Covidien (NYSE: COV) makes healthcare products that are used in hospitals worldwide. Most of the company's revenue comes from the sale of medical devices that are used during surgery; Covidien's small, precise instruments help decrease recovery time for minimally invasive operations. Covidien serves customers in over 130 countries.
Until 2007, Covidien was a subsidiary of Tyco International (TYC) Ltd., 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. 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. 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. 
Minimally invasive surgery, or a surgical procedure that tries to minimize trauma to the body, has become increasingly popular among healthcare providers and patients alike in that it is less traumatic to the body and allows for a quicker recovery time than invasive surgery. The immediate effects of increased R&D investment, however, have been a loss in profitability.
In 2009, COV generated a net income of $907 million on revenues of $10.68 billion. This represents a 33.4% decrease in profitability on a 3.1% increase in total revenues from 2008, when the company earned $1.36 billion on revenues of $10.36 billion.
Covidien operates its business through five segmentsgg:
Most of Covidien's total sales revenue comes from operations within of the United States. This means COV has a relatively high reliance on the U.S. market in comparison to other comparable pharmaceutical companies. This high reliance on the U.S. market amplifies losses in Covidien's domestic earnings. 83% of Covidien's production takes place in the United States and increases in oil, gas and pulp prices have resulted in higher production costs and has made it more expensive to distribute products.
Covidien's foreign operations are namely grounded in the other Americas, Europe, Japan, and Asia-Pacific.  Operations abroad are subject to all the risks that come with conducting business abroad under foreign laws, regulations and customs. These risks include changes in non-U.S. medical reimbursement policies, possible failure to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act, trade protection measures, and more general political and economic factors such as military instability or recession.
On June 29, 2007, Covidien separated from Tyco International in order to gain independent operating capabilities, namely with the stated intention of increasing investment in Research and Development. In the separation, Covidient agreed to assume 42% responsibility of Tyco International's contingent and corporate liabilities. Covidien shares an equivalent amount of tax liability for periods prior to and including the date of separation.
Covidien's strengths rest in the fact that it offers a full breadth of products to its consumers, most namely in regards to Medical Devices and Imaging Solutions. In fact, no single company competes with Covidien over the full breadth of products offered by its Medical Devices segment. In regards to its Pharmaceutical Products branch, Covidien possesses a secure source of raw materials and manufacturing capabilities that enables them to compete effectively against its competitors.