MDDI Online is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Medtech Losers of 2018

These companies, devices, and concepts struggled in 2018 – some even past the point of recovery. Here is a list of those with the greatest losses this year.

  • The medtech industry took some devastating blows in 2018. From businesses closing to products ending – the industry saw its fair share of losses. Hopefully, 2019 will provide plenty of opportunities to rebound. 

  • Affordable Care Act

    Ah, the Affordable Care Act (ACA). A measure that was signed into law in 2010 and has been a source of friction between Democrats and Republicans. While Dems support the law that was spear headed by former President Barack Obama, Republicans have said the cost of the healthcare plan isn’t sustainable. During his campaign, President Donald Trump vowed to repeal the law. However, in 2017, the measure to repeal the law failed to garner enough votes in the Senate. The ever-evolving tale of the ACA took a sudden turn last week as a Texas judge ruled the law was unconstitutional. The ruling has put into question the future of the law and just what will happen in the coming months.

  • GE

    General Electric shook things up this year with its decision to spin out its healthcare division as a publicly-traded company in order to focus on aviation, power, and renewable energy. This news could ultimately end up being positive for the healthcare division, which has long been a bright spot for its poor-performing parent company.

    In 2017, GE Healthcare brought in about $19 billion in revenue and posted five percent revenue growth and nine percent segment profit growth in the same year.

    General Electric’s plans call for it to sell about 20% of the health business and spin off the rest to its shareholders. GE Healthcare provides medical imaging (including contrast agents), monitoring, biomanufacturing and cell therapy technology, leveraging deep digital, artificial intelligence and data analytics capabilities.

  • Medtech Outlook

    The future for medtech looks to be a little bumpy. In some ways, it looks like it could be pretty expensive for medical device companies. There’s the uncertainty of whether or not the medical device tax will be fully repealed or not. In addition, trade tariffs could have a negative effect on the medtech industry. AdvaMed pointed to proposed tariffs of almost $3 billion on life-saving medical technology. AAMI noted that the initial list has been cut to remove items, including defibrillators. A list final as of September 18 outlines the Chinese imports subject to tariffs.

    In addition to taxes and tariffs, the industry also has to grapple with a number of complex regulatory changes, ranging from the EU MDRs to FDA’s 510(k) modernization, which could include limiting the use of older predicate devices. But not everyone agrees that newer predicates are better.  And one report suggests that the medtech industry is not ready for the EU MDRs. According to a survey by the Regulatory Affairs Professionals Society (RAPS) and KPMG, a majority of medical device companies responding to the survey "do not have a sufficient understanding of EU MDR."

    Consequently, the outlook for the medtech industry is definitely a challenging one.

  • Medtech Perception 

    The consumer media has not been kind to the medical device industry this year.

    In May, a 60 Minutes segment brought unwanted attention to transvaginal mesh devices with a particularly harsh focus on Boston Scientific (the company spoke out about the controversial story in an interview with MD+DI soon after the report aired). The report claimed that the company made transvaginal mesh devices using counterfeit materials smuggled from China.

    Boston Scientific denied any wrongdoing and received support from surgeons as well as the American Urogynecologic Society. These products, which tend to get lumped together as "pelvic mesh," are designed to treat women who suffer from pelvic organ prolapse or stress urinary incontinence. The implants are made with polypropylene resin, which has previously been linked to some patient complications. A month after the 60 Minutes report aired, a Massachusetts jury backed Boston Scientific in a product liability case involving two of the company's transvaginal mesh devices.

    The next big blow to the medical device industry came in July following the Netflix release of The Bleeding Edge documentary, which offers a poignant look at specific medical device categories that have adversely impacted patients. MD+DI interviewed the filmmakers and published several pieces on the documentary, including a slideshow of the film's most powerful moments, an op-ed from a biomedical engineering expert, and a story based on reader feedback about the film.

