Device-Tax Worries Aside, Major Med Tech Mostly Added Jobs in 2012
On the surface, it looks like encouraging news: All but two of the top 10 medical device companies in terms of market capitalization employed more people in 2012 than they did in 2011.
A report by EP Vantage, an arm of EvaluatePharma (also connected to EvaluateMedTech) notes as much in its latest look at the largest med tech companies and their employment trends. Even more, as the roundup points out, the overall employment jumps took place despite company warnings that the 2.3% medical device tax would cause the loss of legions of jobs as companies prepared for the tax to kick in.
As EP Vantage notes, however, the tax did not make the sky fall, at least for the largest med tech companies.
One device maker in the top ten–St. Jude Medical slashed employment by 6% to prepare for extra costs the tax is expected to generate in 2013. Another–Boston Scientific–has endured thousands of layoffs over the last few years as it focused on reducing a massive debt hangover from its $27 billion acquisition of Guidant back in 2006. But employment at the company between 2011 and 2012 remained static, as executives continued a turnaround plan focused on acquiring smaller companies with promising new technology.
In some cases, however, the numbers are robust, albeit with a twist. Johnson & Johnson’s employment levels jumped 9% between 2011 and 2012, and the company tops the EP Vantage list. But 2012 is the year that J&J completed its purchase of Synthes for $21.3 billion, giving it a massive boost of employees and revenue beyond its own offerings and their stagnant revenue growth.
Medtronic , on the other hand, grew its employee count slightly from 2011 to 2012. But the employment hike stems, in part, from an agressive expansion in emerging markets, and execs countered that growth with 1,000-plus job cuts at home in the U.S.
And then there’s C.R. Bard. The company reported a 1% growth in its employee numbers in 2012 versus 2011. Bard has alternatively trimmed and added jobs over the last few years as it has focused on managing costs. But the company has also grown through acquisitions, such as its $225 million buyout of Lutonix in late 2011 and its $140 million move to snatch up Neomend. In late November 2012, it is worth noting, Bard was among a cadre of device companies that lobbied Congress to repeal the medical device industry tax before it kicked in on Jan 1, 2013.
The real determination, of course, will be employment numbers for 2013. Extra costs produced by the tax could lead to job cuts or smaller job growth at the largest med tech companies during the year that remains. Device tax-related job losses are already happening, in part, at Boston Scientific. In January, CEO Michael Mahoney told FierceMedicalDevices that the tax was one of several factors in the company’s decision to cut 1,000 more jobs through 2013.
And the tax could very well be harming smaller and medium-sized med tech companies that must grapple with smaller profit margins.