Tough Times Breed Opportunity and Optimism in the New Year

Most people look forward to the new year, and do so even more on the heels of a year filled with bad news and hard times for many companies. The troubles brought by the recession even hit the traditionally recessionproof medical device industry over the last year.

Sherrie Conroy

January 1, 2010

3 Min Read
Tough Times Breed Opportunity and Optimism in the New Year

And yet there was some good news. As 2009 came to a close, it was evident that not much could hold back an industry with an entrepreneurial spirit and a mission to help save lives. The industry made some adjustments, and the outlook is looking more upbeat for 2010.

Reports are already indicating an upswing. An Emergo Group survey, for example, found that the industry is feeling a bit more optimistic about the year ahead. Chris Schorre, Emergo’s global marketing director, points to generally improved economic news and stable markets (for details, see the news story on p. 16). Shares of St. Jude Medical Inc., Stryker Corp., and Zimmer Holdings, for example, all rose in the last few weeks of December. These increases were due mostly to analysts’ reactions to the healthcare reform bill, which dropped provisions for a government option (a provision that investors feared would hurt profits).

Also, analysts at New York investment firm Leerink Swann have predicted a rise in the medical device sector in the coming year. The firm has released a 12-page outlook for 2010, which says that earnings in the sector will improve and that investors will begin to focus on the medical device industry.

The firm points to stabilizing hospital budgets as hospitals restock inventories and capital equipment. One analyst calls out the strength of the atrial fibrillation, spine, and structural heart device markets. And improving economic conditions could lead to more elective procedures being performed in 2010—
particularly orthopedic procedures like hip and knee replacement surgeries.

Unlike many industries in which mergers and acquisitions came to a complete stop in 2009, most segments of the medical device industry continued to see activity. It is likely that activity will continue to pick up in 2010, and well-positioned companies will be poised to ink lucrative deals.

The coming year will certainly hold challenges for medical device manufacturers, but I predict that the industry will find ways to maintain growth and profitability. Healthcare reform will be on the table for the indefinite future. Once legislation is final, individual companies and the industry as a whole will find ways to cope with the device tax and contribute to reform in positive ways. A revamped 510(k) process is promised, and whether that’s a good or a bad thing remains to be seen. The industry has undergone adjustments in the past and will no doubt weather this one just fine. For a lively discussion on this topic, visit our blog at

The year will also bring more debate over comparative effectiveness as the industry finds ways to support a given method—as long as it doesn’t compromise patients. “There are many who believe that comparative effectiveness takes us to this promise land of providing treatments that are cost-effective,” says Phil Nowell, global leader of Cook Medical’s Aortic Intervention strategic business unit. Although the main goal for policymakers is to deliver data that help doctors and patients make informed decisions, industry must find ways to show how such data should—and should not—be used.

We recognized that we too needed to reflect the changing industry and address our readers’ needs. You will see in this issue that we have redesigned MD+DI to make it more dynamic and easier to use, while still bringing you the high-quality content that you count on every month.

Sherrie Conroy for the Editors

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