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What Investors Should Know about the US Medical Device Industry

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Part 10
What Investors Should Know about the US Medical Device Industry PART 10 OF 20

Why Technology Is a Key Driver in the US Medical Device Industry

Overview

Traditionally, the United States has been home to the most advanced technological inventions in the medical device industry. A few of the leading US-based companies include Johnson & Johnson (JNJ), Medtronic (MDT), Boston Scientific (BSX), and Abbott Laboratories (ABT).

Why Technology Is a Key Driver in the US Medical Device Industry

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Technological advancement

Due to the improvement in medical technology over the years, various segments of patient care, health diagnosis, and treatments have improved drastically. According to the Centers for Disease Control and Prevention (or CDC), the mortality rate from heart attacks fell from 345.2 per 100,000 in 1980 to 186 per 100,000 in 2000.

Technological advancement has been the major value creator for medical device companies in the past. A shift to value-based healthcare has created opportunities in the low-tech device segment as well. Low-tech devices that have primarily been imported in the past have seen a developing domestic market resulting from the onshoring of medical device manufacturers in recent years. Also, technological advancements related to mobile applications and devices providing healthcare beyond hospitals like health monitoring devices for measuring blood pressure and diabetes are emerging segments that have extensive scope and market potential.

Information technology

Big data, cloud, and analytics are key technologies that are changing the technological landscape of the medical device industry. The application and use of such technologies are imperative for medical device manufacturers to be able to provide accurate and timely medical treatments to fulfill the needs of the value-driven healthcare environment. Analytics-driven intelligent medical devices lead to better safety, outcome accuracy, efficient patient monitoring, and reduced recovery times.

One of the latest medical devices encompassing superior technology and innovation is Sapien’s transcatheter aortic valve, an alternative to open heart surgery manufactured by Edward Life Sciences (EW). The SPDR S&P Healthcare Equipment ETF (XHE) is a broadly diversified niche ETF with holdings across major and small device manufacturers. Another major ETF in the segment is the iShares US Medical Devices ETF (IHI).

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