Aggression needed, says Medtronic's new regional head

The Business Times by ANNABETH LEOW

MEDTRONIC's newly minted regional head comes across in conversation as a moderate man.

But he wants to see some aggression - and he is not afraid to say so. In fact, the word "aggressive" popped up no less than half a dozen times when senior vice-president Chris Lee, a South Korean in his early 50s, was asked what the healthcare technology company needs to grow here.

In his view, that could be anything from investing in startups alongside the Singapore government to ramping up talent acquisition here - even as neighbouring countries threaten a Changi plant with cheaper factories.

Mr Lee became New York-listed Medtronic's Asia-Pacific president in December, after heading the Greater China market. Singapore has housed the company's Asia-Pacific headquarters since May 2016, with some 1,000 employees in what Mr Lee called the regional "centrepiece".

"Not only is it seen as a centre of excellence in many aspects, but (also) a lot of our employees - increasingly, the senior people - are originally from Singapore and surrounding countries. And, as you know, the infrastructure of Singapore is very well suited to be qualified as a regional hub for all these countries.

"So we have full operations here, ranging from manufacturing and sales and marketing and all kinds of supporting functions - they're all based in Singapore," he said.

"We are prepared to work to position Singapore as the global hub . . . There are only a few companies that have declared Singapore as global or international headquarters, but not, to my knowledge, healthcare companies. But it does have infrastructure that could easily compete with global, international hubs - if the government can be a little bit more aggressive."

Bold solutions

Bold and aggressive solutions have been called for, in the face of problems such as rising healthcare costs, Mr Lee believes.

"I just got here but I've planned to talk to the Singapore government," he said, quickly name dropping state investment firm Temasek Holdings.

"We'd like to engage in a conversation with someone like that, to see whether we can be partnered together to invest in bio-venture.

"Companies that have emerging technologies - not only in Singapore, but in other countries as well, it could be Japan, it could be Korea, it could be China - if we can detect companies that have potential capability to introduce breakthrough biotechnology products, early investment there can lead to a much better outcome . . .

"We cannot do research and development innovation alone. We'd like to work with the Singapore government in looking for these early adopters - companies or some small ventures that do have potential to be big breakthrough products. If we do that together, then we can get the investment returns together."

Medtronic is no stranger to putting its money in innovation here. It closed the US$28 million purchase of Catalist-listed QT Vascular's Chocolate PTA balloon catheter in January.

Pointing to the infrastructure, "sophisticated" talent and use of English in Singapore and Australia, Mr Lee added that "we are counting more on meaningful collaboration in public partnerships" with the governments of those two countries, out of the 15 in the region where Medtronic has a presence.

Another area for tie-ups that he hopes to introduce is a clinic management model that the company has been testing in other markets.

"We'd like to have a meaningful partnership with the government, to prove that - by joining hands between the government and companies like us - we can jointly address the concerns, to not only lower the healthcare costs but, at the same time, improve the outcomes," he said.

Medtronic's experience in this arena includes its Smiling Hearts speciality facilities for heart failure in India. It also bought Diabeter, a Dutch diabetes centre, in 2015 and took a majority stake in Nederlandse Obesitas Kliniek for obesity a year later.

"If we can prove that we have an economic model that is win-win for both the public and a company like us, we can expand that to other countries, because Singapore is the right setting for us to do that," said Mr Lee.

"It is better for us to do that in Singapore than, for example, emerging markets where infrastructure is not ready and, if we do that in other countries, the data may not be reliable."

He said that he is looking into "whether we can bring the somewhat more advanced pilot programmes that are going on in the United States to this market - and, again, Singapore will be at the forefront".

"We are actually talking to the Singapore government and some of the hospitals in addressing some of these areas," Mr Lee added. "We're not actually in a position to announce anything so specific yet, at this point in time. But we're working on multiple projects that are far beyond just selling medical devices."

Citing Medtronic's Dutch dealings, Mr Lee explained its proposed clinic model: "There, we no longer just sell our therapies or products. We actually look at the overall treatment option from the prevention to post-surgery, post-care and everything else.

"And we compare that with the normal, conventional model, and we think that we have a proven example to show to the government by working together overseeing the whole process - not just a particular section of the treatment option. That can be cost-effective, so we're trying to prove that in Singapore as well.

"Then, once the government is convinced - we believe they are on their way - we believe we can introduce that to other markets as well."

When asked whether the clinical model means that Medtronic is looking to invest in the Asian private healthcare market, Mr Lee responded readily, with a clipped "sure".

But he hastened to add: "In doing that, obviously, we're not a hospital management company, so we're not interested in managing the hospitals . . . Some hospitals, we only manage that (particular) section of the hospital. We actually prefer to do that."

Talent woes are fresh on Mr Lee's mind, as he argued that the government here "could be a little more aggressive in introducing policies that are catered towards positioning Singapore as an international hub" for biotechnology and health care.

His outlook may be coloured by his five years as Medtronic president of Greater China, where he observed: "In the past, when they were trying to attract foreign investment, they were offering tax incentives, all kinds of other things. But now they have done enough of those things, so these manufacturing benefits are going to countries like Vietnam."

Track record

Despite Singapore's track record in high-value manufacturing, Mr Lee noted that competition from regional factories does not bode well for its production line in the east of Singapore. "We have no plans to scale down. That will just remain where it is," he said. "But I mean, in the future, if we had the choice of bringing more manufacturing versus more sophisticated technologies like clinical studies . . . I think it makes more sense to bring that."

He returned to his theme of putting the Republic on the world map. "I think Singapore used to compete with Hong Kong, but now those days are gone . . . Singapore has done a very good job in, again, positioning as one of the better places to invest in the Asia-Pacific. But again, I think they need to compare with the global hubs."

Mr Lee argued that the authorities "should be introducing some more aggressive, attractive policies to allow multinational companies to be bringing more assets to Singapore" - in other words, their top talent.

"Because with one right move, many multinational companies are big - their market cap is US$100 billion-plus, including Medtronic," he said. "If they decide to choose Singapore over other locations, this could bring hundreds of millions of dollars of added benefits."

The Asia-Pacific market was 12 per cent of Medtronic's FY2017 net sales to external customers, with the region raking in some US$3.44 billion.