As AdvaMed 2012 kicks off today in Boston, an industry in transition looks ahead to a cloudy future while states angle to woo companies eyeing expansion.
Massachusetts, a hub for medical device innovators, is looking to ink deals with companies looking to expand, The Boston Globe reports, and the state is sponsoring a 1,200-square-foot pavilion to showcase all its market has to offer. But Massachusetts will hardly be alone: Industry trade shows are hotbeds for economic development groups from around the world, vying to entice expansion-minded companies, as June's BIO 2012 demonstrated.
At AdvaMed, however, the environment might be a bit different than in years past. The medical device industry, once considered a source of unfettered growth, is at something of a crossroads, as the markets for old standbys like pacemakers and implantable defibrillators have largely flattened and the whole industry is grappling with how to deal with the impending 2.3% excise tax on U.S. sales.
Big-time firms like Boston Scientific ($BSX) and St. Jude Medical ($STJ) are slashing their payrolls to cope with market pressures, and small to mid-size outfits are facing a constricted venture climate. In the last quarter, VC funding for medical device firms shrunk 17%, part of a 39% year-over-year drop in life sciences investments, according to PricewaterhouseCoopers.
But there are silver linings to be found, as ever. Emerging markets like China and India present the promise of big profits, and companies like Medtronic ($MDT) and Johnson & Johnson ($JNJ) have hardly been shy about acquiring overseas firms and setting up R&D shops to develop products catered to those customer bases. And while some of the old reliable cash cows are on their way out to pasture, new devices like renal denervation catheters and neurostimulation technologies have an opportunity to pay big.
So, if you're headed to AdvaMed this week, keep an eye out for companies finding innovative ways to navigate a tricky market, and be sure to stop by booth No. 323, where FierceMedicalDevices will set up shop for meetings, greetings and, of course, announcing the inaugural Fierce 15.
- here's The Boston Globe's AdvaMed preview