3 MedTech Outperformers To Grab Amid Coronavirus Pandemic

The coronavirus pandemic threw a curveball that has impacted every facet of life and the MedTech industry has been no exception to the trend. However, going by the first half of the year, MedTech has been more resilient compared to other industries despite the worldwide manufacturing halt and supply chain disruption.

Since the reopening of the economy (with lockdown restrictions gradually lifted around May and June), the optimism among investors is palpable. However, market watchers remain skeptical about the economic scenario as spike in infections continue to plague several regions of the United States amid bleak prospect of vaccines.

While most sectors are struggling to cope with the market turmoil, the MedTech space has been benefiting from the growing worldwide demand for critical products and services. Hence, it may be prudent to invest in this space at the moment to capitalize on the prospects.

MedTech’s Pandemic Takeaways

If we look closely, the impact of the pandemic on MedTech has been mixed so far.

Postponement of elective and non-critical procedures (creating a dent on MedTech sales) came as a blow to most players in this space. Although key markets like the United States have taken steps to resume elective procedures, Moody’s anticipates earnings for the next 12 to 18 months to be flat (down from 2-4% growth per the prior prediction).

Moreover, according to Moody’s analysts, as per a MedTech Dive report, MedTech behemoths have high fixed costs associated with infrastructure such as manufacturing plants. Consequently, the fixed costs will make it difficult for companies to lower spending at the pace of revenue declines.

Also, the diagnosis and treatment of COVID-19 patients became the top priority of health care facilities and first responders. Due to this scenario, ongoing and prospective clinical trials and product approvals will face delays. For instance, Abiomed (ABMD - Free Report) stated that it is hitting the pause button on its STEMI-DTU trial for the Impella heart pump.

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