Medtech’s Top 20 Report Slower Growth in 2006

An analysis of 2006 financial performance among the 20 largest publicly traded medical device manufacturers reveals that growth at many companies slowed compared with prior-year rates. Unlike 2005, when more than half of the top-20 medtech companies reported double-digit revenue gains, the latest analysis of annual financial performance reveals that only six firms achieved that kind of growth in 2006. And for two of those companies--Abbott (Abbott Park, IL) and Boston Scientific Corp. (Natick, MA), which both posted year-to-year revenue increases of 24%--the gains were attributed primarily to the acquisition of Guidant by Boston Scientific and Guidant's vascular business by Abbott, rather than to organic growth.

Among medtech's top 20 companies, 19 firms posted sales gains in 2006. Kodak Health Group, a business unit of Eastman Kodak Co. (Rochester, NY), was the only firm on the list to report a decline in year-over-year revenues. The troubled unit has posted declining revenues for several years. The company's 6% decrease in 2006 was attributed primarily to flagging sales of its medical imaging equipment. In January, Kodak announced the sale of the business unit to Onex Healthcare Holdings Inc., a subsidiary of Onex Corp. (Toronto), for $2.55 billion.

Medtech's orthopedics sector has been a top performer for several years running. Not surprisingly, that string continued in 2006. Orthopedics firms Smith & Nephew plc (London), Stryker Corp. (Kalamazoo, MI), and top 20 newcomer, Synthes Inc. (Solothurn, Switzerland), all posted impressive performance with sales gains of 13.6%, 11%, and 15.1% respectively.

As a group, the top 20 companies generated 2006 revenues of $141.1 billion, an increase of 8.6% over last year's total of $129.9 billion. Representing the financial performance of the world's leading publicly traded medtech firms--with thousands of firms not accounted for--these results suggest that the often-cited figure of a $220 billion global medical device market should be adjusted upward significantly. By themselves, the 15 U.S. firms on the top 20 list produced 2006 revenues of $114 billion.

Compiled by MX from recent company financial reports, this yearly review is exclusively limited to companies' medical product sales--excluding healthcare services and product sales in other categories (see Table). For example, Cardinal Health Inc. (Dublin, OH), a leading player in the delivery of clinical technology services and the healthcare supply chain, posted 2006 calendar year revenues of $85.5 billion. But the company estimates that only $4.1 billion, or 4.8% of the total, is directly attributed to sales of its own manufactured products.

St. Jude Medical Inc. (St. Paul, MN), which reported the greatest rate of revenue growth in the 2005 analysis, was also a top performer in 2006, with a 13.3% increase. Johnson & Johnson Inc. (New Brunswick, NJ), General Electric Co. (Fairfield, CT), and Medtronic Inc. (Minneapolis) held on to the top three positions again this year.

© 2007 Canon Communications LLC

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