EMDT_European Medical Device Technology

European Medical Device Technology, Spring 2015

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4 | Spring 2015 European Medical Device Technology emdt.co.uk A NOTE FROM THE EDITOR Thomas Klein thomas.klein@ubm.com twitter.com/medtechinsider PlasticsOne ® Designing components. Engineering life. Design • Molding • Assembly As a progressive, USA Contract Manufacturer, we work with OEMs worldwide to create custom ZVS\[PVUZMVY`V\YZWLJPÄJHWWSPJH[PVUZ ISO 13485 and ISO 9001 plastics1.com/emdt315 See us at MEDTEC Europe Stand #5F16 A Tale of Two Announcements TWO PUBLIC ANNOUNCEMENTS made in January could have a major impact on many medical device companies' earnings results in 2015. On 22 January, Mario Draghi, Chief of the European Central Bank (ECB), unveiled a quantitative easing programme intended to ward off the threat of deflation. As part of the programme, the ECB committed to buying government bonds for €60 billion each month. Since the decision, however, the euro is in free fall. Some analysts even expect parity with the US dollar by 2016—from an exchange rate of around 1 to 1.33 in 2014. Despite the uncertain economic conditions in Europe, medtech manufacturers from within the eurozone could actually benefit from this development, as their products automati- cally become cheaper in other currency areas and, thus, more com- petitive. In contrast, however, imports from abroad may become less attractive to European customers. As such, many large multina- tional firms, such as Thermo Fisher Scientific, Stryker, and Edwards Lifesciences, have already lowered their 2015 expectations. A few days prior to Draghi's announcement, on 15 January, the Swiss National Bank made an announcement of its own: It would abandon the Swiss franc's cap against the euro. Consequently, the value of the franc went through the roof, driving up the cost of Swiss products. In order to avoid losing eurozone customers, many Swiss medtech companies immediately took action. Audiology company Sonova, for example, reported that it would shift jobs out of Switzerland, while Schneeberger, a supplier of motion systems for the medtech industry, asked its employees to work two hours more per week without a pay raise. Implant maker Straumann remitted the salary of some commuters from Germany and France in euros instead of francs. For some medtech companies, this shifting economic landscape in Europe will translate to a sales surge. For others, though, it means that they will have to increase productivity to compensate for higher costs. Even for some firms within the eurozone the chal- lenges associated with a weak euro might outweigh the benefits. The industry's supply chains are generally global, after all, and a weakening euro makes importing components and raw materials more expensive. While its is still unclear just how severe the consequences for the industry will be in the eurozone's new economic reality, it is clear that, for medical device companies, this spring will surely neither be the best of times nor the worst of times.

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