Healthcare is viewed conventionally as being inelastic to economic downturns, since healthcare needs are independent of economic variables. But with the extent of the current recession reaching into credit availability, those medtech companies with short term financing needs – seed stage or startups, early stage, and developmental stage – have clearly depressed economic immunity. But those entities with established product lines, operating revenues, and deep pockets are finding the economy to be largely irrelevant.
Abbott Vascular, case in point, demonstrated this in 2Q 2009 with:
- A 10.5% increase in worldwide operational sales
- Worldwide Humira (arthritis drug) sales up 32.8%
- Worldwide vascular operational sales up 43.0%, driven by its Xience drug-eluting stent contributing to coronary stent sales increase of 83.5%
To be clear, all medical technology companies have been affected by the recession, but companies like Abbott Vascular have more armor in the form of operating revenue, debt capacity, and, most importantly, innovation that shields them from the recession’s blows.
The coronary stent market, in particular, has proven an area of steady growth for market participants like Abbott Vascular, Boston Scientific and (though declining in shares) J&J/Cordis. Significant size and growth prospects exist for the major segments of this market (The global coronary stent market is the subject of MedMarket Diligence’s Report #C245.)