Medtronic Assurance program with a new option of supporting diabetes customers who have lost their health insurance due to COVID-19-related job loss.
During fiscal fourth-quarter earnings call in May, the company had confirmed that airways and ventilators production got a boost during the quarter due to increased supply to meet COVID-19-related patients’ needs around the world.
In March, Medtronic announced that the Medtronic Care Management Services (MCMS) business launched two new solutions to help assess, monitor and triage support for patients who may be concerned about COVID-19 and their respiratory symptoms. It has already launched the Respiratory Infectious Disease Health Check for the existing MCMS customers, and is now launching a new COVID-19 Virtual Care Evaluation and Monitoring solution that will be available to U.S. health systems, health plans and employers.
Price Performance
Shares of the company have lost 4.9% in the past year versus the industry’s 6.9% fall and S&P 500’s 5.4% rise.
Zacks Rank & Stocks to Consider
Currently, Medtronic carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space include Quest Diagnostics Incorporated (DGX - Free Report) , Hologic, Inc. (HOLX - Free Report) and QIAGEN N.V. (QGEN - Free Report) .
Quest Diagnostics’ long-term earnings growth rate is projected at 7.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic’s long-term earnings growth rate is estimated at 7%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
See the 5 high-tech stocks now>>