According to the British "Economist" report, the new crown epidemic has caused an economic downturn, and the medical equipment manufacturing industry bears the brunt. The epidemic is raging, and the medical procurement process that requires sophisticated medical equipment has collapsed, which has dealt a huge blow to sales. At the same time, the epidemic crisis has also created business opportunities for manufacturers of ventilators and testing equipment.
According to the British "Economist" report, the new crown epidemic has caused an economic downturn, and the medical equipment manufacturing industry bears the brunt. The epidemic is raging, and the medical procurement process that requires sophisticated medical equipment has collapsed, which has dealt a huge blow to sales. At the same time, the epidemic crisis has also created business opportunities for manufacturers of ventilators and testing equipment.
To illustrate the changing process of this trend, you can take Medtronic as an example. On August 25, the American giant Medtronic with a market value of $138 billion announced its financial results for the quarter ended July. Judging from the financial report, the performance was terrible: revenue was only 6.5 billion US dollars, down 17% year-on-year, and net profit fell nearly half. The company refused to predict future revenue on the grounds of the epidemic.
However, investors and analysts cheered for it, one of the reasons is that their previous expectations were worse: Medtronic's revenue and earnings easily exceeded expectations. Another reason is that sales of ventilators have increased five-fold, which underpins overall revenue. Medtronic CEO Jeff Martha expects the company to return to "normal growth" in the next few quarters.
Medtronic's recovery may herald a larger-scale recovery of medical device companies. Matt Mikicic of the investment bank Credit Suisse pointed out that these companies were in crisis when they were "driving against the wind." The strong growth of global income has become the driving force behind their recovery. In 2020, consulting firm KPMG predicts that global sales in 2030 will increase from USD 371 billion in 2015 to USD 795 billion. Tim Van Bison of Bain Consulting pointed out that before the outbreak, sales of high-profit equipment used in orthopedics, neurosurgery, and cardiovascular surgery surged. As a result, in the past five years, its stock price has exceeded Big Pharma and the S&P 500 index (see chart).
