Last year was the year of medtech mergers – made patently obvious by a new report from EP Vantage, which tracks job in the sector.
With that Covidien merger, Medtronic has swelled its employee base to more than 90,000 on the payroll worldwide at the end of the 2014 fiscal year. It didn’t make too many layoffs with the merge, either — the company grew by 88 percent, or by 43,000 employees, from 2013 to 2014. Here’s a chart that outlines the top 15 medtech companies by market cap and employee count:
It’s notable that not one of the 15 medtech giants listed reduced in numbers in fiscal 2014. The pharmaceutical industry, in contrast, continues to contract and pivot in terms of employment — highlighting the discrepancy between the markets.
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“It could be that the economic upturn — at least in the U.S. — is making medtech companies more confident of growing sales and they are hiring accordingly,” the report says.
This is fantastic news for the big players, as the smaller-sized medtech companies continue to struggle with U.S. regulatory hurdles and, purportedly, the excise tax on medical device revenues.
The report does point out that the only company that flatlined in terms of job growth was St. Jude Medical.
“The company has long been contending with shaky sales in its key cardiac rhythm management division, and in 2014 underwent a reorganization that involved combining its manufacturing and supply chain operations,” the report said. “Although St. Jude said at the time that job cuts were not on the cards, things have, at best, merely remained steady.”
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It does expect that the $3.4 billion acquisition of Thoratec announced just last month will grow St. Jude’s numbers by at least 1,000 employees in the coming year, barring any divestments, of course.
Baxter will likely slim in terms of employees in the next year, thanks to the recent spinoff of its pharma division, Baxalta, which will shed 16,000 jobs.
The report also sliced the medtech job figures in terms of headcount increases, so in this case it doesn’t necessarily restrict itself to the biggest players in the space:
Case in point: Exact Sciences, a mid-tier medtech that is showing growth in large part because of its “strong” launch of Cologuard, an at-home, noninvasive test for colon cancer that has been performed some 21,000 times. It’s also raised a $179 million follow-on financing round to further commercialize the test.
“Examined over the five-year period, the company’s success is even more startling; between 2009 and 2014 Exact’s workforce expanded more than 12-fold,” the report said. “This is a marked contrast with its one-time rival Epigenomics, whose blood-based test underwhelmed in late-stage trials and was denied FDA approval. Epigenomics had 86 staff in 2009 but now employs just 37 people.”
The table below outlines the top 10 headcount reductions of the last year:
The report concludes:
“After slow and steady growth in medtech employment in 2013, 2014 was more extreme, with big mergers and divestments leading to greater gains and loss. With industry consolidation, along with the likely continuing popularity of spinouts, the coming year could bring more of the same.”
