Covidien (NYSE: COV) makes healthcare products that are used in hospitals worldwide. 61% of the company's 2007 revenue came from the sale of medical devices that are used during surgery; Covidien's small, precise instruments help decrease recovery time for minimally invasive operations.^[1] Covidien's growing presence in non-U.S. markets has helped it increase its net sales by over 4% since 2005. Sales abroad made up approximately 40% of Covidien's net sales in fiscal 2007. ^[2] Today, Covidien serves customers in over 130 countries. No single account provided more than 10% of the company's total sales from 2005 to 2007. ^[3]

Until 2007, Covidien was a subsidiary of Tyco International (TYC) Ltd.^[4], a conglomerate that makes safety equipment and electrical and metal products. The key to Covidien's success is the advantages its products give to surgeons and their patients, so the company must invest heavily in research and development to continue to innovate ahead of competing medical device manufacturers. A key motivator of Covidien's separation from Tyco was to increase the percentage of spending on R&D relative to revenue growth.^[5] Covidien has increased investment in its R&D department by tripling the amount of money put into Research and Development projects since separating from Tyco.^[6] However, these efforts come with both cost and risk in that increases in R&D costs have led to a 1.7% decline in Covidien's profitability. ^[7]

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