Must-know: Why medical device companies are seeing promising data

Market Realist

Medical device industry risks and opportunities (Part 2 of 2)

(Continued from Part 1)

Study shows medical devices are the bright spot in healthcare costs

A study published by Advamed shows that medical devices aren’t part of the growing healthcare cost problem. Invalidating previous reports, the study shows that prices for medical devices increased at a rate one-quarter that of other medical goods and services in 2012. The group also claims that device-intensive procedures’ cost variations, year-over-year, were among the lowest.

A study published in September, which tracked the prices of device implants, showed prices falling anywhere from 17% to 34% from 2007 to 2011 (depending on the device).

Biomet CEO Jeff Binder said that the data shows that medical devices aren’t part of the problem—but part of the solution. The CEO insists that devices have helped keep healthcare costs down. He cites data that shows that improvements in medical devices have driven the cost of procedures down. The data also shows that improvements in devices have driven the total cost of care down as well as that devices are more efficient, need less maintenance, and implement wireless monitoring.

The study is great news for the medical device industry, making innovation investment more appealing and enhancing the value proposition of a lot of these devices.

Medical device chatter

Volume in Internet chatter for medical technology was plentiful this month, according to Google Analytics. Internet chatter was highest for Medtronic (MDT) following significant FDA announcements and strategic shifts. Boston Scientific (BSX) was second in popularity online, as it announced massive layoffs, a research and development center in Shanghai, a CFO retiring in the middle of layoffs, and significant risky pending litigation. Johnson & Johnson (JNJ) was third, following its closely watched private equity battle over its orthopedic diagnostics arm and strong earnings.

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