Medical Equipment Outlook The New Year

Exercise, travel, volunteer, work, compete, play and self-improvement are words describing the new face of retirement both for baby boomers in the U.S. and seniors overseas. The words also represent quality of life factors that may continue to place a higher demand on medical equipment makers in 2009. Here we'll review medical equipment makers likely to benefit from the active lifestyle of a generation going through their second phase of life.

Keeping Pace
Medtronic (NYSE:MDT) is one of the leading manufactures of devices used to treat cardiac rhythm disorder, cardiovascular disease, neurological disorders and spinal conditions. Its forward thinking implantable defibrillators and cardiac resynchronization therapy devices, capable of using wireless telemetry to transmit data concerning the condition of the heart, has helped Medtronic's net sales increase on a compounded annual growth basis of more than 12%, from $7.7 billion in fiscal 2003 to $13.5 billion in fiscal 2008 ending in June. Pending settlements for the life saving medical devices maker related to a bevy of lawsuits ranging from patent infringement to product liability could affect its bottom line and should be followed into the New Year. Combined with stiff competition from Johnson & Johnson (NYSE:JNJ) and Abbott Laboratories (NYSE:ABT) the Minneapolis, Minnesota based Medtronic will have to maintain its focus on growth through acquisitions and avoiding lawsuits to prosper in 2009. (To learn more about lawsuits, and how they can affect your investments, read Litigation: Are Your Investments At Risk?)

Zimmer (NYSE:ZMH) is a leading $3.9 billion provider of orthopaedic implants for knee and hip replacements along with other trauma related surgical products. Retirees trading in desk jobs and car pools for tennis or golf are increasingly pushing their bodies to the point of needing orthopaedic implants. Zimmer is counting on an aging global population, obesity and the active lifestyles being adapted by up and coming seniors to increase demand for orthopaedic implants at mid single digit rates. Zimmer's enhanced program oversight procedures arising from the companies $169.5 million settlement paid out in 2007 is working its way into the background as demand for its devices moves to the front.

Stryker (NYSE:SYK) is a $6 billion competitor of Zimmer. A differentiating factor is Stryker's strength in MedSurg (medical surgical) equipment including surgical navigation systems and other micro powered tools used in orthopaedics, neurosurgery, spinal surgery and plastic surgery. For the first nine months of 2008 MedSurg equipment accounted for nearly approximately 41% of Stryker's total net sales. The two pronged game plan to capture revenues from orthopaedic devices and surgical equipment is likely to have a positive showing into 2009.

Final Thoughts
The goal of living longer, better, and more productive lives can be achieved with the help of medical equipment makers. The ultimate guarantee of healthy living is determined by the dietary and workout habits of each individual, but for those whose bodies give out before, their will be medical device providers to support them.