The effort to repeal the 2.3 percent medical device tax is winning bipartisan support.
There are reportedly four separate bills in Congress that seek to ensure that the tax, designed to go into effect in 2013, never sees the light of day. The one which seems to have the best chance is Minnesota Republican Congressman’s Protect Medical Innovation Act which has 238 co-sponsors.
But who would benefit the most if it were repealed?
Analyst David Lewis of Morgan Stanley believes the companies that would enjoy the biggest reprieve are those that share these common characteristics – they have higher percentage of overall revenue derived from sales in the U.S. and lower operating margins.
In a note to investors, Lewis said that the company to benefit the most is Abiomed who would see a 13 percent bump to its 2013 expected earnings per share. Boston Scientific and Integra would also see a 10 percent positive effect on their calendar year 2013 EPS.
Across the board, medical device companies should see a 4 percent bump in both top and bottom lines, Lewis said.
But there are companies who, unlike Abiomed, Integra and Boston Scientific, don’t have much skin in the repeal-the-device-tax game. They are those whose revenue comes from overseas, have higher operating margins and those who sell pharmaceuticals or plasma/blood products that are outside the scope of the tax.
Those companies include Grifols, Abbott, Baxter, and Johnson & Johnson.
[Photo Credit: freedigitalphotos user renjith krishnan]
By Arundhati Parmar
Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.More posts by Author
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