Moody's: Medical Product Innovation Faces New Hurdles

New York, November 02, 2009 -- As the introduction of new products becomes increasingly important to the growth of medical device companies, obstacles to innovation appear to be mounting, said Moody's InvestorsService in a new report.

"New product launches will continue to buoy the sector, but the process of bringing new products to market may prove more difficult," said Moody's Senior Credit Officer, Diana Lee. The sector is facing new challenges such as additional regulatory pressures and healthcare reform initiatives that could further hinder future efforts to bring new products to market.

Stronger oversight from the Food and Drug Administration (FDA) has already led to more stringent post-market requirements to help the U.S. government monitor the safety of medical devices and side effects of
drugs after the general population has begun using them, the report said. Now, the FDA is reviewing its 510(k) clearance process, which may result in higher costs or delays in launching new medical products.

"Companies that face slowing growth trends due to competitive pressures or that depend on more mature products will be particularly vulnerable to new regulatory constraints," said Lee.

In addition, healthcare reform initiatives such as comparative effectiveness studies and a possible sector fee could raise product development risk or constrain margins in the sector. "These challenges may force high-tech companies to be even more selective about their R&D spending," Lee commented.

Meanwhile, the new pressures could also further burden the lower-tech companies that have already ramped up their spending rates to support sales growth. Obstacles to new product development could lead to more
acquisition activity to help companies supplement their organic growth.

The full report, titled, "Medical Product Innovation Faces New Hurdles,"  is available at www.moodys.com.

* * * * *

NOTE TO JOURNALISTS ONLY: For more information please contact New York
Press Information +1-212-553-0376; EMEA Press Information in London
+44-20-7772-5456; Juan Pablo Soriano in Madrid +34-91-310-1454; Alex
Cataldo in Milan +39-02-914-81-100; Eric de Bodard in Paris
+331-5330-1076; Detlef Scholz in Frankfurt +49-69-707-30-700; Mardig
Haladjian in Limassol +357-25-586-586; Alex Sazhin in Moscow
+7-495-228-60-60; Petr Vins in Prague +4202 2422 2929; Tokyo Press
Information +813-5408-4110; Hilary Parkes in Toronto +1-416-214-1635;
Hong Kong Press Information +852-2916-1150; Hector Lim in Sydney +612
9270 8102; Luiz Tess in São Paulo +5511-3043-7300; Alberto Jones Tamayo
in Mexico City +5255-1253-5700; Daniel Rúas in Buenos Aires +54
11-4816-2332 ext. 105; Craig Jamieson in Johannesburg +27-11-217-5470;
Jehad el-Nakla in Dubai +971 4 401 9536; or visit our web site at
www.moodys.com

 

New York
Diana Lee
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John Diaz
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

 

CREDIT RATINGS ARE MIS'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF
ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT
RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL
OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF
DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED
TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE
NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE
INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO
PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT
ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS
CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL
MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION
FOR PURCHASE, HOLDING, OR SALE.

Copyright 2009, Moody's Investors Service, Inc. and/or its licensors and
affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S").
All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH
INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER
TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR
SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER
OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN
CONSENT. All information contained herein is obtained by MOODY'S from sources
believed by it to be accurate and reliable. Because of the possibility of human
or mechanical error as well as other factors, however, such information is
provided "as is" without warranty of any kind and MOODY'S, in particular,
makes no representation or warranty, express or implied, as to the accuracy,
timeliness, completeness, merchantability or fitness for any particular
purpose of any such information. Under no circumstances shall MOODY'S have any
liability to any person or entity for (a) any loss or damage in whole or in
part caused by, resulting from, or relating to, any error (negligent or
otherwise) or other circumstance or contingency within or outside the control
of MOODY'S or any of its directors, officers, employees or agents in
connection with the procurement, collection, compilation, analysis,
interpretation, communication, publication or delivery of any such
information, or (b) any direct, indirect, special, consequential, compensatory
or incidental damages whatsoever (including without limitation, lost profits),
even if MOODY'S is advised in advance of the possibility of such damages,
resulting from the use of or inability to use, any such information. The
credit ratings and financial reporting analysis observations, if any,
constituting part of the information contained herein are, and must be
construed solely as, statements of opinion and not statements of fact or
recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS
OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR
INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each
rating or other opinion must be weighed solely as one factor in any investment
decision made by or on behalf of any user of the information contained herein,
and each such user must accordingly make its own study and evaluation of each
security and of each issuer and guarantor of, and each provider of credit
support for, each security that it may consider purchasing, holding or
selling. MOODY'S hereby discloses that most issuers of debt securities
(including corporate and municipal bonds, debentures, notes and commercial
paper) and preferred stock rated by MOODY'S have, prior to assignment of any
rating, agreed to pay to MOODY'S for appraisal and rating services rendered by
it fees ranging from $1,500 to $2,400,000. Moody's Corporation (MCO) and its
wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS),
also maintain policies and procedures to address the independence of MIS's
ratings and rating processes. Information regarding certain affiliations that
may exist between directors of MCO and rated entities, and between entities
who hold ratings from MIS and have also publicly reported to the SEC an
ownership interest in MCO of more than 5%, is posted annually on Moody's
website at www.moodys.com under the heading "Shareholder Relations - Corporate
Governance - Director and Shareholder Affiliation Policy."
Moody's Investors Service Pty Limited does not hold an Australian financial
services licence under the Corporations Act. This credit rating opinion has
been prepared without taking into account any of your objectives, financial
situation or needs. You should, before acting on the opinion, consider the
appropriateness of the opinion having regard to your own objectives, financial
situation and needs.

 

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.