Originally Published MX January/February
2003
EDITOR'S PAGE
Swimming into 2003
During 2002, the great debate among economists was whether the U.S. economic recovery might falter, slipping into a so-called double-dip recession.
Led by analysts such as Stephen Roach, chief economist at Morgan Stanley Dean Witter Co. (New York City), the double-dippers cited weak economic conditions—growing unemployment coupled with low rates of manufacturing growth, consumer spending, and corporate profits—as key factors making the economy vulnerable to such a second hit. During the final quarter of 2002, however, most economists brushed such predictions aside, instead projecting that the world’s economies will experience a sluggish but steady recovery during 2003.
For medtech companies, such long-range predictions are often a two-edged sword. On one side, medtech companies benefit from a recovering economy through increased sales that might make them more attractive to investors—if it weren’t for the fact that companies in other sectors of the economy become even more attractive. On the other side, healthcare companies traditionally benefit when investors seek out defensive investments during times of recession—except that there are too many companies chasing too few investment dollars.
Changing economic conditions can affect medtech companies in very different ways. Large medtech companies can generally do well in either economy. But smaller companies have a much harder time surviving when investment funding is scarce.
Since the beginning of the New Year, concerns over the possibility of another dip in the economy have returned—this time driven by flagging consumer confidence and fears of war in the Middle East. No doubt, most business people would prefer to avoid such a possibility.
But if the alternative for 2003 is a recovery without sufficient spirit to support renewed investment in medtech’s entrepreneurial cutting edge, some medtech company leaders might find themselves preferring a second dip into the recessionary pool.
Steve
Halasey
Copyright ©2003 MX
