Funding & Investment

Funding & Investment

Fleeing pharma in the pursuit of medtech


The medtech space led by Intuitive Surgical (ISRG), Varian Medical Systems (VAR) and Steris (STE) has proved to be a safe haven in 2017, riding out drug-pricing fears that have weighed down Big Pharma and biotech stocks.

Analysts say that’s because the economy and jobs numbers have improved, allowing patients to finally go for those “pseudo-deferrable” procedures like getting a hip or knee replacement, or having spinal surgery.

Meanwhile, even as political pressure mounts over the effort to “repeal and replace” ObamaCare, the medtech sector seemingly has bipartisan support to end the Medical Device Tax, a 2.3% tax on medical device sales in the U.S. Congress placed a moratorium on the tax two years ago.

The combination has made the space ripe for generalist investors fleeing the risks of biotech and pharma for more security, KeyBanc analyst Matt Mishan told Investor’s Business Daily. The sector’s strength reflects a growth in medical procedures as Baby Boomers hit their golden years.

“When you consider the landscape out there, health care looks good,” he said. “It’s a large piece of the economy. If you want to tie yourself to something, you want to tie yourself to volumes, which are tied to demographics. The older the population gets, the more procedures they have.”

This article first appeared on Investor’s Business Daily and was written by Allison Gatlin. You can read the full article here.

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