Succeeding Amid Savage Competition

C.R. Bard makes devices for the urology, surgery, oncology and vascular markets. Since 1999, Bard has had quarterly revenue growth between 7% and 10% until the past two fiscal quarters, when it shot up to 15%. This report is based on an IW interview and presentation CEO Timothy Ring gave at an executive summit at the Cleveland Clinic Foundation.IW: What makes medical-device manufacturing so competitive? Ring: The dynamics of [the medical device] market require rapid innovation and evolution of technology while demanding ever-increasing product complexity and its attendant risks. This is -- and should be -- a highly regulated environment. So it is not only about technology. It's about quality and manufacturing processes that provide safe and efficacious products in high-volume situations. The market has begun to consolidate into a land of small technology start-ups [market caps below $500 million] and giants [market caps in excess of $10 billion]. The giants must use their war chests of resources, both financial and human, to develop internally and seek out new technologies to sustain growth. The numbers alone become difficult to fathom as companies with multi-billions in sales must seek out and create new opportunities to sustain double-digit growth. Just think about it -- to sustain 10% growth, even a small "giant" must generate almost a billion dollars in new sales annually while maintaining sales of existing products and services. IW: You've said that for your company, which falls between start-ups and giants, a strategy of rapid innovation, intimacy with the customer and a focus on market leadership is working. Why? Ring: Bard seeks to introduce a host of high-value products within selected market segments that can aid in the creation and sustenance of a leadership role. For instance, in the peripheral vascular market, we recently introduced the Recovery IVC filter, which was the first of its kind to enter the market and allows doctors to do something they couldn't do before. This product is on track to generate significant sales growth this year. Certainly not a billion-dollar product, but one of many that fit nicely within our strategy of market segment leadership and true partnerships with customers to provide high-value, patient-centric solutions. I also believe that a number of small successes versus blockbuster products keeps Bard divisions and individual teams hungry to constantly improve performance and resist complacency. IW: Despite the success your company has achieved using this strategy, it goes against the current model of seeking high-profile, high-margin products, such as drug-eluting cardiac stents. How has Wall Street reacted? Ring: Our strategy has always been pretty straightforward -- create a company that is not about one big blockbuster but is well-diversified into a host of disease states and is capable of creating long-term growth in both top-line revenue and bottom-line EPS. Though easy to say, this strategy is not as easy to benchmark and analyze when viewed from the outside. First, due to a focus upon a number of disease states and markets instead of the more typical focus on a small number of markets or technologies; and second, the complexity makes it more difficult for outsiders to forecast future growth. In short, when asked what we seek as a goal for growth and timing, I enjoy answering, "No upper limit and as fast as possible."