- Normalization of the Chinese market could drive improved procedure volumes and support sales growth for medtech outside of the U.S. next year, according to analysts at Goldman Sachs.
- The analysts expect a slow start to 2023 in medtech markets outside of the U.S., but then for activity to pick up as China moves away from zero-COVID policies and its new quota drives capital sales.
- In Europe, a backlog of patients and the controlled impact of COVID-19 suggest the region will be a “modest positive” for medtech manufacturers over the coming year.
Overall, international markets slightly outperformed the U.S. in 2022, although that headline takeaway masks variation among countries and regions. Emerging markets were generally slow to return to their pre-pandemic growth rates, and periodic lockdowns in China caused volatility and weak sales in a market that was once a source of fast, reliable growth.
The Goldman analysts said “China will likely be the biggest variable once again,” while noting that the market “has changed notably in recent years, and growth has not been nearly as reliable as it was in the past.” They listed some reasons for optimism next year, including expectations for greater volumes as China begins to relax some of its zero-COVID policies, and a new government quota that is expected to go into effect in the first quarter of 2023.
Amid those positives, the analysts identified the expansion of value-based pricing as a challenge for medtech companies in China. The program has already lowered the prices of drug-eluting stents and orthopedic devices, hurting companies such as Boston Scientific and Stryker, and will likely expand to other categories.
In 2023, numerous regional pricing programs will affect growth in the cardiac ablation, neurovascular and surgical instruments markets, the analysts wrote. Abbott, Baxter, Medtronic, Johnson & Johnson and Stryker are among the companies that could be affected. The analysts expect the pricing programs to “capture most of the top medtech markets by size” in the coming years.