Medical device companies in US which are focusing on using medical technology to cure some of the ailments will do well in the future and it depends on the demographics, cost-effectiveness and consolidation.
In the developed countries, people here living longer, due to which there is an increase in the need of medical technology such as knee replacements or heart procedures. Whereas in emerging economic countries such as China or Brazil, there is a demand for medical device makers because of the rising middle class people, but they also have an issue of affordability.
Since, medical procedures such as surgeries are expensive and also have complications, the medical device companies have used technology to create products that can improve certain conditions and allow patients to avoid costly pharmaceutical alternatives or perhaps avoid surgeries, which minimize the burden on the body. These companies are continuously investing in development of better and newer treatments. For example, many companies have developed procedures to decrease the blood pressure also known as renal denervation, when medicine is not effective.
There are many matured companies in medical device industry which are growing by investing in R&D along with the acquisitions of younger companies with good technology but a lack of distribution. The new excise tax of 2.3% on domestic sales given by Affordable Care Act that was confirmed by the Supreme Court last summer can effectively make it very difficult for smaller companies to remain independent, but it is potentially positive for a longer run.
There are more than 20 medical device companies in the Russell 1000 index which include St. Jude Medical, Zimmer Holdings, Johnson & Johnson, CareFusion, Becton Dickinson, C.R. Bard, ResMed and many more.
St. Jude Medical (STJ) develops medical technology and services which are used for treating cardiac, neurological and chronic pain patients worldwide. The company’s cardiac implants sales have decreased, mainly because of the quality issues in cardiac devices, due to which the product is no longer in the market. Inspite of these challenges, the company has several products in its pipeline that could help in its growth.
Zimmer Holdings (ZMH) focuses on hip and knee replacements.
Johnson & Johnson (JNJ) is an American multinational medical device, pharmaceutical and consumer packaged goods manufacturer and is more than a Medical Device company. The stock of this company finally broke out of a tight consolidation last year.
CareFusion (CFN) offers clinical and medical products for infusion, surgical procedures, medical diagnostics, medication and supply dispensing, infection prevention, and respiratory care and is a branch from Cardinal Health (CAH).
Becton Dickinson (BDX) is focuses on hospital infections and diabetes, are the two very large and growing areas. The company has slowed down because of research spending and its recent decrease in their sales has affected the growth.
C.R. Bard (BCR) focuses on consumables and less on expensive devices like implants, selling products used to repair hernias or treat cancer patients. The company has been very aggressive repurchasing its stock and their growth in emerging markets has been notable.
ResMed (RMD) is focused on obstructive sleep apnea and sells both the machines and the masks used to treat it. This is a medical condition that is becoming better understood for its role in serious diseases, like heart conditions or diabetes.