LIMEDex Index Report Q4/2018

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Medtech managers expect a slightly gloomy market outlook for 2019/20.

MedTech business managers foresee 2019/ 20 sales growth rates similar to last year's, with higher volatility in FOREX and ongoing challenges to business increasing risk. Managers anticipate no significant changes in sales, profitability or markets. On the other hand, a substantial decline in the willingness to invest in strategic initiative arose this quarter, reflecting concerns about government policies and sterner regulation in key markets.

LIMEDex Index, which captures MedTech industry's sentiment on key business indicators on a quarterly basis since January 2015, is down this quarter but still up compared to a year ago. It fell by -1.0pt to +11.9points (+4.6 pts Y-T-Y).Slightly over 150 MedTech managers were surveyed by ConCeplus in November 2018 about their outlook on operations, financial, and market development over the next twelve months. Their outlook on financial KPI's fell this quarter by -2.8pts to +0.1pts compared to last quarter. Managers are now expecting a top-line growth rate of +4.6% (-0.4% Q-T-Q), with slightly higher expectations for growth markets (+5.0%, up +0.8% Q-T-Q).

Margins are expected to improve slightly with an EBIT growth rate of +2.3%(0.3% Q-T-Q).The sentiment is largely positive, but volatile markets, FOREX risk exposure, and greater geopolitical uncertainties are weighing down the outlook. Based on risks and challenges indicated by a majority of managers, we think that a risk-adjustment to top-line growth of -2.9%is warranted, yielding +1.7% real growth.

Managers' confidence in Operations is still high. This sub-index is practically unchanged (-0.1pts Q-T-Q to +13.2pts). An increase in headcount by +4.2%is on the agenda of the majority surveyed. However, only 22%of managers feel confident about making strategic investments. Over the past several years, ConCeplus noted MedTech's ability to achieve operational excellence as an effective way to overcome cyclical issues. Such short-term fixes still work miracles. But in the face of changes underway in healthcare, longer term fixes are called for to compete in a more personalized and cost-conscious global healthcare market. At a time when managers need to be making strategic investments, an increased number reported falling confidence in doing so.

As 2019 begins, faith in MedTech business models is at an all-time low. But there are some who are addressing business model changes. Several transformational examples are provided in this quarter's report, along with an analysis of healthcare industry M&A activity.

We can see some of the tactics used by early movers. They are taking steps towards new business models to master the value-based healthcare trend. They are embracing new data domains, technologies, and engaging in collaborations and acquisitions that might have seemed unlikely just a few years ago. Without this kind of effort, many MedTech businesses are at risk longer-term. Each company must (re-)define its unique strategy on "Where to play?" and "How to Win?"

Please use this link to get the report and for the free report please drop a mail to christoph.schreiner(at)human.technology.at to get the voucher code.

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