Not So Lonely at the Top
For the past five years, the editors of Medical Product Outsourcing have taken an in-depth look at the movers and shakers making headlines and history in the medical device industry.
Each company featured on our list of the top 30—as in years past—is here by virtue of its sales prowess. No company on this roster of medtech powerhouses had less than $1.5 billion in revenue for fiscal year 2006. That said, there’s more to being a top company than strictly generating revenues. Success, particularly in the multifaceted and demanding world of medical technology, usually isn’t an accident. Organizations competing at this level are driven to reinvent the wheel for each new fiscal year, as stockholders demand consistently improved performance. Even privately held companies must answer to investors at some level.
As of late, medtech firms may be sharing some of the pharmaceutical industry’s critical spotlight (current questions about ethical issues in the orthopedic industry provide a prime example), but the device industry is still in a growth mode and continues to be attractive to investors. Double-digit revenue growth is not unheard of; in fact, it’s rather commonplace. Most of the companies are US based, and right now many American industries would be covetous of that kind of year-over-year expansion. Even with payment and reimbursement challenges, current market projections and healthcare demographics would seem to bode well for the device industry’s continued success.
There are some themes worth noting. As we’ve reported for the last five years, new product development is the name of the game. Medical device firms not only look to expand markets and add capabilities to currently approved devices, but there remains continued emphasis on finding the next blockbuster therapies as the true means by which to drive (and sustain) bottom line growth, both through R&D as well as mergers and acquisitions. Venture capital is booming (see Top of the News on page 12), and established companies are ready to gobble up the next well-funded start-up or small-cap firm with the right technology. Private equity investors also have recognized the benefits of the device industry, and their involvement is being felt in a big way. Though this year’s list hasn’t been overly affected—the list is compiled based on annual revenue from fiscal year 2006—our issue for 2008 will be marked by noticeable change. Kodak’s Health Group has gone private and Biomet is close to accepting a deal. It’s likely we’ll see more before 2007 comes to a close.
As you read our report, please take note that while the device and in vitro diagnostic companies profiled are ranked according to estimated sales they reported for FY 2006 (though we do provide some 2007 figures to date, where possible), some may include non-medical sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies publicly break out just the device or IVD portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates.
Please also note that—as was the case last year—Bausch & Lomb certainly belongs on this list, but as of press time still had some significant gaps in its financial filings. The company may not have those headaches for too much longer, as it too has seen the private equity light. The company recently announced an agreement with firm Warburg Pincus to be acquired for $65 per share in a deal worth $4.5 billion.
The MPO Staff
Top Medical Device Manufacturers
|1.||Johnson and Johnson||$20.3B|
|5.||Siemens Medical Solutions||$10.1B|
|8.||Philips Medical Systems||$8.5B|
|10.||Becton, Dickinson & Co.||$5.8B|
|16.||St. Jude Medical||$3.3B|
|17.||Smith & Nephew||$2.8B|
|20.||Kodak Health Group||$2.5B|
|22.||Olympus Medical Systems||$2.4B|
|26.||C. R. Bard||$2B|