selected). To ensure full visibility, we chose only firms that publish annual financial reports of financial results that are publicly available. Of the 25 firms selected, 20 are based in the United States, while four have headquarters in northern Europe (Germany, Netherlands, Sweden), and one is based in Japan (Terumo).

Firms for which sufficient, detailed data on revenues and expense was not available were deselected, usually because medical devices and technology comprised a smaller part of a much larger firm. Thus we have not included GE, Siemens, Philips, Johnson & Johnson, and Toshiba because, while they break out top line revenue for their medical lines, they do not break out in sufficient detail the expenses and revenues associated with the segment to allow comparison and compilation with other firms more solely dedicated to the medical device sector.

One exception to the rule of dedication to medical devices was made to include Danaher Corp., because it is a growing player in the medical device business based on a steady stream of strategic acquisitions and organic growth, and its reporting allowed us to sufficiently sort out the medical device sector and the associated expenses and investments from its unrelated involvements as a provider of Craftsman Tools to Sears and gasoline pumps to retail gas stations. And with the plans announced in February 2011 to acquire Beckman Coulter, the company will substantially increase its presence in medical device and technology business.

To be selected, the firms had to publish financial reports that prepared and presented in adherence with accepted and respected financial accounting standards, such as the U.S. Generally Accepted Accounting Principles (GAAP), international standards, International Financial Reporting Standards (IFRS), or the Japanese GAAP. Reports had to include a full scale management discussion and analysis of results, fully detailed financial statements including an income statement, balance sheet, statement of cash flows from operations, supported by accompanying and detailed footnotes, and with breakouts of results by major product line (if applicable) and by geographic region. We relied upon either U.S.-style reporting in 10-K reports filled with the SEC, or with European format reports issued under the IFRS standards. To add a sample on the leading edge of growth, we included one smaller new firm, Tornier, based in the Netherlands but issued U.S.-format reporting in a prospectus that that supported a public issuance of stock to U.S. markets in February 2011.

Our analysis consisted of summaries of revenues, profits, and earnings per share from the Top 25 firms medical devices business, as well as in depth examinations of the expenditures for sales and marketing (S&M), or their total expense for selling, general and administrative expense (SG&A) if S&M were not broken out separately. We also examined the level and growth of their organic investments in research and development; R&D investments in acquired firms, which can be booked as investment and or treated as expense, were treated as current period expenses. We have focused on the years that span the Great Recession, 2006 to 2010, with updates added for fiscal year (FY) 2010 results as they have become available. Companies with FYs ending through April are grouped back with results for FYs ending the prior December, while FYs ending from May onward are grouped forward to the December ending that year.

Yair Holtzman is director and global life sciences leader at WTP Advisors (White Plains, NY). Tom Figgatt, Sr., is an associate at the firm.