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Report: Medical device makers may face pressure

Thu, 06/24/2010 - 8:45am
The Associated Press

Medical device makers may face more pricing pressure and market shifts as U.S. hospitals pursue partnerships and closer relationships with their medical staff, according to Moody's Investor Service.

Moody's said in a note Thursday financial alliances between hospitals and doctors have reduced the influence medical device makers have in selling products directly to physicians. This will especially be felt by companies that sell "physician-preference items" like stents, defibrillators and orthopedic implants.

"As hospitals increasingly provide physicians with greater incentives to control costs, they are better positioned to limit the number of vendors," the note said.

Diana Lee, a Moody's vice president, said in the report medical device companies that can develop distinctive and cost-effective products will fare best in this environment.

Moody's also noted the trend could accelerate if the government cuts spending through reimbursement reform that could include the bundling of doctor and hospital care payments.

The medical device market includes companies like Boston Scientific Corp., Medtronic Inc. and St. Jude Medical Inc.

Boston Scientific shares fell 11 cents to $5.93 in late morning trading Thursday. Medtronic shares dropped 37 cents to $37.14, while St. Jude climbed 30 cents to $36.68. Broader trading indexes were down about 1 percent.

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