For years, the medical device industry was billed as source of unfettered growth--new technologies treating an aging population with enough profits to keep everyone happy. But cost pressures, slumping sales and the impending 2.3% excise tax have forced devicemakers into a murky environment, and the industry's titans have responded by slashing spending and, of course, jobs.
All of that came to a head this year, as the markets for once-reliable devices like pacemakers matured, flattened and ceased to stir the imaginations of investors. Then came austerity measures in Europe, eating into margins for companies grappling with lower prices for the same techs.
And then there's the device tax, costing about $30 billion over a decade and billed as a long-term boon to the industry in the form of millions more insured patients. Devicemakers, of course, disagree, saying the charge forces them to trim payrolls, relocate operations and short-change R&D spending. Pundits are split on the issue, with some arguing that the tax provides an ideal scapegoat for companies looking to excuse planned cuts, and others claiming the measure is a raid on a dutiful, job-creating industry.
The truth is probably somewhere in the middle, but that likely provides little comfort to the thousands of employees facing down pink slips as a result of the ongoing layoffs announced this year. For some companies, like Kinetic Concepts, the job cuts are the result of divestures and shuffling priorities. For others, like Welch Allyn, the layoffs are solely to offset the cost of the tax. Either way, the medical device industry has hit a transitional period, and its workforce is feeling the pinch of the resulting uncertainty. Click here to check out the full report >> -- Damian Garde (Twitter | email)