Will the Medical Device Market Ride Out Economic Crisis?

The global stock markets took another beating on Friday, 24 October, but those active in the medical device industry still may have reason to be optimistic. The Millennium Research Group recently released its latest editions of its Industry Quarterly publications, which focused on recent trends in the cardiovascular, endoscopy, orthopedics, aesthetics, and imaging and IT industries. The group found that, though the med-tech industry is not recession proof, the medical device industry is expected to be resilient during this economic downturn. While markets tied to elective procedures such as aesthetic and dental device markets likely will contract, the overall long-term outlook for the medical device industry remains positive, the group found.

A couple of days ago, we also reported on a recent survey from the Emergo Group that found medical device firms were upbeat about their prospects for 2009.

But a less-optimistic report on the med-tech industry also was released recently from Credit Suisse. Though the report acknowledges that the healthcare and medical technology markets have been considered “defensive” historically, it finds that several signs have emerged that may indicate that the world’s economic woes may be bleeding into the med-tech industry.

The report from Credit Suisse observed the following:

Nobel Biocare of Switzerland issued a profit warning, citing a deteriorating economic environment affecting sales towards the end of September.

Biomet (private) was also feeling the pinch in dental (down 7% in U.S.), but not yet in hips and knees.

General Electric’s healthcare business was below expectations. Orders were up 9% globally, but down 6% in the United States.

Philips noted customers are delaying decisions and pushing out orders, which happened very late in the quarter.

Johnson & Johnson commented that it was starting to see softness in “some pockets” of its business, specifically elective procedures in sports medicine and women’s health.

Results from the major orthopedic manufacturers did not signal a notable slowdown, but there was an extra selling day in Stryker and Zimmer Holdings, which may have masked a slight deceleration.

The report found that the orthopedic companies are especially prone to the economic downturn.

Tags: Credit Suisse, Emergo Group, med-tech market, Millennium Research Group, recession