A new, in-depth analysis from Morgan Stanley shows the medical technology industry has a long way to go in truly tapping the opportunity that emerging markets represents.
In the 101 page report titled “Emerging Markets: Search for Growth,” Morgan Stanley analysts point out that compared to the pharmaceutical industry, whose sales in emerging markets comprises 3o percent to 35 percent of overall sales, that of medical technology and services sectors account for only 9 percent to 15 percent of overall sales.
But now the tide is changing. As governments both in the U.S. and EU adopt austerity measures and as there is more R&D productivity pressures, Morgan Stanley analysts believe that there is limited growth opportunities in developed markets.
“We believe emerging markets provide the only realistic medium-term opportunity for the medtech and services sectors to offset the growth pressures in developed markets,” the analysts wrote.
The good news is that there is plenty of opportunity for revenue upside in these markets with the report projecting that U.S. medical technology firms will see an increase in their emerging markets sales to 43 percent of overall sales by 2014, up from 36 percent in 2011.
So, which segments within the medical technology sector stand to gain the most from emerging markets opportunity?
They are:
- Cardiac rhythm management
- Dialysis
- In vitro diagnostics
- Injectable generics
Even within emerging markets, defined as the world minus North America, Japan and developed markets in Europe, there are pockets that are more attractive than others.
“We think the BRIC [Brazil, Russia, India, China] countries will be the focus of Western medtech companies’ investment, given their demographic profile and drivers ofhealthcare reform,” the report said. “We expect this to be driven by companies stepping up their allocation ofcapital to the emerging markets, both organically and through acquisitions.”
Which U.S. companies are best positioned to take advantage of the emerging markets opportunity and grow their sales compared to their competition? They are Baxter International, Becton Dickinson, Medtronic and C.R. Bard.
[Photo Credit: Freedigitalphotos.net]
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
Hi Arundhati, where I can find the Morgan Stanley report? thanks
Link to report?
@bgrayburnHave you found the report?
@Elton @bgrayburn
Hi, Sorry I was just informed of your query. Unfortunately, these are analyst reports and only available to institutional investors who pay for it. Once, I posted the whole report and was asked to take it down. So sorry.
@Arundhati Parmar @bgrayburn
Hi bgrayburn, thanks for your prompt response! Could you please inform the title of this report and the author? Thanks you so much!