The story of our evolution as a company is the story of two complementary strengths: the ability to manage our business to deliver consistent financial performance year-over-year, alongside the ability to execute with excellence and speed. This year included a number of achievements that underscore our evolution and progress:
- Our MedSurg segment surpassed $3 billion in global revenue for the first time ever, growing at a market-leading 12.7% as reported, 11.2% in constant currency under the leadership of Group President Tim Scannell. This group of businesses continues to provide meaningful innovation in both devices and services that matter to caregivers, hospital partners and patients.
- We continued to execute a highly focused merger and acquisition (M&A) strategy under the leadership of Vice President, Strategy and Investor Relations Katherine Owen, that both supplemented our core businesses and added new growth platforms. We are now the world leader in two businesses that were not even in our portfolio two years ago: reprocessing and neurovascular.
- We completed the transition to a new company-wide Global Quality & Operations group under the leadership of twenty-three year Stryker veteran Lonny Carpenter, finishing the journey from a highly decentralized and independent manufacturing and quality network to one that is operationally aligned and focused on our continued commitment to world-class quality and manufacturing efficiency.
- We increased our research and development (R&D) spending by 17.3%, well above the industry norm, which is driving our internal innovation pipeline as well as fueling additional innovations in our acquired businesses. In addition, with the divestiture of the OP-1 product line for orthopaedic bone applications, we freed additional resources that can now be channeled towards internal projects that hold greater growth promise. By optimizing our cash flow capabilities to pursue both focused M&A and investing in internally driven innovation, we believe we are well-positioned to outpace our competitors.
- We strengthened our leadership team. As we continue our focus on early-stage medical technology opportunities as well as emerging economies with complex healthcare needs, we have assembled a team with deep knowledge, expertise and skill in global execution — a combination that we believe will help us deliver above-market growth. This year we gained two valuable executives with substantial global experience in Kevin Lobo, who heads our Orthopaedics group, and Ramesh Subrahmanian, the new leader of our International group. As a whole, our talented team continues to enable us to evolve, innovate and execute.
We achieved these results in the midst of dramatic changes in the healthcare environment and ongoing challenges that face medical technology companies worldwide. Our reconstructive implant businesses, in particular, were affected as high unemployment and fears about job security drove down the number of elective surgical procedures. For the first time ever, visits to doctors’ offices in the U.S. declined. At the same time, pricing pressures from hospitals and Europe’s debt crisis further curtailed our revenues. Conversely, providers in emerging economies, such as India and China, are struggling with how to meet soaring healthcare demands. Despite these headwinds, we managed to post a year of solid growth as a company, largely due to our balanced diversification.
In a very challenging and dramatically changing healthcare environment, we are evolving and transforming in order to position Stryker for continued strong performance. We remain committed to and will continue on the journey established by former Chairman, President and CEO Steve MacMillan. This effort began more than three years ago to broaden our company’s footprint and allow us to navigate through the changing environment and perform at a higher level for you, our shareholders. Our financial results underscore the strength of our unique footprint, which reflects balanced diversification both geographically and across a range of key business segments. With over 21,000 employees around the globe, Stryker is truly among the leaders in delivering innovative, life-changing and life-saving medical technologies. It is the commitment of every one of us that ensures we are doing the very best each and every day for caregivers and patients.