Humility is not the first word you expect to associate with the long-time leader of one of the biggest and fastest-growing players in the medtech space but it ranks high in Kevin Lobo’s corporate lexicon.
Alongside drive and a commitment to innovation, it is what the boss of medtech giant Stryker considers essential for the teamwork necessary to deliver the company’s rapid growth under his tenure – much of it through acquisition.
The medical device group – synonymous with replacement joints for hips and knees though it ranges far beyond those two areas – has grown from an $8 billion (€7.3 billion) business when Lobo took over in 2012 to one topping the $20 billion mark in sales last year.
And Ireland has been pivotal to that success.
Stryker first came to Ireland in 1998, opening a plant in Tullagreen, in Cork. The city now accounts for seven of its nine Irish facilities, including three research and innovation sites. The group also has manufacturing sites in Limerick and Belfast.
Having recently passed 5,500 staff – with staff from over 60 countries worldwide – Stryker’s Irish operations account for more than 10 per cent of the group’s workforce, making it the largest innovation and manufacturing hub outside the US.
“This is the largest concentration of employees that Stryker has anywhere in the world,” Lobo says, adding that the State is “massively important to Stryker”.
“The number of people we have, the innovative spirit we have, the fact that in Ireland we have all the different divisions [joint replacement, trauma, craniomaxillofacial and spine] present creates tremendous collaboration across divisions. So, we have this know-how.”
He attributes Stryker’s growth in Ireland to three factors: the people, the university and IDA Ireland.
US executives will always praise the efforts of IDA Ireland. It can come across as part of a preordained list of speaking notes to be mentioned in passing. Not with Lobo.
“IDA Ireland is the best development agency in the world,” he says, “and I say this to other countries who come to me constantly asking for us to invest in their countries. I say you go take a page from IDA Ireland – in terms of not just research incentives, but location, help with permitting, help generally. They are just an amazing organisation that we’ve had great experience with.”
He is equally convincing in his comments of collaboration with Ireland’s third-level sector, attributing the company’s decision to open what it says is the largest 3D printing plant in the world two years ago to Stryker’s interaction with local universities.
“Why 3D printing here? It is because of the university relationships. We were the first medical device company to have implants in the human body that were 3D printed at scale. If you look at total knee replacement, they used to always be done with bone cement. And because of this facility and this design that was created with collaborations with universities, more than half of our knees in the United States are now done without bone cement because the bone grows into the porous titanium. And around the world, that percentage is also increasing.”
While 3D printing now seems a no-brainer for joint replacement, not least because of the ability to customise products to the particular needs of patients in workable time frames, it is far from the sole string to Stryker’s Irish bow.
The company makes everything from defibrillators (in Belfast) to neurovascular coils, trauma and spine products across its Irish network of plants. It also has a centre of excellence focused on cutting tools.
Developed on the back of Irish intellectual property, that last speciality came into its own when Stryker made a big bet early in Lobo’s reign on robotic-assisted surgery with the $1.4 billion acquisition of a business called Mako.
“It was a big bet. It was in my first year as CEO and it was not popular,” Lobo recalls. “The day we announced the deal, the stock went down 6 per cent.
“There was really no robotics in orthopaedics at the time but now it’s becoming standard of care. Obviously it’s played out to be a fantastic deal. We’ve been the fastest-growing company for both knee and hip replacements over the past 10 years and we are launching Mako spine at the end of the third quarter, and Mako shoulder at the end of this year.”
The technology guides surgeons as they cut into bone to make sure they do not nick ligaments or anything else inadvertently. It sounds like a win-win for surgeons carrying out ever more complex procedures in an increasingly litigious environment.
“Surgeons are telling me that this takes away mental stress, because it’s a 3D-printed plan that they can see ahead of time, so they know what they’re walking into,” says Lobo.
But one early problem was the durability of the robotic tool’s cutting blades.
“They were having trouble with blades breaking when we acquired this company, and they didn’t have our blade know-how,” Lobo says. In search of a solution, the company turned to Ireland.
“They created a special purpose blade here. And so, the country has become an innovation hothouse for the company as well as a manufacturing base.”
Lobo has overseen 60 acquisitions in his time leading the group. Most are what he calls “tuck-ins”, small-scale acquisitions of generally privately-held businesses that can augment existing expertise and product development across the business.
“We have terrific internal innovation, including some of the innovation you see here in Ireland. But we supplement that with acquisition,” he says.
Integrating acquisitions is a notoriously challenging area for all companies but Lobo is happy his Stryker team have cracked it.
“Acquisitions have been a huge part of our success formula. And the integration process – we’ve become very robust in how we integrate. I like to joke that we make mistakes, but they’re not the same mistakes and that’s why integrations have become much more successful for us over time.”
Part of that is down to the very deliberately decentralised way the global group is structured. Stryker has just two corporate business development executives at group level. All the rest are attached to the group’s individual business units, closer to the business and its customers.
