Will 2017 be a good year for MedTech in the US Healthcare Industry? Signs point to yes.
Looking at the uncertain healthcare landscape under the new Trump administration, predicting future healthcare markets seems like an exercise in magic 8-ball prediction. You know the toy that answers any yes or no question with some ambiguous answer like, “Luck is on your side.”
Bloomberg reported that in a conference call, AstraZeneca Plc CEO Pascal Soriot pointing to the daily uncertainty over repeal and replacement of the ACA, financing care, and in rule setting for everything from how hospitals operate to which drugs can be sold said, “You really cannot predict the unpredictable.”
Meanwhile Bloomberg quoted Aetna CEO Mark Bertolini as saying, the lack of certainty makes planning for 2018 difficult.
Consequently, rather than try to offer predictions of where the US healthcare market is heading in 2017, we’ve culled some looks ahead for key pieces of the healthcare industry from a number of industry experts.
Mergers and acquisitions
The New York Times’ report on the medical insurance industry suggests that the current drive to merge with, and acquire competitors is likely to be given a green light under the current administration’s anti-regulatory stance.
Will that end in a single Aetna/Unitedhealthcare/Cigna/Humana/Anthem payer system? Probably not, but it is much more likely the Trump Justice Department will no longer block the Cigna and Anthem’s merger and Aetna and Humana’s merger plans, which will consolidate the already highly concentrated medical insurance industry.
The same is expected for hospital system mergers, as the trend for hospital systems to merge with other systems while acquiring physician practices is expected to continue.
While critics say such consolidation is expected to reduce consumer choice and put further pressure on provider pricing, many Wall Street observers point out that such megamergers are often fraught with difficulties, and that what to watch for is who Attorney General Jeff Sessions appoints to key anti-trust positions.
MD+DI spoke with several healthcare leaders to see what medtech experts think may be ahead for the industry. These excerpts paint a mostly positive picture.
Larry Biegelsen, senior analyst at Wells Fargo, wrote in a post-election research note that Trump's win makes repeal of the medical device tax more likely, which could be a boon for business-friendly corporate tax reform and repatriation of foreign cash. It also could signal a more industry-friendly leadership at FDA and CMS. Overall, he sees the Trump administration as a slight positive for Medtech.
Shaye Mandle, president and CEO of the Medical Alley Association, a Minnesota-based health technology industry organization, told MD+DI the new administration may signal greater change in terms of a more favorable FDA approach to the medical device industry.
Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA) echoed many of the same sentiments, saying the issues important to the medtech community such as suspension of the device tax, reauthorization of MDUFA, and protecting intellectual property rights are likely to get a more favorable hearing under the new administration.
Wall Street sees positives for medical device sector
In a roundup of opinions by Wall Street fund managers, Reuters reported that Eddie Yoon portfolio manager of the $6.1 billion Fidelity Select Heath Care fund remains bullish on the medical device sector, expecting the moratorium on the medical device tax to be extended, and predicted that president Trump is unlikely to want to get bogged down in healthcare, which will result in little disruption to medical device markets.
Connor Browne, a portfolio manager with the $889 million Thornburg Value fund in Santa Fe, New Mexico, said he has been adding to his position in medical device makers in anticipation that little will be done to change the law, meaning that millions of Americans will still have insurance that will help pay for devices.
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