Article preview from IN VIVO - January, 2013
The prospective medical device tax, the continuing decline of venture investing, pricing challenges, austerity measures in Europe, and other headwinds continued to push against the medtech industry in 2012. But emerging clinical and geographic markets, along with an active M&A market, provided the industry with some momentum.
Article preview from IN VIVO - January, 2013 The prospective medical device tax, the continuing decline of venture investing, pricing challenges, austerity measures in Europe, and other headwinds continued to push against the medtech industry in 2012. But emerging clinical and geographic markets, along with an active M&A market, provided the industry with some momentum.
Each year at this time, IN VIVO looks back at the year just passed to identify the highs, the lows, and the trends that will shape the future. In 2012, the theme was headwinds. It was the buzzword CEOs often used at investor presentations to describe the difficult environment the industry is facing – the pending medical device tax (now a reality in 2013), the fiscal cliff negotiations that threatened to cut Medicare physician payments by 26.5% (forestalled, at the moment), pricing pressures, and austerity measures in Europe that have reduced surgical and interventional procedure volumes. In addition, the US Food and Drug Administration remains unpredictable, and the decline in device venture investing continues, making financing hard to find for many medical device start-ups. Even markets that have traditionally been the drivers of device growth, most notably interventional cardiology, have seen declines, while growth in other large markets, including cardiac rhythm management (CRM) and much of orthopedics – particularly hip and knee implants and spine – remains slow. Overlaying all of this is the broad banner of health care reform with its accompanying focus on cost reduction and comparative effectiveness, meaning companies now need to demonstrate the economic as well as the clinical efficacy of new products. Let’s just say that the wind is not at the backs of medical device companies these days.
Still, as any sailor knows, headwinds are an unavoidable reality; the kind of shift in conditions that requires sharp piloting skills and a tight rein on the sails since there is little room for error. At the end of 2012, it did appear that medical device companies had the know-how to weather these foul conditions, as they prepared to absorb the impact of the medical device tax by restructuring and reprioritizing, lobbied hard, with some success, for FDA transparency, and in many cases, appointed new captains to see them through the next part of the journey. Boston Scientific Corp.’s new president and CEO Mike Mahoney has been three months at the job, Covidien PLC’s president and CEO Jose Almeida succeeded Richard Meelia, who retired in July 2011, Kevin Lobo, the new president and CEO of Stryker Corp., has been at the helm since October 1, and chairman, president, and CEO Omar Ishrak, has been guiding Medtronic Inc. for a year and a half now.
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