As another year comes to a close, it’s a great time to reflect in preparation for the new year. 2019 was shaped by key issues, some of which will continue to impact 2020 and beyond. These include:
1. Medical device tax: Unfortunately, the 2.3% Medical Device Tax is back on the radar. After a Congressional suspension for the past 4 years, gridlock in D.C. may allow this job-killing tax to reappear. The tax is on revenue (not profits), which is why it is so painful and cost jobs in the U.S. during its first implementation earlier this decade. We hope sanity in Washington prevails by year-end.
2. Tariffs: It’s possible that this issue will be resolved by press time. However, we’ve thought that a few times during the past two years. The trade war between China and the U.S. has been challenging for medtech companies with international suppliers. The tariff issues also seem to be expanding beyond the U.S. and China. While we prefer a long-term trade agreement to benefit all, we’d be happy with a 2020 cease-fire on new tariffs.
3. EU Medical Device Regulation (MDR): Getting a CE mark in Europe has gone from being an incentive to time-to-market to another Brussels Big Government regulation that makes it difficult to work in Europe. We’re hoping for an extension to the current May 2020 deadline or we believe good products will be eliminated from Europe before the end of next year.
4. Mergers & acquisitions: Without major consolidation news from industry giants, there continues to be huge investments in disruptive innovation. Companies such as Medtronic, Boston Scientific, Stryker, and Johnson & Johnson have shown a willingness to make non-accretive deals to ensure a long-term strategic advantage. Companies that consistently execute on M&A demonstrate a track record of organic and inorganic success, showing this strategy is paying off for the long-term.
5. Innovation: Machine learning, robotics, infection prevention, and remote monitoring will continue advancing in 2020. While artificial intelligence (AI) is today’s buzzword, a recent analysis indicated that 85% of those claiming AI were actually performing machine learning, not true AI, and we expect this trend to continue for the short-term. The upcoming surgical footprint wars in robotics between Medtronic, Verb Surgical (J&J/Google Combo), and Intuitive Surgical will also be interesting to observe.
What are your reflections from 2019? We welcome your inputs anytime as we all continue to prepare for an exciting 2020.