Stryker Corporation And Medical Industry Trend 2004 Medical Equipemnt Industry

1038 words - 4 pages

Industry Analysis & Future OutlookIndustryThe U.S. market for medical devices exceeds $55 billion and continues to grow, thanks to an aging population and technological advances that help improve health and lengthen lifespans. The Medical Equipment Industry (to which Stryker Corporation belongs) has an estimated market capitalization (number of shares outstanding multiplied by the stock price) of 129.70 billion. Although there are medical equipment companies all operating globally, the key players are headquarters in the US who primarily target Americans. Market size/share rankings from greatest to least are Stryker Corporation, Smith & Nephew PLC (SNN), and Zimmer Holdings, Inc. (ZMH). Stryker Corporation and its competitors are in the business of making medical supplies, gadgets, and equipment for saving human lives. Medical equipment companies perpetually strive to invent new products and to improve existing products. Often competing companies squabble over patent rights to the necessary technology and scientific information which are the foundation for many of these new medical marvels.The current picture and future outlook for this industry is quite good, according to Yahoo! Finance. U.S manufacturing of these products rose from 2002 of 250 million units to 350 by 2004. Analysts indicate that R&D is an important growth indicator for the medical devices industry. Manufacturers have shown a growing interest in research and development expenditures in recent years for devising innovative medical technologies. In this highly competitive industry, increased spending on R&D is a sign of a company's sustained commitment to achieving long-term success. Medical device companies spent an average of eight percent of their sales on R&D in 2002, an increase of one percent since 2000.Current TrendsAs the lines between traditional healthcare and medical technologies are blurring, combination products have been launched for the diagnosis and treatment of many different conditions. Image-guided surgery uses medical imaging technologies, such as CT and MRI, in conjunction with specialized surgical instrumentation. Drug-coated stints combine a medical device with a pharmaceutical formulation. As one analyst says, "Combination products are expected to drive future market growth and be the key to bringing in revolutionary therapies."Mergers and AcquisitionsAs the industry undergoes change from as safe and profitable market to one in which companies have been forced examine new strategies in order to maintain their position, consolidation has definite become a trend for the medical equipment industry. Large conglomerates are constantly buying and selling at all levels --divisions, brands, etc... There are three primary reasons why there are many mergers and acquisitions in the medical equipment industry. 1) Since the industry is relatively mature, mergers and acquisitions tend to lead to economies of scale, which lowers operating costs and...

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