Category Archives: Industry Trends

“Milder Than Expected” Device Tax Costs 33,000 Med Device Jobs, Impacts 132,000 Others

Advamed_for-web

MassDevice.com was a little schizophrenic in reporting the effects of the medical device tax, as outlined in a striking new Advamed report. According to their first post (2/12) the Device Tax’s impact was “milder than expected”…but their later post (2/18) states that 33,000 jobs have been lost in the industry already. So, what gives?

Well, it turns out that 53% of senior-level respondents had predicted “somewhat negative” or “very negative” effects when, after the fact, 45% actually experienced these negative effects. I guess that’s somewhat milder, but not by much.

At first blush, you might be tempted to say “this is an industry-sponsored report and exaggerated” but the scope of the survey suggests otherwise – responses came from 38 companies, accounting for 40% of domestic medical device revenue…45% had revenue below $100 million, the rest were above.

Other notable negative consequences reported by AdvaMed include:

  • 30.6% said they had reduced R&D
  • 10% said they were relocating manufacturing overseas
  • 58% were considering layoffs if tax is not repealed
  • 50% were considering reducing R&D if tax is not repealed

Not a pretty picture.

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Device Growth to Outpace Pharma Through 2018…But Then What?

medical funding

A recent EvaluateMedTech report from Evaluate Group predicts that medtech (4.5% CAGR) will outperform pharma (3.8% CAGR) between now and 2018 – that’s the good news.

The bad news is that VC investment in the medical device industry dropped 17% in 2013 versus 2012….in 2012, VC investment dropped by 13%. A good analysis is available at FierceMedicalDevices.

What does this mean for industry? Considering the time and financial resources required to develop, conduct clinical trials, and commercialize devices, it means that we will be facing a significant fall-off in device innovation in the coming years…which is not great news for long-term industry growth.

The game has changed for devices in recent years – products must now demonstrate value as well as improve the standard of care…new hurdles that introduce investment risks that early-stage VCs seem to be avoiding. Unless new funding sources can be developed (crowdfunding?) the medical device industry, long considered an innovation leader, may become a laggard.