Edwards Lifesciences Corp. has added 1,300 employees over the past 12 months, a trend that’s likely to continue as the heart valve maker continues to spend about $500 million a year on research and development.
The hires include about 500 at its headquarters in Irvine, where work continues on an expansion. The company—a global leader in catheter-delivered heart valves therapy, and the most valuable publicly traded company based in Orange County, with a market capitalization of about $20 billion—now employs more than 11,000 globally and about 4,000 here.
Edwards has been notching impressive gains in recent years—its sales are up by about 50% to around $3 billion annually, since the end of 2013. The company’s shares have about tripled over the same period.
‘Edwards’ Central Park’
Its headquarters makeover is a multiyear project intended to keep facilities up-to-date, and to put the company firmly in the trend of creative-office spaces that encourage collaboration and community. Plans include a walking track at the campus wraps around a 3.8-acre greenspace that was previously a parking lot and has been dubbed “Edwards’ Central Park.”
The majority of the new hires have been in research and development, according to Chief Executive Michael Mussallem.
“Long-term strategic R&D investment is a number-one priority for Edwards,” Mussallem said. “We’ve been so … successful, which allows us to be much more aggressive to invest in future therapies.”
Edwards’ growth strategy, which was outlined at a recent investor meeting, calls for expanding transcatheter aortic heart valve therapy to a broader group of patients, as well as exploring therapies involving new valves—mitral and tricuspid.
The company plans to make its core aortic heart valve therapy available to more patients with severe aortic stenosis. Patients who are at high and intermediate risk for open heart surgery can get the valve now; Edwards is early in the process of seeking approvals to provide the valves to others with less risk.
The company also aims to grow its transcatheter mitral and tricuspid heart valve pipeline. It added to its CardiAQ mitral valve replacement technology with the recently acquired mitral and tricuspid valve repair technology from Valtech Cardio Ltd. in Israel. The $340 million acquisition, which closed in the first quarter, includes milestone payments over the next 10 years.
Mussallem noted that there are significant engineering challenges working with mitral valve replacement technology, as the valve is amorphous in shape and higher in pressure compared to other valves. The company also has programs focused on trancatheter intervention for the tricuspid valve.
The technology is aimed at treating mitral valve regurgitation, which occurs when the valve fails to close tightly, allowing blood to flow backwards to the heart instead of to the rest of the body. Tricuspid regurgitation is leakage of blood backwards through the tricuspid valve each time when the right ventricle pumps blood forward to the lung.
“This has never been done before,” Mussallem said. “At this point, we have a lot to learn about what approaches have most promise. It is exciting, and we have added fabulous talents to help us get there.”
Edwards plans to spend approximately 16% to 17% of total sales this year on research and development. The number, in line with last year, which saw 16% of sales of nearly $3 billion—or about $480 million—go to research and development, is significantly higher than the industry average, according to a company spokesperson.
Spending in the $500 million range is likely this year based on early projections of sales.
“You really shouldn’t expect significant sales [increases] in 2017 and 2018,” said Mussallem, referencing early transcatheter mitral and tricuspud valve programs.
Edwards’ new look extends to its eight-seat board. The company has added five directors since November 2014. Among the newcomers are: Leslie Heisz, who currently serves on the boards of directors for Kaiser Permanente and Ingram Micro Inc.; Steven Loranger, most recently chief executive of water technology company Xylem Inc. and previously chief executive of ITT Corp.; Kieran Gallahue, chief executive of CareFusion Corp., which manufactures devices used in infection control, medication management and respiratory care, among others; Martha Marsh, chief executive of Stanford Hospital & Clinics until her retirement in 2010; Nicholas Valeriani, a Johnson & Johnson veteran and now chief executive of the Gary and Mary West Health Institute, a nonprofit medical research organization.
Edwards competes with other—some significantly larger—medical device companies that operate in the heart valve segment. Medtronic PLC has a market cap of $112.1 billion; Boston Scientific Corp. is at about $33 billion; and St. Jude Medical Inc. checks in at about $23.1 billion.
Mussallem sees an edge for Edwards because of its tight focus on heart valves.
“We tend to compete with very large companies [of which] the structural heart valve space is just one of or a very small part of their business,” he said. “But this is what we do.”
Edwards’ business units also include critical care monitoring devices, cardiac surgery systems and vascular products like catheters.
