Stock Watch:Investing in Medical Technology

Originally Published September 1999

MARKET ANALYSIS

Carol Winslow

As a category for investment, medical technology is a relatively young industry. Twenty years ago, only a dozen or so publicly held companies existed; today, nearly 240 firms occupy the marketplace and are contributing to the explosion of new technologies designed to improve clinical outcomes and remove costs from the healthcare system. With healthcare currently representing approximately 14% of the gross domestic product, the medical technology industry today represents an exciting and substantial segment of the U.S. equity markets.

The Year Past

The year 1998 proved to be volatile and difficult for medical technology stocks. Channel Medical Partners' proprietary Medical Technology Index (see sidebar, page 28) significantly underperformed the overall stock market in 1998, declining 11.0% versus a 31.9% rise in the Standard & Poor 400 and a 16.2% increase in the Dow Jones industrial