Because of the destabilization of the economy, a variety of industries look like they may be headed toward tough times. But for the medical device industry, at least, the prognosis is good.
Wall Street woes, bank bailouts, and the downturn of the housing market have incited panic and speculation about what the future holds. Comparisons to the crash of 1987 and even the Great Depression are keeping everyone on edge and concerned about what’s to come. And as the stock market—and expectations—continues to plummet, recession seems to be the word on every economic analyst’s lips.
As a recession looms on the horizon, experts are scrambling to weigh in as to which industries will fare the best in a slumping economy. Studies indicate that the medical device industry is one of the few sectors likely to emerge from these troubled times relatively unscathed. But can we venture so far as to deem the medical device industry recessionproof?
It’s unlikely that any industry is completely immune to what experts are labeling an economic crisis, and the medical device industry is no exception. A recent publication by the Millennium Research Group of Waltham, MA, claims that the industry is indeed vulnerable to recession and is not completely in the clear. It suggests that the brunt of the economic backlash will fall on elective procedures, as people opt out of nonessential dental and aesthetic surgeries, for example. On the upside, however, the industry has proven resilient in the past and most device sectors will likely remain relatively strong, the group says.
While perhaps not quite recessionproof, the industry does boast several inherent strengths that work in its favor. There are exceptions of course (especially in the young and uninsured), but when people are cutting costs, their health is often not an area in which they are willing to make sacrifices. Plus, it’s also an area over which people have little control. The reality is that people are bound to get sick, whether during times of recession or prosperity. And, of course, it would be remiss not to mention the impact that the multitudes of active, long-living baby boomers will have on the industry.
With these constants in mind, device makers seem to be fairly optimistic about the future. A recent survey by the Emergo Group Inc., a Texas-based consulting firm, revealed that 61% of respondents expect their overall sales to increase next year, and 84% anticipate that their company will employ the same number of or more employees one year from now. Moreover, only 17% responded that they were ‘somewhat negative’ or ‘negative’ in their personal outlook on the medical device industry in 2009.
If Medtronic and Becton, Dickinson & Co. posting profits in their first quarter this year is any indication, the medical device industry will likely endure in a struggling economy in 2009. However, as we potentially slide into a deep recession, only time will tell just how resilient the industry really is.