Medtronic was fined by the National Development and Reform Commission for a net price of 118 million yuan. In addition to the fine amount, Medtronic’s tough attitude during the investigation was even more ridiculous.
The relevant person in charge of the National Development and Reform Commission revealed that more than 40 inspectors were trapped in the Medtronic China headquarters for more than six hours, and the head of the company was hiding in the office to drink coffee during this period. Where is Medtronic sacred? How serious is the monopoly of multinational medical device giants?
Medtronic: Maori close to 70% from the Chinese market, the Nuggets
The $118 million fine is almost negligible in terms of the tens of billions of revenue that Medtronic received from the Chinese market.
Headquartered in the United States, Medtronic is one of the world's largest medical device companies; its products include cardiovascular disease, diabetes, and neurological diseases. According to a report by EvaluateMedtech, in 2015, Medtronic's share of the cardiovascular device market was as high as 24.30%. Ranked first in the world.
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Recently, Medtronic released a financial report that in the middle of fiscal 2016 (as of October 28 this year), its total revenue was US$14.51 billion, up only 1.25% year-on-year; net profit was US$2.044 billion, a surge of 52.54% year-on-year. The chart below shows the total revenue and net profit of Medtronic in the middle of the year:
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The high profit of Medtronic has a lot to do with its high sales gross margin. In the middle of FY2016, its sales gross margin was as high as 68.39%.
The growing Chinese market is contributing huge revenues and profits to Medtronic. The financial report shows that in the past two and a half years, Medtronic’s revenue from Greater China was equivalent to more than RMB 21 billion, and mainland China is the main source of income. According to its global average gross profit margin, the gross profit obtained from Greater China in the past two and a half years has exceeded 14 billion yuan.
The fine of 1.18 billion yuan can be called "insignificant" for Medtronic's huge revenue and profits from the Chinese market.
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