The Medtech Big 100: The world’s largest medical device companies
The medtech industry is bouncing back from the economic fallout caused by the COVID-19 pandemic, according to an analysis of our Medtech Big 100 data.
The medical device industry has seemingly recovered from the economic headwinds caused by the COVID-19 pandemic, according to a Medical Design & Outsourcing analysis of financial data from the Medtech Big 100, 100 of the largest medical device companies’ most recent annual results.
More than half of the companies listed in this year’s Big 100 ranking reported positive growth over their prior-year sales. Total revenue, research spending and employment figures were up significantly as the industry adjusts to a world with COVID-19 challenges.
For this analysis, we compared the performance of the Medtech Big 100 companies in 2021 and early 2022 with their results in 2020. Due to the increasing strength of the U.S. dollar, our analysis uses foreign currencies in the year-over-year analyses for companies that don’t report sales in dollars.
Overall, aggregate revenue for our 2022 Medtech Big 100 companies increased to $440.9 billion, up from $415.3 billion in 2020 for last year’s Big 100 companies, $420.3 billion in 2019 and $374.4 billion in 2018.
Big 100 revenue bounces back to an all-time high
Companies that topped the list of increased sales were heart, orthopedic and dental device companies, a stark difference from last year when diagnostics and imaging experienced the most growth. Overall, elective procedures appear to be recovering as health providers seek a new normal despite staffing shortages. This year has its own host of macroeconomic challenges: a strong U.S. dollar that makes American companies less competitive overseas, inflation, supply chain challenges and more. Still, the medical device industry is demonstrating adaptability.
BTIG medtech analyst Ryan Zimmerman [Photo courtesy of BTIG]
“Staffing issues are still plaguing parts of the industry and inflation is a risk and currencies for a lot of the large multinationals are risks. I don’t want to diminish those,” Ryan Zimmerman, medtech analyst at BTIG, told MDO. “And I’d say we’re probably in a tougher macro environment than we’ve seen over the past few years. That aside, there are pockets of good underlying fundamental growth on … a mix of some of the large companies, but also some of the more niche sub-segments.”
More than half of the companies on this year’s list reported year-over-year sales gains. Three companies in particular had sales growth of more than 50%. Most notably, Inari Medical (Nasdaq:NARI) nearly doubled its revenue to $276.9 million (98.3% growth) for its most recent fiscal year. Alphatec (NSDQ:ATEC) followed at 67.9% year-over-year while Align Technology (NSDQ:ALGN) was the third-fastest-growing company at 59.9%.
Fisher & Paykel Healthcare (NZE:FPH) reported the largest sales loss on the Medtech Big 100 list, with a 14.7% decrease to NZ$1.68 billion in its most recent fiscal year compared to 2020.
In 2019, the respiratory care device manufacturer broke NZ$1 billion in sales for the first time — and nearly doubled that figure with NZ$1.97 billion in 2021 as COVID-19 drove demand for nasal high flow therapy.
Hospital respiratory support for COVID-19 patients appears to have peaked in many parts of the world, and Fisher & Paykel Healthcare’s hospital sales dropped 19% in fiscal 2022, Board Chair Scott St. John told investors in his annual report.
“For a long time into the future, we will remember ‘the COVID years.’” St. John wrote. “No doubt, they have been transformative. In addition to F&P products helping millions of patients, the adaptations required to meet surges in demand have moved us closer to our long-term growth aspirations. That transformation is accelerated by the boost in our installed base of hospital hardware that we achieved.”
Big wins for Inari Medical
Inari Medical had a breakthrough year. Its revenue nearly doubled and R&D expenditures nearly tripled to $51 million, with R&D spend equal to roughly 18.4% of Inari’s revenue.
The Irvine, California-based company credited its fiscal 2021 gains to its continued U.S. commercial expansion and new product launches throughout the year. The company makes minimally invasive, catheter-based mechanical thrombectomy devices that remove large clots in blood vessels to eliminate the need for thrombolytic drugs. Its FlowTriever won FDA 510(k) clearance in 2018.
