The implantable device segment has consistently been a top performer for medtech companies, but that star may be falling, according to a PricewaterhouseCoopers report.
Implantables, among the most highly regulated and profitable medical devices, have seen slower revenue growth in recent years, even prior to the recession, PwC reported.
"The implantable devices segment was the clear leader in 2005 but has been declining gradually since then and has lost its edge over other industry segments," according the report. "The IVD segment, on the other hand, has steadily improved to become the leading segment."
Implantables are still a top-3 divisoin, alongside in vitro diagnostics and diversified lifesciences, trailed by medical equipment and consumables. In terms of profit margins, however, implants in 2011 dipped below IVD for the 1st time since 2005.
"The implantable devices segment has been the most consistent top operating performer relative to other segments, driven by significantly higher gross margins," according to PwC. "This advantage is declining, however, likely due to the maturation of the cardiology and orthopedic implant markets (both of which have been characterized by low growth and reimbursement challenges) and changes in purchasing dynamics and buyer behavior."
More than 40% of the companies in the implantable devices segment saw operating performance decline between 2005 and 2077 and only 1 in 4 saw improvement. Nearly ⅓ of of the IVD companies in PwC’s report increased operating performance during that time, and the rest remained "steady."
"Although [the implantables] segment continues to enjoy the highest profitability, its invested capital productivity has been declining steadily," according to PwC’s "Operating performance in the Medtech industry: Trends and imperatives" report.