Uneven Performance Marks First-Quarter Medtech ReportsUneven Performance Marks First-Quarter Medtech Reports

A review of recently released financial data for the first three months of 2006 points to significant performance variability among leading public medtech manufacturers (see Table). Among the top 20 firms, the strongest performances were turned in by companies in the medical imaging and healthcare information systems sector. Imaging giants Siemens Medical Solutions (Malvern, PA), Philips Medical Systems (Andover, MA), and GE Healthcare (Chalfont St. Giles, UK) all posted double-digit revenue gains over the prior-year period.

By contrast, three companies—Guidant (Indianapolis), now a division of Boston Scientific Corp. (Natick, MA); Kodak Health Group (Rochester, NY); and Beckman Coulter Inc. (Fullerton, CA)—all reported revenue declines. Revenue performance for Boston Scientific, Baxter International Inc. (Deerfield, IL), and Cardinal Health Inc. (Dublin, OH) was essentially flat.

Orthopedic firms Stryker Corp. (Kalamazoo, MI), Zimmer Holdings Inc. (Warsaw, IN), and Smith & Nephew plc (London) all continued to report revenue gains.

The top performer for the period was St. Jude Medical Inc. (St. Paul, MN), which saw its year-to-year quarterly revenues increase by 18%. The company also posted the greatest year-over-year earnings increases for 2005.

Johnson & Johnson Inc. (J&J; New Brunswick, NJ) cited performance by its Cordis Corp. (Miami Lakes, FL) and DePuy Orthopedics Inc. (Warsaw, IN) units as prime contributors to its 4.6% gain for devices and diagnostics for the first quarter of 2006 as compared with the year-earlier period. J&J is now reporting that Cordis' Cypher drug-eluting stent has captured the global market leader position from Boston Scientific's Taxus stent.

In related financial news, Medtronic led Fortune magazine's list of 16 “pure-play” medtech companies in the publication's annual ranking of America's largest companies. Medtronic ranks 235 on the list of 1000 firms. Johnson & Johnson, the world's largest medtech company, is listed with the pharmaceutical industry group and is ranked number 32 overall. Cardinal Health, which is listed in the healthcare wholesalers industry group, is ranked 19. General Electric, the highest-ranked company with a medtech connection, is number 7 on the overall list.

For detailed information, the 2006 Fortune 500 lists can be downloaded from http://money.cnn.com/magazines/fortune/fortune500/industries/Medical_Products_Equipment/1.html and http://money.cnn.com/magazines/fortune/fortune500/full_list.

© 2006 Canon Communications LLC

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