LivaNova's Narrow Economic Moat Rests Wholly on Its Neuromodulation Business

As a midsize medical device firm, LivaNova follows the same innovation strategy that has been successful for many larger competitors, including Medtronic and Boston Scientific. With this approach, manufacturers can create differentiated products that are not entirely interchangeable, and with each iteration of the technology, can eke out a pricing premium. The success of this strategy hinges on two factors. First, firms must be able to generate meaningful innovation. This usually happens through internal R&D, potentially augmented with acquisition of emerging technologies. Very rarely have we seen medical technology firms succeed solely on acquisition of technology. Second, successful commercialization also depends on a salesforce that has built strong relationships with the practitioners making the brand choice.