Summary
It is naive to think that the medical device industry will be spared during this recession. Hospitals are struggling because of the credit crunch and may postpone the acquisition of expensive products such as MRI and surgical robots, but may also put pressure on the device manufacturers by picking the lower cost products or by paying lower prices. The other factor will be the loss of medical insurance that goes with the loss of jobs. This may lead to a decrease in elective procedures and a resultant decrease in demand for artificial hips, knees, heart valves and even intravascular stents and pacemakers/defibrillators.
Analysis
The recession will affect the manufacturers of hospital utilities (such as B&D or Kimberly Clark) less than it will affect manufacturers of more expensive products (such as Zimmer, St. Jude, J&J, Boston Scientific and Medtronic). However, because medical spending is non-discrcretionary (or less discretionary) it will affect medical manufacturers in general less than it will affect electronics of car manufacturers.
