Medtech Confidence Index Q309: Maintaining Market Momentum

11/30/2009

Growing from a Q209 score of -16.3 to -7.5 in Q309, the Millennium Research Group Medtech Confidence Index (MCI) suggests that medical technology markets are continuing to regain strength despite the ongoing economic recession.

Continuing Optimism

Consistently trending upwards since the study was initiated in Q4 2008, the MCI currently stands at its highest point, and is within striking distance of breaking into positive territory.

Although medical device industry continues to feel recessionary-related burdens—which range from downward pressure on device prices to hospital cost constraints to patients postponing nonessential surgeries—3Q09 MCI data suggests that the coming months may see a slight alleviation of pressure, and perhaps loosening of customer purse strings.

MCI 3Q09
Increases in the overall MCI were driven in particular by improvements in sentiment regarding the national economy. This score rose from a value of -90.3 in 2Q09 to -75.3 in 3Q09. Expectations of changes in procedure volume growth further fueled increases in the MCI. Respondents indicated more positive outlooks for procedure volumes across all three therapeutic areas tracked by the MCI, and thus procedure score increased from -10.8 in 2Q09 to 3.6 in 3Q09.

Nevertheless, differences in sentiment across different therapeutic areas continued to be evident. While the US orthopedic and cardiovascular markets continued to move in near lockstep—being similarly less or non-elective—the facial aesthetic market, which was most adversely affected by the economic downturn, has broken through into positive ground, achieving a score of 16.7 in 3Q09.

Trends in respondent sentiment appeared to transcend geographic boundaries in 3Q09. In the cardiovascular market, the regions of the US, and Europe, as well as Asia Pacific, Latin America, and the Middle East (collectively referred to here as Rest-of-World) showed improvements that for the third consecutive quarter. For the first time since the study was initiated in Q4 2008, the Rest-of-World segment recorded the highest MCI score (-8.2).

Orthopedics

Although the surgeries are not as elective as aesthetics, orthopedic procedures have felt the impact of recessionary cutbacks. Depending on the type of injury or condition, surgery such as hip or knee replacement can be postponed for a time and managed unstead with pharmaceuticals. Indeed, despite the positive movement of the MCI, of the three therapeutic areas tracked, orthopedics remains the only one with a score lower than its 4Q08 values.

Nevertheless, the orthopedics MCI has improved for two consecutive quarters, and 3Q09 has shown the first signs of procedure volumes stabilizing. Trends suggest a case for a positive 4Q09 procedure outlook.

Pricing pressure will persist in the coming months despite this cautiously optimistic market outlook, with many surgeons to use more affordable devices.

Facial Aesthetics

Facial aesthetic devices have shown the greatest improvement in respondent sentiment since the inception of the MCI in Q408. At that time, facial aesthetic sentiment was at its lowest point, reflecting the industry apprehension about declines in discretionary spending.

Indeed, the field was heavily affected by the economic downturn. Nevertheless, dermatologists, plastic surgeons and facility administrators are regaining confidence in this market now that the economy appears to be recovering. Facial injectables thus represent the first therapeutic area to gain a positive MCI score.

Cardiovascular

Sentiment among cardiovascular respondents continued to climb in 3Q09, and with confidence in procedure volumes rising, this field could achieve a neutral or positive score by the end of 2009.

Geographically, respondents in the US continued to show higher levels of confidence than Europeans, however, for the first time, the Rest-of-World now has the highest MCI score. IQ

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