MCI Q3 2012: Medtech Confidence Remains Low as Economies Recover Slower Than Expected

11/5/2012

Millennium Research Group’s medtech confidence index (MCI) remained negative in Q3 2012* amid continued economic concerns in the US and around the world. At an overall score of-1.9, the score remains much better than the very low scores seen during the 2008 and 2009 recession and the beginning of the eurozone debt crisis, but remains below the higher confidence levels seen in 2010. The MCI is calculated from facilities’ levels of confidence in the national economy, facility financial health, and procedure volume outlook.
 

Despite a number of stimulus efforts, confidence in the American economy has yet to recover, remaining at a score of around -50 in Q3 2012. This has the potential to decline further in Q4 given that several recent articles, such as this one, have suggested that much of the profit gleaned in other years due to factors such as aggressive cost-cutting will not be sustainable going forward. According to the same article, the unexpected slowdown in growth of the Chinese economy may also be having a negative impact on the US economy. Additionally, facilities are indicating generally declining confidence in their financial health, perhaps due to the recent implementation of the Centers for Medicare & Medicaid Services’ (CMS) prepayment audits  across several states, which are anticipated to be rolled out across all states in the future. The procedure volume outlook, while positive, has yet to show any major improvements; many patients are likely continuing to hold off on elective procedures until the economy shows more signs of stability.



The cardiovascular MCI score also showed a decline in Q3 2012, falling to a score of around -10. In addition to the aforementioned problems affecting the US economy, resulting in a decline in the US score, the European economy is continuing to suffer: recent data showed manufacturing contracting at an increasing rate in Germany, Italy, and France. In the UK, fiscal stimulus is not having the positive effect that was initially hoped, with this article speculating that letting some companies go bankrupt might have had a more positive effect by “cleansing” the economy. As a result, the cardiovascular MCI score in Europe dropped further from the previous quarter, decreasing to more than -25 in Q3 2012. Further fueling the decline in scores in both the US and Europe is the fact that the large mature cardiac rhythm management and interventional cardiology device markets have been stagnating and—in the case of the US—declining, which is potentially affecting confidence in this area. By contrast, confidence in the rest of the world remains high, although the score remained largely stagnant between Q2 and Q3. This is likely because the increase in confidence seen previously was mostly attributed to economic expansion in Brazil, which has recently been slower than expected. Nonetheless, the economy in Brazil is still growing, and this score is also bolstered by increasing confidence in regions such as Latin America—particularly Mexico—and the Middle East. As a result, the Rest of World cardiovascular score remained very positive at around 35 in Q3.



Confidence in facial aesthetics has, as expected, continued on an upward trajectory as more people undergo injectable treatments despite economic uncertainty; industry sources have indicated that individuals are looking to maintain a more youthful appearance to remain competitive in the job market. Meanwhile, although much lower, confidence in orthopedics has remained fairly steady at a value slightly above zero, representing one of the most positive outlooks for the orthopedics industry in the last 3 years. After negative publicity in 2009 and 2010, confidence in vertebral compression fracture treatments is rising, perhaps bolstered by the recent approval of reimbursement for in-office vertebral augmentation. In the reconstructive implant market, rising confidence may indicate that the controversy that has historically surrounded failed metal-on-metal implants is easing. Some recalls and uncertainty regarding the success of the integration between DePuy and Synthes may, however, cause this score to decline in Q4.



*Note: In Q3 2012, Millennium Research Group updated its data to include new data streams not previously included in the MCI in order to improve the robustness of this measure. This update has now been applied to all previous quarters as well, resulting in slight changes in scores from those seen in Q2 2012 and previously; however, no major differences were noted. In the interest of continual improvement, Millennium Research Group will continue to add new data streams periodically to ensure we are providing the best medtech confidence metrics available. If you have any questions or ideas for improvement, please forward them to Karen Gierszewski at kgierszewski@mrg.net.




Search Reports

Decision Resources Group brands include: