Survey: Medical device makers cautiously optimistic

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A survey of 47 medical device manufacturers, ranging from pre-revenue firms to those with sales topping $100 million, indicates a sense of cautious optimism when it comes to the economy.

The survey, conducted by executive services provider Tatum LLC for the Massachusetts Medical Device Industry Council (MassMEDIC), polled device makers during the fourth quarter on a variety of business indicators. Most — more than 58 percent — said they expected conditions to improve during the last 60 days of the quarter. Nearly 35 percent reported improvement during the 30 days preceding the survey.

MassMEDIC president Tom Sommer said the survey, the group’s second quarterly poll, delivered similar results for the fourth quarter as the third.

"For the second consecutive quarter, medical device manufacturers remain optimistic about prospects for sales and employment growth in the coming year. Despite the passage of a new and burdensome federal excise tax on medical devices, companies are continuing to design innovative medical products and meet the unmet needs of the healthcare delivery system worldwide," Sommer said in prepared remarks.

Other results of the survey included:

  • Sales backlog:
    • 33.3 percent of respondents saw an increase in the last 30 days. More than 23 percent reported declines and 43.6 percent reported flat sales backlogs.
    • Only 10.3 percent of respondents predicted a potential decline in the sales backlog during the last 60 days of the quarter; 48.7 percent expected improvement and 41 percent expected their sales backlog to remain the same.
  • Headcount:
    • Headcounts stayed the same for 51.2 percent of respondents in the 30 days preceding the survey. For 27.9 percent of those polled, headcounts increased; for 20.9 percent, it decreased.
    • Slightly more than 40 percent of respondents said they expected flat headcounts for the final two months of Q4. Half said they planned to make hires and only 9.5 percent expected to cut their workforces.
  • Capital Expenditures:
    • For the majority of respondents (76.2 percent), capital expenditures stayed the same in the month before the survey. Capex rose for just 9.5 percent and decreased for 14.3 percent.
    • A majority (61.9 percent) also expected capital expenditures to stay the same as Q4 wound through its final two months. Thirty-one percent expected an increase and only 7.1 percent expected a decrease.
  • Financing Conditions:
    • Nearly 15 percent of respondents saw improved financing conditions during the first month of the fourth quarter, 70.7 percent saw no change and 14.6 percent confronted worsening financing conditions.
    • In the final 60 days of the quarter, 34.1 percent expected financing conditions to improve, 56.1 percent believed they would stay the same and 9.8 percent thought they would worsen.
    • According to respondents, the major challenges to recovery over the next six months were evenly split between the inability to accurately forecast revenue, a lack of capital investing and sluggish consumer spending.
    • Only 4.9 percent expected a stronger rate of spending within the 30 days after the survey; 12.2 percent expected their rate of spending to increase within the next 90 days. Nearly 20 percent expected spending to pick up three to six months from now, and 36.6 percent believed an uptick will take place this year. Nearly 27 percent abstained from providing time frame for resuming spending.
    • More than 58 percent of respondents said their first step would be to begin hiring. Nearly 21 percent said they planned to release capital expenditure spending, 10.3 percent expected to build inventory and 13.8 percent to increase pricing.
    • Nearly two-thirds of respondents experienced overall growth last year, with a fourth reported flat growth and 3 percent reporting declines. Nearly 7 percent said they were still tallying up the numbers for 2009 at the time of the survey.

    MassMEDIC and Tatum plan to continue to conduct similar surveys on a quarterly basis.

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