The Top 30 Global Medical Device Companies

Still on Target

To say that 2008—particularly the last quarter—was one of the most challenging and destructive business environments in modern history is not hyperbole. It brought venerable and iconic firms such as General Motors to their proverbial knees. While no industry is completely immune to the downturn’s effects, the medical technology sector has done a good job of weathering this perfect financial storm—though many analysts say the bigger test for healthcare remains on the horizon. Companies continue to feel the impact of the struggling economy well into 2009, and the current debate swirling in Washington, D.C.—and indeed nationwide—about healthcare reform dangles a very large question mark over medical technology and how firms possibly could be impacted. During the recent annual meeting for the Massachusetts Medical Device Industry Council, Richard Ramko, a partner with global consulting firm Ernst & Young’s biotech unit, provided info on his group’s “Pulse of the Industry” report. The report highlighted industry performance for 2008. Ramko said results for the end of 2008 and beginning of 2009 were not as positive as in years past, but that long-term demographics for the industry still present a good opportunity for medical device companies. In the short term, however, the numbers are a little bleak. For example, eight out of 10 hospitals have cut their capital expenditures, he said, citing a recent study by the American Hospital Association. Nearly 45 percent of hospitals in the study indicated they expect to post first-quarter losses, according to Ramko. He said high-priced products (i.e., imaging and robotic surgical systems) face a challenging outlook as a result of tougher economic conditions. Cost-sensitive consumers are delaying or spending less on elective and out-of-pocket procedures (i.e., hip replacements, LASIK surgeries, diabetes testing, dental), Ramko explained, while industry sectors such as cardiology and oncology are more immune to market fluctuations. He also said that decreased provider spending is forcing medtech firms to operate more efficiently through cost containment, better management of capital and debt, and rationalizing portfolios. Companies that provide products with incremental clinical improvement, and deliver an immediate return on investment and cost savings to providers are “best positioned to survive and thrive,” he noted. “Cost-reduction pressures are not going to change,” he explained. “But products with better patient outcomes and reduced costs will have no problem being paid for.” On a positive note, he said: “First-quarter revenues appear to be flat or up,” he said. “What we see when we have these tough times is that the bounce back is pretty significant.” Editor’s note: As you read our report, please take note that while the device and diagnostic companies are ranked according to sales reported for FY 2008 (though we do provide some 2009 figures to date where possible), some may include non-device sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies publicly break out just the device portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates. Also note that foreign currency conversions were done based on the conversion rate at the end of the fiscal reporting period being discussed.