This epidemic crisis has also created business opportunities for manufacturers of ventilators and testing equipment
Time：
2023-02-10
According to the British Economist, the COVID-19 has caused economic depression, and medical equipment manufacturing industry is the first to bear the brunt. The epidemic is raging, and the medical procurement process that requires precision medical equipment has collapsed, causing a huge blow to sales. At the same time, this epidemic crisis has also created business opportunities for manufacturers of ventilators and testing equipment.
To illustrate the changing process of this trend, we can take Medtronic as an example. On August 25th, American giant Medtronic, with a market value of $138 billion, announced its quarterly financial results as of July. From the financial report, the performance was extremely poor: revenue was only $6.5 billion, a year-on-year decrease of 17%, and net profit fell by nearly half. The company refused to predict future revenue on the grounds of the epidemic.
However, investors and analysts cheered for it, partly because their previous expectations were even worse: Medtronic's revenue and profits easily exceeded expectations. Another reason is that the sales of ventilators have increased fivefold, providing a foundation for overall revenue. Medtronic CEO Jeff Martha expects the company to return to "normal growth" in the coming quarters.
The recovery of Medtronic may indicate a larger recovery for medical device companies. Matt Michisic of Credit Suisse, an investment bank, pointed out that these enterprises were in crisis when they were "going against the wind". The strong growth of global income has become the driving force for their recovery. In 2020, consulting firm KPMG predicted that global sales would increase from $371 billion in 2015 to $795 billion in 2030. Tim Van Bison of Bain Consulting pointed out that before the outbreak of the epidemic, the 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 surpassed the Big Pharma and S&P 500 index (see chart).
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