In 2013, a number of outside forces hammered the med tech industry. While things could have been better, most of the top 10 companies in the sector still enjoyed moderate year-over-year revenue gains.
Plenty of obstacles limited those positive results, however.
The Affordable Care Act in the U.S. accelerated changes in healthcare industry buying habits, placing increasing pressure on companies to prove their products could help manage or reduce costs as well as boost the standard of care. Companies continued to clamor for repeal of the 2.3% medical device industry tax, which kicked in last year as a way to help pay for the U.S. health reform law. Supporters of the law said that bringing new patients into the system would help many device companies broaden their business and more than compensate for negative impacts created by the tax. Opponents continue to rail against it as a killer of jobs and innovation.
Insurance coverage became increasingly harder to win in 2013, limiting the gains companies enjoyed from bringing new devices and diagnostics to market. Not surprisingly, fewer reimbursement options restrict revenue potential. As well, FDA approval rates plunged in 2013, leaving companies to invest more time and money into the regulatory race to gain approval for innovative or risky new products.
As economic conditions remained tepid in Europe and the U.S., some of the major med tech companies embarked on cost-cutting or streamlining programs in order to boost revenue. While M&A deals have plunged overall, some of the biggest med tech companies pursued acquisitions both large and small in 2013 in an effort to diversify, invest in the future and find ways to spur revenue growth that they were unable to accomplish with their existing product options.
Growth came, in some cases, in spite of those challenges and changes. Covidien ($COV) and Abbott ($ABT) spun off their pharmaceutical arms with a goal of focusing on their remaining device and med tech business lines. Their remaining med tech businesses still saw small year-over-year gains, as executives anticipated and took steps to generate better numbers in the future.
Below, we list the top 10 med tech companies in 2013 in terms of revenue, as compiled by EvaluateMedTech. Before mulling over the numbers, please consider a few things first.
Revenue figures listed for this report reflect 2013 med tech sales only. For some companies, that means total revenue. But for conglomerates such as Siemens ($SI), Johnson & Johnson ($JNJ) and General Electric ($GE), this reflects med tech as scrutinized outside of a wide roster of other divisions within the same company. They are actual, final numbers except for Medtronic ($MDT) and GE. Medtronic's fiscal year ends in April 2014, so the results, as listed, are estimates. General Electric reports sales for its GE Healthcare division, but EvaluateMedTech estimates what the med tech sales are as a proportion of that. GE does not disclose specific numbers for each subsector.
Also, Covidien's fiscal year ended in September 2013, so its results don't reflect the full fiscal-year impact of the July 1 spinoff of its pharmaceuticals operation. (But Covidien has taken at least one major M&A step to blunt the loss of that business.)
Take a look at the 2013 revenue list and tell us what you think. As always, we appreciate your interest. Thanks for reading.
-- Mark Hollmer, Senior Editor, FierceMedicalDevices/FierceDiagnostics (email | Twitter)
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Total Med Tech Revenue |
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1. Johnson & Johnson |
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CEO: Alex Gorsky 2013 sales: $28.5 billion 2012 sales: $27.4 billion |
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2. Siemens |
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CEO: Joe Kaeser 2013 sales: $17.87 billion 2012 sales: $17.7 billion Fiscal year ended Sept. 2013. |
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3. Medtronic |
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CEO: Omar Ishrak 2013 sales: $17 billion 2012 sales: $16.6 billion Estimates; fiscal year ends April 2014. |
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4. Roche |
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CEO: Severin Schwan 2013 sales: $11.3 billion 2012 sales: $10.95 billion |
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5. Covidien |
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CEO: José Almeida 2013 sales: $10.2 billion 2012 sales: $9.85 billion Fiscal year ended Sept. 2013. |
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6. Abbott Laboratories |
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CEO: Miles White 2013 sales: $9.86 billion 2012 sales: $9.6 billion |
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7. General Electric |
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CEO: Jeffrey Immelt 2013 sales: $9.78 billion 2012 sales: $9.83 billion Revenue reported as a whole; med tech sales estimated. |
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8. Philips |
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CEO: Frans van Houten 2013 sales: $9.4 billion 2012 sales: $9.63 billion |
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9. Stryker |
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CEO: Kevin Lobo 2013 sales: $9 billion 2012 sales: $8.66 billion |
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10. Boston Scientific |
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CEO: Michael Mahoney 2013 sales: $7.14 billion 2012 sales: $7.25 billion |
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Source: EvaluateMedTech |
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