Medtronic 2014 Annual Report Download - page 29

Item 1A. Risk Factors
Investing in Medtronic involves a variety of risks and uncertainties, known and unknown, including, among others, those
discussed below.
The medical device industry is highly competitive and we may be unable to compete effectively.
We compete in both the therapeutic and diagnostic medical markets in more than 140 countries throughout the world. These
markets are characterized by rapid change resulting from technological advances and scientific discoveries. In the product lines
in which we compete, we face a mixture of competitors ranging from large manufacturers with multiple business lines to small
manufacturers that offer a limited selection of niche products. Development by other companies of new or improved products,
processes, or technologies may make our products or proposed products less competitive. In addition, we face competition from
providers of alternative medical therapies such as pharmaceutical companies. Competitive factors include:
•product reliability,
•product performance,
•product technology,
•product quality,
•breadth of product lines,
•product services,
•customer support,
•price, and
•reimbursement approval from health care insurance providers.
Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts,
and publications about our products; reflecting the importance of product quality, product efficacy, and quality systems in the
medical device industry. In the current environment of managed care, consolidation among health care providers, increased
competition, and declining reimbursement rates, we have been increasingly required to compete on the basis of price. In order to
continue to compete effectively, we must continue to create, invest in, or acquire advanced technology, incorporate this
technology into our proprietary products, obtain regulatory approvals in a timely manner, and manufacture and successfully
market our products. Given these factors, we cannot guarantee that we will be able to continue our level of success in the
industry.
Reduction or interruption in supply and an inability to develop alternative sources for supply may adversely affect our
manufacturing operations and related product sales.
We manufacture most of our products at 41 manufacturing facilities located throughout the world. We purchase many of the
components and raw materials used in manufacturing these products from numerous suppliers in various countries. Generally
we have been able to obtain adequate supplies of such raw materials and components. However, for reasons of quality
assurance, cost effectiveness, or availability, we procure certain components and raw materials from a sole supplier. We work
closely with our suppliers to try to ensure continuity of supply while maintaining high quality and reliability. However, we
cannot guarantee that these efforts will be successful. In addition, due to the stringent regulations and requirements of the U.S.
FDA regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for
certain components or materials. A reduction or interruption in supply, and an inability to develop alternative sources for such
supply, could adversely affect our ability to manufacture our products in a timely or cost-effective manner and to make our
related product sales. Moreover, pursuant to the conflict minerals requirements promulgated by the SEC as a part of
Dodd-Frank, we are required to report on the source of any conflict minerals used in our products, as well as the process we use
to determine the source of such materials. We will incur expenses as we work with our suppliers to evaluate the source of any
conflict minerals in our products, and compliance with these requirements could adversely affect the sourcing, supply, and
pricing of our raw materials.
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