    One of the most controversial products highlighted in The Bleeding Edge is Bayer's Essure birth control system, which has been the subject of nearly 30,000 adverse event reports to FDA and thousands of patient lawsuits. Bayer announced in July that it would stop selling the Essure system in the United States at the end of the year, citing a decline in U.S. sales of the device and the conclusion that the Essure business is no longer sustainable. The company insisted that the decision to discontinue the product is for business reasons only, "not for any safety or efficacy concerns about Essure."

    More recently, the medical device industry came under fire by an international consortium of journalists. The group released an investigative report on the industry in November that blames poorly regulated medical devices for millions of patient injuries and thousands of deaths. The report was based on a year-long investigation by the International Consortium of Investigative Journalists.

  • MiMedx

    MiMedx took some pretty hard hits this year. 

    In February, MiMedx postponed the release of its financial results and the filing of its Form 10-K for 2017 and reported that independent legal and accounting advisors were investigating allegations regarding the company's sales and distribution practices. That investigation eventually led to the resignations of CEO Pete Petit and COO Bill Taylor, as well as the resignations of former CFO Michael Senken, and former corporate controller and treasurer John Cranston. The company also drew the unwanted attention of both the Securities and Exchange Commission and the Department of Justice. Later, the company's board announced that these four separations were to be treated as terminations "for cause," and that the former executives would have to forfeit equity and incentive awards they received in connection with their resignations.

    The most recent blow came earlier this month when Ernst & Young (EY), the firm hired to audit the company's financial statements for the past two years, resigned after advising the company that the internal controls necessary for MiMedx to develop reliable financial statements do not exist.

    EY told MiMedx that the firm is unable to rely on representations from the current interim CEO and interim CFO because they, in turn, would have needed to rely on representations from certain legacy management personnel still in positions that could affect what is reflected in the company's books and records.

    "Given its ongoing audit investigation and restatement process, the company is having a difficult time recruiting a permanent CEO," Mike Matson, an analyst at Needham & Co., said in a research note after the firm suspended its rating of MiMedx due to the EY resignation and "a further reduction of visibility" into the company's financials.

    Matson noted that payers are eliminating coverage for certain MiMedx products, which has materially impacted revenue.

    MiMedx also recently announced that it will eliminate about 240 full-time positions, which is about 24% of its total workforce. Roughly 120 of these positions will be within the company's sales organization and the company's current management said the restructuring could result in material cost savings beginning in the first quarter of 2019.

    The company also eliminated its chief commercialization officer position and promoted Mark Landy to executive vice president and chief strategy officer. Other management changes include the promotion of David Mason Jr., MD, to chief medical officer, and John Marris to senior vice president of marketing and business development.

    "We believe the recent news has signaled that the business is deteriorating and we do not see a clear path towards recovery," Matson said.

  • Theranos

    It truly is game over for Theranos. Once upon a time, Elizabeth Holmes was poised to change medtech forever. At 19, Holmes left Stanford University to start a lab-testing company with the goal of providing consumers access to cheap, fast, and high-quality diagnostic tests that used just a drop of blood from a fingerstick. But over the years those hopes were dashed and 2018 was the year of reckoning for Theranos. In March, the Securities and Exchange Commission charged Theranos, its founder and CEO Elizabeth Holmes, and its former president Ramesh "Sunny" Balwani with raising more than $700 million from investors through an elaborate, years-long effort in which they allegedly exaggerated or made false statements about the company's technology, business, and financial performance. Holmes settled civil charges brought by the SEC, agreeing to pay a $500,000 penalty and to refrain from serving as a director or officer of a publicly traded company for 10 years. As part of the settlement, Holmes and Theranos did not admit or deny the allegations. By April, it was revealed Theranos had laid off most of its workforce and its cash reserves dropped below the $3 million minimum liquidity threshold required by its lender, the Fortress Investment Group. Then in September, the company former Vice President Joe Biden once called “ the laboratory of the future,” closed up shop. The company distributed its remaining $5 million in cash to creditors, while investors were left in the dark.

Filed Under
500 characters remaining