Covidien succeeds in standing apart from old Tyco empire

(Dino Vournas/Associated Press)

For years, Tyco Healthcare was part of Tyco International Ltd. But last summer, the division became an independent company with a new name - Covidien Ltd. - and instantly became one of the Bay State's biggest corporations. The Mansfield-based company, which is incorporated in Bermuda, has roughly $10 billion in annual sales and 43,000 employees, including 2,000 in Massachusetts. Globe reporter Todd Wallack recently sat down with Covidien chief executive Richard Meelia, who has run the organization for more than a decade.

Q: Has being independent from Tyco helped or hurt the company?

A: As part of Tyco International, it was more run for cash. Tyco used what we made to write down Tyco International debt and didn't reinvest in the business. This whole notion of becoming an independent company has changed the way we look at the business. We are much more focused on growth. We are focused on innovation. We are looking at the business from a global standpoint. It's a very different strategy.

Q: What have you retained from being part of Tyco?

A: There was good and bad associated with Tyco. We built some solid franchises. The negative legacy - that all occurred in 2002. That's pretty much gone away.

Q: You worked with former Tyco International chief executive Dennis Kozlowski, who was convicted of stealing hundreds of millions of dollars from the company. What are your impressions of what happened?

A: I wish I knew. Dennis had a great vision and helped us build Tyco Healthcare. When the 8-K [a filing with the Securities and Exchange Commission] was released in September 2002, outlining a lot of the issues, we were as surprised as anybody. We just did not see it - the loans, the apartments, and things.

Q: How did you come up with the name?

A: We wanted to have a name that not just looked good and sounded good, but reflected what we are trying to do. So "co" is a company that is collaborative. And compassion is also part of what we want to be known as a company. Vi is from the Latin word for life. We are in business to help improve and save lives.

Q: You recently announced plans to sell your retail business. Are you considering divesting other parts of the business?

A: We will continue to shape the portfolio by bringing things in through business development and internal development that create shareholder value. We'll also look at parts of the business that don't make sense either strategically or financially and we'll divest those. There's more work to be done on both fronts - adding and subtracting.

Q: Two-thirds of your sales are in medical devices. Why not just focus on that?

A: We do primarily focus on that. We've made some major investments in selling and marketing over the last two years and more than 90 percent of that went to medical devices. But the pharmaceuticals business - that's good growth, good margins. Imaging has good sales growth. So there are other businesses that may not be as compelling as medical devices, but there are good returns.

Q: Covidien has cut jobs in some other parts of the country. What about Massachusetts?

A: We've added about 300 jobs in our Mansfield facility in the past year and a half. And these are pretty important jobs - functions that used to be provided by Tyco that we now have to support ourselves. We've added a lot of finance, tax, legal, selling, marketing, and R&D, but especially those public company functions. We've got quite a campus in Mansfield.

Q: How does employment look going forward?

A: I'd say mostly stable.

Q: What else do you want people to know about Covidien?

A: We now have a philanthropic mission. It is focused on wellness.

Q: How much do you spend on it?

A: In the first year, it's around $10 million to $12 million.

Q: Out of $10 billion in annual revenue?

A: It is our first year. It is a beginning.

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