
The ever-looming 2.3% medical device tax "will have more impact on businesses than is generally appreciated, St. Jude Medical (NYSE:STJ) CEO Daniel Starks told investors during the company’s earnings call this week.
Starks described a downward spiral of events that will begin Jan. 1, 2013, with giving the federal government a 2.3% cut of every U.S. medical device sale.
"We think that it will reduce the level of investment that medical device companies have available," he said. "We think the reduced level of investment is going to impact jobs and result in reduced jobs."
"We think that the reduced level of investment and the increased outflow of cash to this excise tax will impact company valuations," he added. "And it wouldn’t surprise us to see consolidation of the medical device industry increase during 2013."
Starks further dispelled the arguments put forth by opponents of repealing the tax that the measure, which aims to provide funding for the Affordable Care Act, would represent a "windfall" for device makers in the form of an increased population of insured patients to sell devices to.
"We don’t see a windfall from healthcare reform. Our outlook for market growth is lower as a result of healthcare reform for our particular business," he said.
June VC deals for med-tech top $418M
Venture capital funding for medical device companies topped $418 million in June 2012, compared with $482 million in June 2011. The infusion was spread over nearly 70 deals, more than any other month in the last 2 years.
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GI Dynamics (ASX:GID) continued its global march, expanding availability of its weight-loss and diabetes treatment devices in Germany, launching the 1st Center of Excellence and 1 commercial centers in Chile and touting 1st use in France.
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Spinal devices maker Globus Medical Inc. plans to launch its initial public offering with nearly 11.8 million shares at between $16-$18 apiece.
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