Linear Accelerator Sales to International Markets Provide Growth for the Top Medical Device Stock Picks from J.P. Morgan's Health Care Group

Wall Street Transcript

67 WALL STREET, New York - March 14, 2014 - The Wall Street Transcript has just published its Medical Devices Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Orthopedics and Cardiovascular Medical Devices - Medical Device Innovation and Consolidation Trends - Affordable Care Act - Aging U.S. Population - End Market Improvement - Biotech, Pharma and Medical Device Convergence - Changing Competitive Dynamics

Companies include: Varian Medical Systems Inc. (VAR), Intuitive Surgical, Inc. (ISRG), Quest Diagnostics Inc. (DGX), Genomic Health Inc. (GHDX), Illumina Inc. (ILMN), Thermo Fisher Scientific, Inc. (TMO), FEI Co. (FEIC), Agilent Technologies Inc. (A), Hologic Inc. (HOLX), Varian Medical Systems Inc. (VAR), Stryker Corp. (SYK), Accuray Incorporated (ARAY), Sirona Dental Systems Inc. (SIRO)

In the following excerpt from the Medical Devices Report, an expert analyst from J.P. Morgan discusses the outlook for the sector for investors:

TWST: What are you seeing from an innovation perspective? What's really drawing your attention?

Mr. Peterson: The greatest innovation is happening in the diagnostics and life science tools space. The costs of sequencing have come down rapidly, which has driven a renewed focus on incorporating genetic analysis into treatments. We have seen it with companies like Foundation Medicine (FMI) and Genomic Health (GHDX), which are using biomarkers to figure out the right chemo drugs for patients.

Going forward I think you are increasingly going to see overlap between the medical device world and genetics world as well. There are companies using genetic markers to figure out what patients will respond to radiation therapy, for example, and at some point there will be an emergence of biologically guided medical device treatments; in other words, adjusting treatments based on the genetic profile of the patient and of the tumor. That is going to be the next wave in med tech, the incorporation of genetics and biology into treatments, similar to what we have seen with the use of biomarkers for guiding chemotherapy.

TWST: We've heard about emerging markets for several years now. It sounds like you're seeing some real efforts out there.

Mr. Peterson: Yes, we are seeing it in Asia, but also Latin and South America. It is a big focus for companies that need to search for growth, such as the radiation therapy companies Varian (VAR) and Elekta (EKTA-B.ST). The U.S. has largely been a replacement market for them, so they have been searching farther afield for linear accelerator placements.

The good thing is there are about 10,000 linacs needed worldwide to bringing emerging markets up to a reasonable standard - not the standard of the Western world, but an acceptable standard - is a big opportunity. We also hear about emerging market initiatives from the diagnostic companies, such as the emphasis on China for blood screening and neonatal testing.

TWST: Where are you pointing investors now? What are some of your favorite stories?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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