Monday, March 22, 2010

Squawking with Steve on MSNBC

On Monday, March 22nd, Steve MacMillan CEO of Stryker provided the public with a snapshot opinion on the effect the healthcare reform bill will have on the medical device industry. Beginning in 2013 over 8,000 medical device companies will contribute $2 billion per year in tax revenue as a result of a 2.3% excise tax. (You can do the math)

MacMillan opined that the device industry doesn't need a tax considering that the industry is attempting to develop innovative products while creating additional jobs. Yet, some salient points were made by MacMillan as to the nature of our industry. The medical device industry is fragmented when compared to major pharma, dominated by many small players where the capital cost of entry to the market is low. One point, that TSB must argue is that we are no different than pharma where we are dominated by the big players. All one has to do is look at a market analysis regardless whether it is spine, recon or trauma. The big boys dominate. The one major difference that exists is that in today's climate, one that was fostered over the last 8-10 years, it was the start-up and early-growth stage companies that had contributed in terms of producing emerging technologies. The Cartels of the industry spend more time on marketing and acquisitions.

MacMillan spoke of the short-term and long-term concerns. In the short-term most of us will figure how to survive by adapting and creating new strategic objectives and by managing our capital with more prudence. Gone will be the day of frivolous spending and no accountability. In the long-term, the country could be straddled with a greater federal deficit. After the cost of the Iraqi and Afghan Wars are we really all that upset with another couple of billions of dollars in spending? Let's face it, we bailed out Wall Street to the tune of billions and there wasn't nearly half the public rancor that has existed of Healthcare Reform.

In closing, one has to admire MacMillan's salesmanship when he lumped Stryker in the same breath as Microsoft and Google. Stryker a legendary company in the device industry? Yes. Comparing it to Microsoft and Google is taking it a bit too far. Overall an informative and calm analysis of what awaits all.


  1. Not to change the subject, but can anyone tell me anything about a company called Spinal USA. I know they had some regulatory problems a couple of years ago. Have they been fixed? Any unique products? Good reputation? Distribution? Any help would be appreciated.

  2. TSB -

    Another couple of billion of dollars??? Where I come from a couple means TWO. 2 billion dollars??

    Try 2 TRILLION with a T!! And thats just the soft estimates. Were the wars and the bailouts expensive? Absolutely. Do they pale in comparison with just the estimated costs of this bill let alone the unintended consequences and all of their costs? YES!!!

    For someone who opines about the how great the industry used to be, do you really think this new idea of the device industry forking over 2 billion in taxes just to exist and do business is not something to be upset about?

    We are manufacturing and providing the products and the support to patients and already trying to sell in an insane reimbursement and FDA environment and on top of that we get to pay 2BB a year to cover new patients for whom we will MAYBE implant our products and probably get poor reimbursement if we do anyway?

    And the legendary spineblogger covers this by coughing out the political talking point of the costs of Bush's wars and bailing out Wall Street fat cats? And by showing playground jealousy of MacMillan by comparing Stryker to Google?

    Objective, informative, value-add FAIL.

  3. Interesting how everybody exactly knows how much it is going to cost, when nobody even knows what it is going to look like. One thing is clear, there is no way we could have continued to do things the way we are doing them now.

    Here are some fun facts:
    Since the article is focused on the EU, just for comparison, for 2009 the expenditure in the US is expected to be at 17.6% of GDP, and life expectancy is lower than every Western European country mentioned.

  4. I think the major cost of this tax in the long term will be American jobs. To maintain their bottom line, the large companies will be taking even more manufacturing jobs overseas. The Dems just don't get it...

  5. "The Dems just don't get it..."

    No, they do, that's why they knew that someone had to go ahead and start health-care reform, and since the Republicans have never shown any interest in it before, might as well get it going.

    In the long run this is saving our country money - I know I know, Republicans think our country only works when its running deficits and borrowing Trillions, but remember Clinton got us to a surplus, and this health-care reform package is just one small brick in the wall to regain some of American's financial stability following the 8 years if financial ruin orchestrated by the Republicans.

  6. I think the new web address for this site is

    4:31- it is the dems that spend money like its going out of style. You try to throw Bush under the bus "following the 8 years of financial ruin orchestrated by the republicans". Firstly, we had 7 years of amazing success with low taxes. Your little buddy gets in office now has already added 2 Trillion to the deficit. Is your theory to take two steps back to take one forward?

    Oh, by the way, all of the bailouts were authored by the democrats. The first signed by a lame duck President but initiated by the most liberal congress we've ever seen.

    I haven't seen one republican say that we don't need health care reform. Costs are out of control and we should reign them in. But the bill that was just passed is NOT the answer. It will destruct the industry that you make your livelihood in.

    Recession = When your neighbor loses his job
    Depression = When you lose your job
    Recovery = When Obama loses his job

  7. Squawk! Squawk! Squawk! Squawk! Let's abolish all taxes. No defense spending. No healthcare spending. No maintaining our bridges and roads, no education, no sanitation, no police protection, no fire departments, let's see what happens?

    The interesting thing about life is that unless you experience a death or illness how can anyone relate to others plight if you've been healthy and young. Surprise, it awaits everyone, and then some of you fools will truly understand what this is about.

  8. Anonymous 5:09-

    Save me the bleeding heart story. I am young and healthy, however, I have experienced a fair share of illness and death around me, including my father. My conclusion at the end of the process is that he received the best healthcare the world had to offer with innovative treatments after the conventional treatment no longer worked. Where else in the world would I have recommended him to go? NO WHERE!!!!

    Our system needs tweaks not overhaul.