“We felt really good about the execution generally in 2021, facing exactly the same sets of headwinds that all of our peers have communicated repeatedly over the last two years really: staff shortages and resource limitations, access issues and alike,” CEO Bill Hoffman said during an earnings call in February. “So we feel really good about executing in this environment and I suspect we might even have another gear just in terms of the crispness of our execution as the operating environment return to something that’s a bit more constructive.”
Medtech Big 100 R&D speeds up amid economic headwinds
Medical device companies appear to be betting they can innovate their way through challenging times. Large medical device companies’ research and development spending grew more than $1.1 billion — or 5.1% — to $23.4 billion during their most recent fiscal years.
Among the 59 companies that report this metric, the average R&D increase year-over-year was 17.5%. Of those companies, five firms spent more than 20% of their revenue on R&D: MicroPort, Novocure (NSDQ:NVCR), Glaukos (NYSE:GKOS), Shockwave Medical (NSDQ:SWAV) and Dexcom (Nasdaq:DXCM).
MicroPort, a new addition to this year’s Medtech Big 100 ranking, topped the list with an R&D spend of $297.8 million, or 38.2% of its revenue. The Shanghai, China-based company develops medical devices like drug-eluting stents for numerous applications, including cardiovascular, orthopedics, cardiac rhythm management, electrophysiology, endovascular, neurovascular, surgical robots and more.
Root, Switzerland-based Novocure, which develops electric fields that disrupt cancer cell division called Tumor Treating Fields, had R&D expenditures equal to 37.6% of its revenue. It reported $201.3 million in research spending, representing a 52.5% increase over its previous fiscal year.
Novocure Chief Financial Officer Ashley Cordova [Photo courtesy of Cordova]
“We believe one of our best uses of capital is research and development,” Novocure Chief Financial Officer Ashley Cordova said in an earnings release in February. “Our R&D initiatives are designed to unlock new cancer indications, expand addressable patient populations and enhance our product offer.
“2021 was a record year for R&D investment, as we invested more than $200 million for the first time,” she continued. “For perspective, we invested $132 million in R&D in 2020 and $79 million in 2019. While we expect the level of R&D investment to stabilize over time, in 2022 we plan to pursue incremental R&D investments intended to unlock additional indications and excess the greatest number of patients.”
Five Medtech Big 100 companies grew their R&D expenses by more than 50% year-over-year: Inari Medical (177.3%), Sonova (95.5%), Alphatec (70.8%), Medacta (65.6%) and Novocure (52.5%).
Meanwhile, 14 companies reduced their R&D expenditures year-over-year: Cooper Cos., Royal Philips, B. Braun Melsungen, BioMerieux, GE HealthCare, iRhythm, Avanos Medical, Elekta, Natus Medical, GN Hearing, Cardiovascular Systems, Nipro (medical segment), Getinge and Invacare.
Medtech Big 100 employment grows
Employment in the medtech industry is on the rise. There were 1,268,924 employees at the Medtech Big 100 companies that report human capital in their annual reports.
Compared to 2021, that is a 6.4% increase in headcount. Medtech companies grew their workforces 7.8% on average among each of the 71 companies that report headcounts.
Alphatec and Inari Medical expanded their workforces significantly throughout 2021. Alphatec’s employee base rose 89.5% to 561 and Inari Medical’s workforce grew 75.4% to 800.
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The next highest percentage of growth was by Fisher & Paykel Healthcare, which added 1,587 employees in fiscal 2021, representing a 27.4% change.
“I personally think people were fearful going into this earnings season because of the lingering impacts of all the headwinds,” Zimmerman said when asked for his perspective on the general tone of medtech executives on recent earnings calls. “And you generally saw a more resilient sector this earnings season that wasn’t as bad as we expected. Sure, currencies are concerning, inflation’s still concerning, but the supply chain has gotten marginally better — or at least it has not gotten materially worse.
“It feels like the big issue the first half of this year is around supply, and it feels like the supply chain headwinds may be easing in the back half of the year,” he continued. “And so that’s probably the bigger takeaway.”
MDO will continue to track the Medtech Big 100 companies for further analysis in 2022 and beyond.
—Managing Editor Jim Hammerand contributed to this report.