“They’re the ones who bubble up the ideas. And as soon as they see a good idea, we’re meeting with the [target] company, we talk to the company and we end up buying them before other companies are maybe even aware of them.”
It probably helps the focus that they have a very personal investment in the outcomes, with Lobo previously noting how the bonus plans of executives doing deals are tied to the successful delivery of expected outcomes for the two years after deals close, “and if they’re missing their numbers, they feel the pain.”
For a man who trained as an accountant, Lobo is uncommonly comfortable with the idea of spending money.
“They kicked me out of finance twice in my career,” he agrees, laughing. “I do believe that if you want to win in the market and deliver great value for your customers, you have to be willing to take risks. And I enjoy taking risks and I believe that’s the way to win. Are they always going to all work out? No. But our batting average is very high.
“When we generate cash, the number one use of cash for Stryker is to buy companies, whereas other companies might buy back shares or have a dividend. We have a dividend, but it’s a modest dividend. We’d much prefer to use cash to buy companies,” says Lobo, whose stated view of buy-backs – currently much in vogue – is that they are not a “long-term value creator”.
Even with his gung-ho approach to M&A, Lobo accentuates the concept of humility.
“Sometimes it’s faster to buy, sometimes they have better capabilities,” Lobo notes, pointing to another of the company’s landmark deals in recent years in the area of fluorescence. “We were working on our own fluorescence and we realised that this other company, Novadaq, was just better than us.”
Lobo describes the $700 million deal in 2017 as another game changer.
“When you go inside the body, with a surgeon doing, let’s say, a gallbladder procedure, fluorescence lights up the anatomy. The patient ingests a contrast dye before the surgery and then when the surgeon’s going in through the procedure ... they can see the anatomy. There’s no chance they’re going to make a mistake.”
Stryker is expanding the scope of its fluorescence products to cover a wider range of surgeries – most recently lung cancer. Two more – for ovarian cancer and bladder cancer – are due over the next six months.
“Surgeons are saying it’s unbelievable, that they would have not seen all the cancer that they’re seeing, and they’re sure that they’re going to be able to get shot of all the cancer,” Lobo says of feedback on the lung cancer fluorescence which is currently available in the US but in the process of wider approvals. “So, you’re going to get safe surgery and the patients are going to benefit from this in a big way.”
The third landmark investment, predictably, is in artificial intelligence, which he says is going to be present in just about all of our technologies over the next decade. Stryker is already tapping its potential in the everyday world of C-section.
“There are many mothers who get a transfusion when they shouldn’t or don’t get one when they should,” Lobo says. Blood loss after birth accounts for more than one in 10 pregnancy-related deaths, with treatment hindered by surgeons relying on visually estimating blood loss during and after the procedure.
Stryker’s Triton uses AI algorithms to compute the haemoglobin in the sponges and canisters used to collect fluids during surgery.
“It’s literally an app on an iPhone that you hold up and hold up the sponge and the app computes the haemoglobin, and then you hold it up in front of the canister and it computes the haemoglobin. And then it gives instruction of whether the mother needs a transfusion or doesn’t,” says Lobo.
Stryker bought Gauss Surgical, the company behind the technology, for $160 million in 2021. The engineer behind its development has stayed with Stryker where Lobo says he is now in charge of Stryker AI, developing AI applications across the group.
Medical devices are a notoriously competitive sector but Lobo is confident his business retains a significant head start over rivals in both robotics and fluorescence.
“As long as you keep staying on that leading edge, you will continue to win in the marketplace,” says the Indian-born but Canadian-reared Lobo. “And the most important thing is that patients are going to benefit.”
Stryker’s rapid growth and expansion by acquisition means that the role of its Irish operations are constantly changing.
“I think when we came here, IDA Ireland helped with some incentives and obviously there were some tax benefits but that’s why we came; it’s not why we’re staying here,” he says. “It’s high technology, mostly high automation, innovation and launching new products and capabilities. It’s really more high end now.
“Ireland is massively important to Stryker. It punches above its weight in terms of our company. We’re committed to continuing to expand here because it has been a key engine of success for our organisation. Ireland’s a place we’re always going to consider investing in.”
CV
Name: Kevin Lobo
Age: 58
Position: Chief executive and chairman of top-five medical device group Stryker
Family: Married to Shazie Zaman whom he met in college; they have two children.
Outside interests: “I enjoy spending quality time with my family and I am passionate about golf. I have been to Ireland several times and I have had the opportunity to play many of the stunning and challenging golf courses around the country.”
Something you’d expect: He is one of the top earners in medical devices, with a 2023 compensation package valued at $20.77 million.
Something that might surprise: He was last year awarded Ellis Island Medal of Honor, which celebrates Americans working for the betterment of the country and its citizens. Previous winners include Muhammad Ali, Lee Iacocca, Google boss Eric Schmidt, Nobel laureate Elie Wiesel and senator John McCain.
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