Originally Published MX March/April
2002
BUSINESS NEWS
Device Firms Report Strong Top-Line Growth in 2001Despite the challenges
of a weakening economy and the effects of the September 11 terrorist attacks,
medical device manufacturers appear to have come out of 2001 in good shape.
Financial reports recently issued by large device companies with fiscal years
ending December 31 suggest that top-line growth was generally in line with expectations
during FY01 (see Table I). Moreover, sales remained stable throughout the year,
with no significant downturn during the fourth quarter.
| Company |
1999
(million $) |
2000
(million $) |
2001
(million $) |
FY00FY01
Change (%)
|
| Johnson & Johnson |
9,913
|
10,281
|
11,191
|
8.9
|
| GE Medical Systems |
6,171
|
7,275
|
8,409
|
15.6
|
| Baxter International |
6,380
|
6,896
|
7,663
|
11.0
|
| Abbott Laboratories |
5,259
|
5,431
|
5,707
|
5.1
|
|
Fresenius
Medical Care
|
3,840
|
4,201
|
4,859
|
16.0
|
|
Philips
Medical Systemsa
|
2,517
|
2,861
|
4,304
|
51.0
|
| 3M |
3,138
|
3,135
|
3,419
|
9.1
|
| Boston Scientific |
2,842
|
2,664
|
2,673
|
0.3
|
| Stryker Corp. |
2,104
|
2,289
|
2,602
|
13.7
|
| Eastman Kodak Co. |
2,120
|
2,185
|
2,262
|
3.5
|
| Beckman Coulter |
1,809
|
1,887
|
1,984
|
5.1
|
| Bausch & Lomb |
1,764
|
1,772
|
1,712
|
(3.4)
|
| aCurrency translated from the euro to the U.S. dollar using period-end exchange rate. | ||||
| Table I. Net sales revenues for 1999–2001, and 2001 growth rate, for selected public medical device companies issuing annual reports with a closing date of December 31, 2001. All figures subject to rounding. | ||||
For a number of
the large companies, acquisitions played a key role in increasing revenues during
FY01. GE reported that "sales by businesses acquired during the last two
years accounted for 5% of Medical Systems 2001 revenues." Philips Medical
Systems reported sales increases of more than 50% over FY00, and noted that
"the main part of the increase (75%) is attributable to the new acquisitions
ADAC, Agilent’s Healthcare Solutions Group (HSG), and Marconi’s medical
business." Excluding the effects of its acquisitions, the company noted,
sales increased by 10%.
Overall, Abbott Laboratories reported revenue growth of 18.5% for the year,
and attributed the increase to strong growth in its pharmaceutical and hospital
products segments. However, the company’s two medical device segments (hospital
products and diagnostic products) grew at a more modest rate of 5.1%. The hospital
products segment grew by 10.8% during FY01. But the diagnostic products segment,
which has been conducting restricted operations since entering into a consent
decree with FDA in 1999, increased by only 0.2%.
Also in the IVD sector, Beckman Coulter reported overall sales growth of 10.9%
in constant currency. Adjusted for currency exchange fluctuations, the company’s
growth was 5.1%. Among the factors contributing to Beckman’s performance
in 2001 was growth of more than 30% in the company’s robotic automation
and genetic analysis segments.
Like Beckman Coulter, most firms reported that top-line growth from international
sales was substantially reduced as a result of the strength of the U. S. dollar
relative to local currencies. At Johnson & Johnson, conversion to U. S.
currency reduced worldwide sales gains of 12.1% in local currency by 3.2%, bringing
the company’s increase for FY01 down to 8.9%. Baxter reported an 11% increase
in net sales for 2001, but noted that "excluding fluctuations in currency
exchange rates, net sales increased 15%."
Boston Scientific was also affected by strong-dollar exchange rates. The company
observed that "without the adverse impact of approximately $92 million
of foreign currency fluctuations, net sales totaled $2.76 billion, an increase
of 4%" over FY00. However, when the company accounted for those fluctuations,
sales revenues dropped to $2.67 billion, an increase of only 0.3% over the previous
year.
Companies headquartered overseas fared better in the currency exchange battle.
Philips Medical Systems experienced "positive currency effects" that
added 1% to its FY01 growth.
Bausch & Lomb was the only company among those sampled to report a decline
in revenues for FY01. Soft sales in the company’s contact lens and lens
care segments led to an overall decline of 3.4%. However, company officials
noted that sales of its planned replacement products had posted double-digit
growth in FY01, for the first time offsetting declining sales for the company’s
older product offerings.
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