Welcome to MassDevice’s annual audit of the ups, downs and in-betweens of the year that was. For the medical device industry, 2011 was more or less defined by a nagging sense of uncertainty that hung over the world’s med-tech companies like a grey cloud above a summer picnic.
But what did we learn from all the conjecture? In truth, not much. The year ends much as it began, full of questions with no cut and dry answers as we turn the calendar over into the new year.
From sweeping regulatory changes promised, but never delivered, by the FDA, to the industry and regulatory backlash against the impending 2.3% excise tax, the industry didn’t move the chains too far in the past twelve months.
Sure, we worried about the slowing pace of innovation and the growing cost of business, but in the end most of the anxiety produced very few results. That is, unless you were one of the thousands of unfortunate souls who found themselves on the wrong end of a pink slip from all the layoffs the industry faced.
Here’s the close of the top 10 stories of the year for the medical device world. Stay tuned in 2012 for the trends that continue to shape the industry!
Check out MassDevice’s Top 10 Part I and stay tuned for Part III for more on the biggest news of the year.
Get the full picture with a MassDevice subscription
6. JNJ’s Cordis bails on stents
Cordis Corp., one of the medical device arms at Johnson & Johnson (NYSE:JNJ), rattled the market when it announced that it would pull out of the stent market by the end of 2011, a decision that then-CEO Ray Elliott called "an upside for 2012."
As one of the biggest players in the coronary stent business, the news was a boon for rival stent makers Boston Scientific Corp. (NYSE:BSX), Abbott (NYSE:ABT) and Medtronic (NYSE:MDT).
"Due to evolving market dynamics in the drug-eluting stent business, we see greater opportunities to benefit patients and grow our business in other areas of the cardiovascular device market," Cordis group chair and worldwide chairman Seth Fischer said at the time.
Cordis was facing years of market erosion when it decided to pull out of the game, and analysts speculated that Boston Scientific was most likely to benefit from the vacuum left behind, scooping up as much as 2/3 of the stent market.
5. Medtronic weathers the Infuse storm
Medtronic weathered a still-mounting storm of accusations and investigations surrounding its Infuse bone growth device this year, a morphogenetic protein that pulls in between $700 million and $750 million per year, according to analysts’ estimates.
What began with investigations of off-label use turned into concerns that Infuse may lead to excessive bone-growth, heightened cancer risk and male sterility after the Spine Journal devoted its entire June issue to exposing problems with growth proteins, including a repudiation of some of the research surrounding Infuse.
The matter worsened as doctors involved with Infuse’s clinical studies came under the spotlight for million of dollars they collected from the medical device titan. Three of the doctors alone are believed to have reaped more than $20 million. The ensuing clamor spurred federal investigations into allegations that Medtronic’s paid consultants may have concealed Infuse’s risks.
Personal injury lawsuits began to pile up in the fall, after Medtronic recovered from a dip on The Street and a downgrade from Wells Fargo over the summer.
As the U.S. Dept. of Justice and Congress continued their probes, Medtronic gave Yale researchers a $2.5 million grant to independently review Infuse’s safety, with conclusions expected in the first quarter of 2012.
4. Med-tech jobs remain in limbo as the device tax looms
Device industry heads promised layoffs in the face of the impending 2.3% medical device tax, and the first cuts came this year.
Within a year of its passage, the med-tech tax led device makers to shift manufacturing to lower-cost areas. Industry CEOs threw their support behind Senators and Representatives promising to repeal the tax, and industry lobbies warned that the tax would be met with layoffs as companies sought to reduce costs.
Medical device industry lobby AdvaMed said that tax will be "the last straw on the camel’s back" for companies trying to thrive in the struggling American economy, forecasting that more than 43,000 jobs are at risk as companies consider shifting more operations offshore.
At the end of the year, Stryker (NYSE:SYK) became the first device maker to publicly announce layoffs tied to budget-cutting in advance of the device tax, which will go into effect in 2013. The company plans to close one of its New York facilities by the end of 2012, cutting 160 jobs in the process.
Read more.
Check out MassDevice’s Top 10 Part I and stay tuned for Part III for more on the biggest news of the year.
Keep reading MassDevice.com in 2012 to make sure you’re up to date on the headlines that continue to shape the medical device industry.
