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Three Medical Device Manufacturers with the Highest Profit Margins
September 10, 2013
3 Min Read
Medical device manufacturers that have significant marketing, manufacturing, or regulatory benefits are often able to dominate the industry. Over the last year, three companies have stood out from the competition for their strong performance, two of which command leading positions in the market.
ResMed One lesser-known medical device manufacturer with strong profits is ResMed. With a 20.3% profit margin, ResMed manufactures medical devices for sleep apnea. Over the past two years, the company has undergone a period of significant growth. In its most recent quarter, ResMed reported record sales and income. In both its European and Asian markets, ResMed has posted double-digit sales growth. In addition, domestic sales in the United States have been very strong.
According to some market analysts, the global sleep apnea market is slated to double in size between 2011 and 2017. Based on this, ResMed could be poised for significant growth in the future.
Medtronic. Another medical device manufacturer with strong profitability is Medtronic, a global medtech giant. The company currently has a 21.3% profit margin. For a company of this size, this large of a profit margin is a significant achievement. For the past two years, Medtronic has consistently posted strong sales growth.
While one-fourth of Medtronic's sales come from its slumping cardiac rhythm management division, the company has been able to make up for this lagging market through a series of acquisitions and other initiatives.In particular, atrial fibrillation has been a strong growth driver for the company. As the United States and other developed countries encounter an aging population and an uptick in chronic diseases, a number of Medtronic's cardiovascular products have proven to be popular. In addition to this, the company's neuromodulation division has experienced strong growth in recent years.
One of Medtronic's competitors, St. Jude Medical, has also seen some of the same cardiac pressures as its arch-rival. St. Jude Medical has seen 7% growth in its atrial fibrillation division in the first half of the year.
Intuitive Surgical. While Intuitive Surgical has been plagued with a significant number of lawsuits, regulatory issues and bad press in 2013, the company has experienced significant growth in recent years and it became one of the most profitable device firms in the United States. (A lawsuit filed in 2013 alleges that the company's high profitability was inflated by fraud.) While there have been concerns over the safety of its da Vinci robotic surgical system, the company remains a popular choice with many surgeons and the company performs well when measured against many other device firms rather than against itself.
While the company's stock has dropped by more than one-fifth this year, Intuitive Surgical has managed to achieve a profit margin of 30.2%. While sales of surgical systems have fallen 6% in its latest quarter, the company maintains its position as the number one player in the robotic surgery market. On top of this, the company has seen a double-digit increase in robotic surgery procedures. While the company may face legal and regulatory issues, it is poised for strong future growth in the long run, despite weak performance in 2013.
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