Across the medical device industry, R&D spending in 2011 increased despite a lethargic economy, job cuts and reorganization mandates by a number of big-name companies.
On average, the level of R&D expenditure for the Big 100 medical device companies was just over $540 million, which represented about 13.2% of the revenues for these firms. Diversified heavyweights including Johnson & Johnson (NYSE:JNJ), Siemens (NYSE:SI), GE (NYSE:GE) and Abbott (NYSE:ABT) outpaced the competition, with R&D expenditures ranging from $4 billion to $7.5 billion:
A number of companies increased their R&D expenditure while simultaneously cutting jobs. For example, Medtronic and Stryker spent $50 million and $68 million more, respectively, on R&D in 2011 than in 2010 – and both companies cut between 1,000 and 2,000 jobs last year.
The R&D spend went towards a range of initiatives, from updating existing technology to expanding the use of current products. St. Jude Medical (NYSE:STJ), which grew its R&D budget from about $631 million in 2010 to about $705 million in 2011, focused on developing new products for their primary CRM business unit. Likewise, Baxter (NYSE:BAX) increased its R&D investment by more than $30 million in areas including kidney disease, hemophilia immune disorders and trauma. In July 2011, Baxter established Baxter Ventures, a strategic initiative to invest up to $200 million in early-stage companies.
Abbott is notable for its plan to split into 2 publicly traded companies (a medical products company that will retain the Abbott name and AbbVie, a branded pharmaceuticals firm). While much of Abbott’s $4.1 billion in R&D spend last year was directed toward its proprietary pharma products, the company is also developing vascular, optical and diagnostic products. Other areas where medical device companies spent their money included emerging markets. Covidien (NYSE:COV), for example, increased R&D expenditures by $107 million from 2010 to 2011, announcing plans to build a new R&D center in Shanghai geared to creating new medical device technologies and surgical tools for the Chinese and other emerging markets.
Although most companies were able to boost their R&D spends last year, some – most notably Boston Scientific (NYSE:BSX) – decreased spending. In 2011, BSX allocated $895 million to R&D activities, a 5% decline from its 2010 expenditure of nearly $939 million.
DeviceTalks Minnesota's leadership track is designed to provide attendees with insights on topics such as:
Use code SAVE15 to save 15%!