Gains and pains from licensing—patent-portfolios as strategic weapons in the cardiac rhythm management industry

It is shown that a strong patent-portfolio can be an important strategic weapon in the pacemaker industry.

Abstract

Because of the rapidly growing number of elderly people, products for the treatment of cardiac rhythm disorders (pacemakers) are a major part of the US $130 billion medical device market. Since 1994 two US companies, Medtronic Inc. and St. Jude Medical Inc., have dominated the pacemaker segment. Very interestingly, the two competitors show substantially different developments of their financial performance. This case study offers some answers to the question, what may have caused these developments? A review of the most recent history of the two companies, and a third player which is of particular interest, Siemens AG, shows that these companies have followed different strategies to achieve success in the pacemaker market. Since technological progress has been of prime importance in the pacemaker industry, patent analyses were conducted. It is shown that a strong patent-portfolio can be an important strategic weapon in the pacemaker industry.