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Bishop tracks eight companies in the medical market sector. This market has shown steady growth over the last four quarters, as measured by these eight companies’ revenues. In 2013, these companies grew 3.0% year-over-year. In 1Q’14, the combined revenues of these companies grew 4.4% year-over-year; in 2Q’14 they grew 6.8% over the prior year; and 6.2% in 3Q’14. In comparison to these companies, the cable assembly market for the worldwide medical market sector grew 0.3% in 2013 and is forecast to grow 5.0% in 2014 (so it is on target).

Bishop follows electronic interconnect sales trends in 13 markets. The combined annual revenue of all the market sectors was $4.24 trillion in 2013 and grew 0.8% over 2012. Of the 13 market sectors, medical was the fourth fastest growing market sector in 2013 at 3.0%, with combined revenues of $75.8 billion. Profitability was $9.4 billion at 12.4% of sales.

Baxter had the most growth of the medical companies at 14.0% year-over-year in the first three quarters of 2014, with sales of $12,412 million. Baxter’s is setting up its two primary business units, biopharmaceuticals and medical products, to be sustainable standalone companies. Growth in 2014 is partially attributed to acquisitions.

CR Bard Inc. had the second largest increase in sales in the first three quarters of 2014 at 8.8% year-over-year to $2,456 million. 3Q’14 revenues were up 9.5% year-over-year. The company credits its revenue growth to the continued focus on and execution of its annual plan to increase revenues and income. Sales were up 13% over the prior year in the U.S.

Medtronic is the largest of the companies covered in this sector. Year-to-date sales are $13.2 billion, up 3.7% over the prior year, with a net income of $2.2 billion or 16.7%. “Our second quarter performance was strong and well-balanced across our businesses and geographies,” said Omar Ishrak, Medtronic chairman and chief executive officer. “Revenue growth was at the upper end of our full-year revenue outlook and within our mid-single digit baseline goal, reflecting the strong execution of our global organization.”

The following table shows the results for the six companies we track in the medical market sector. 

Medical-Market-Sector-Sales-and-Net-Income

As shown in the following chart, year-over-year sales growth has been steady since 3Q’13. Sequentially, third quarter 2014 sales grew 0.4% from the second quarter of 2014. 

Medical-Market-YOY-change

Trends in the Medical Market

  • The health care reform act of 2010 is having a negative impact on the medical equipment market in North America in multiple ways.
    • Medical equipment manufacturers are bearing the cost of a 2.3% excise tax on their equipment, which is driving up their costs.
    • The uncertainties of when and how the act will be implemented has caused healthcare providers to be very cautious about spending money for equipment.
    • The healthcare reforms are driving many private practitioners out of business because they cannot compete with the larger providers; thus, there are fewer offices buying equipment.
  • The recessions and economic difficulties in several European countries has curtailed spending on medical equipment. With socialized medicine in most European countries, the governments under austerity budgets cannot afford to spend money on new equipment.
  • Aging of the population is a worldwide phenomenon. The expanding and aging global population is expected to result in increasing demand for healthcare products and services.
  • The demand for self-monitoring one’s health is growing quickly. Medical devices bought by the consumer to self-monitor health conditions will result in more medical equipment sales.

Bishop & Associates projects the worldwide market for medical cable assemblies to grow 5.0% in 2014 to $4.2 billion. At 9.2% year-over-year growth, China will be the fastest-growing region in 2014 for this market sector. 

Ronald E. Bishop


Ronald E. Bishop

Ronald E. Bishop founded Bishop & Associates Inc., a market research firm that specializes in the world electronic connector industry, in 1985. The firm publishes a monthly newsletter titled “The Bishop Report,” and the twice-monthly digital publication Connector Supplier.

The reports, produced by a staff of 20 researchers, focus on geographic regions, end-user equipment markets, connector products, and interconnect technologies.

The firm also provides executive placement services and conducts multi-client studies and customer surveys, and assists in merger and acquisition activity.

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