05 Jun Midwest retains dominant role in 2005 world medical device market
In a recent article, we looked at the leading pharmaceutical companies in the world and size of the pharmaceutical market, which for the first time surpassed $600 billion in annual revenues. But this is only part of equation, as another significant market is the medical device market.
Although definitive numbers on the size of the total medical device market are not available, it has to have surpassed $200 billion in annual revenue in 2005, as the top 20 medical device companies generated almost $140 billion in sales.
Let’s take a look:
Leading Medical Device Companies – 2005 ($ billions)
| Company/Ticker Symbol | Country of Origin | 2005 Revenue | 2004 Revenue | % Growth |
| 1. Johnson & Johnson (JNJ) | U.S. | $19.1 | $16.9 | +7% |
| 2. GE Healthcare (GE) | U.S. | $15.2 | $13.5 | +13% |
| 3. Medtronic (MDT) | U.S. | $11.0 | $9.9 | +11% |
| 4. Baxter International (BAX) | U.S. | $9.9 | $9.5 | +4% |
| 5. Tyco Healthcare (TYC) | U.S. | $9.5 | $9.3 | +3% |
| 6. Siemens Medical Solutions (SI) | Germany | $9.5 | $8.4 | +12% |
| 7. Cardinal Health (CAH) | U.S. | $8.5 | $7.4 | +15% |
| 8. Philips Medical Systems(PHG) | Netherlands | $7.6 | $7.0 | +8% |
| 9. Boston Scientific (BSX) | U.S. | $6.3 | $5.6 | +12% |
| 10.Abbott Labs (ABT) | U.S. | $5.9 | $5.2 | +14% |
| 11.Becton Dickinson (BDX) | U.S. | $5.5 | $5.0 | +10% |
| 12.Stryker (SYK) | U.S. | $4.9 | $4.3 | +14% |
| 13.3M Healthcare (MMM) | U.S. | $4.4 | $4.2 | +3% |
| 14.Guidant (GDT) | U.S. | $3.6 | $3.8 | <6%> |
| 15.Zimmer (ZMH) | U.S. | $3.3 | $3.0 | +10% |
| 16.St. Jude Medical (STJ) | U.S. | $2.9 | $2.3 | +27% |
| 17.Kodak Health Group (EK) | U.S. | $2.7 | $2.7 | <1%> |
| 18.Smith & Nephew (SNN) | U.K. | $2.4 | $2.2 | +13% |
| 19.Beckman Coulter (BEC) | U.S. | $2.4 | $2.4 | +1% |
| 20.Alcon (ACL) | Switzerland | $2.0 | $1.8 | +11% |
| TOTAL TOP 20 | $136.6 | $124.4 | +10% |
Source: MX: Business Strategies for Medical Technology Executives, May/June 2006
Some observations are in order:
• The sales reported above were only those sales for medical devices products for these companies and do not reflect total company sales nor other non-device divisions
• The U.S. companies clearly dominate this business with 16 of the top 20 firms!
• This group of companies grew a very solid 10%; in fact only two companies had negative growth, and 12 companies had double-digit growth!
• The Midwest clearly dominates in medical devices: ten of the companies (50%) have their HQ located in the Midwest; even the German Siemens has significant operations in the Midwest as does Tyco.
At least one of the companies will disappear in 2006 due to M&A activity: Guidant! Guidant was acquired by a combination of Boston Scientific and Abbott Labs (which teamed up to outplay Johnson & Johnson for this acquisition). Guidant will now be divvied up by these two companies. Furthermore, so as to finance the $20+ billion purchase price, Boston Scientific sold Abbott an equity position, opening the door for a potential acquisition of Boston Scientific in the future.
Abbott clearly has staked out a growing role in the medical devices field and has been rapidly acquiring companies. While most of the acquisitions have been under $1 billion in size, Abbott’s aggressive role in the Guidant acquisition surprised many people and represents the second largest acquisition for Abbott (after acquiring Knoll from BASF).
Abbott has fortified its cardiovascular stent, orthopedic device (particularly spinal), and diagnostic businesses. All of this while setting free its low margin hospital products business, now called Hospira, which has prospered since gaining its independence from Abbott.
The above list doesn’t reflect a whole group of smaller medical device companies headquartered in the Midwest which are also flourishing.
Chicago Blues Festival 2006
The 23rd Edition of the Chicago Blues Festival (www.cityofchicago.org/specialevents) is happening this next week (Thursday): June 8th-11th. The first one, which began in 1984, celebrated the famous blues performer Muddy Waters, who had died the prior year.
Over the years many famous blues and rock artists have graced the Chicago stage including Chuck Berry, Keith Richards of the Rolling Stones, John Lee Hooker, Willie Dixon, Sunnyland Slim, Bonnie Raitt, and many others. The Gulf Coast will be honored this year as a key site contributing to the blues.
The 2006 version features, among others:
• Siegel-Schwall Blues Band (including harmonica player Corky Siegel)
• The Elvin Bishop Group (of Paul Butterfield Blues Band fame)
• Bobby Blue Bland
• Larry McCray
• John Primer
For those of you who have never been to a Chicago Blues Festival, a couple of remarkable aspects of the festival are:
• The multiple stages and acts going on at once, from the intimate small outside venues such as the Mississippi Juke Joint, the U.S. Cellular Front Porch , the Louisiana Bayou Station and Social Club, the Gibson Guitar Crossroads, to the large Petrillo Music Shell
• The participation of authentic blues performers from the Deep South that truly preserve the origins of the blues
This year there will be a number of blues musicians that have never played the festival before including:
• Dorothy Moore
• Big George Brock
• Catherine Russell
• Thornetta Davis
• Walter Wolfman Washington
• Eddie Bo
• Daddy Mack
So if you want to hear some authentic blues, check out the festival this world famous festival this week!
See you soon!
The opinions expressed herein or statements made in the above column are solely those of the author and do not necessarily reflect the views of The Wisconsin Technology Network, LLC. (WTN). WTN, LLC, accepts no legal liability or responsibility for any claims made or opinions expressed herein.