Crimson Audit & Review

Content Audit, Review & Consulting for Medical Device Makers

Greek Tragedy: Sovereign Debt Harms Patients

Posted by crimsonlanguage on 2011/09/25

There were quite a few pieces of bad news this week – several of which directly affect the device industry and the patients it serves:

To begin, Citi analysts cut their 2012/2013 sales estimates for Smith & Nephew. While this alone is not particularly earth-shattering, what came next in the downgrade report was: Citi’s view is that Hip & Knee markets won’t recover in the short term and emerging markets aren’t expected to grow until 2014. 

Don’t expect much from developed markets, either. A recent Financial Times article documents how the Greek government has fallen dramatically behind in payments to device companies. According to the article, Roche has cut staff and is operating on a cash-only basis…BD and Covidien have shuttered their Greek operations and transferred them to local distributors. Many haven’t been paid in over a year.

With device payments grinding to a halt, device deliveries aren’t far behind…and this is now having a direct affect on patients. One retired school teacher who was interviewed for the FT article reported, “My consultant sent me to colleagues at three different hospitals to try to arrange the [hip replacement] operation but I haven’t managed to get a place on the list for surgery”. No need to look further for a cause behind the lack of growth in the hip market.

Let’s hope the Europeans can get their act together soon. Most large device manufacturers have well over 50% of their sales overseas – with a large portion coming from Europe. Another financial crisis – driven by sovereign debt issues in Greece, Portugal, Italy, or Spain will not have a sanguine affect on device industry growth prospects – despite the ageing of worldwide markets. Doubtless, the result would be the pervasive under-serving of an at-risk, at-need, growing poplulation of elderly people. Tragedy, indeed.


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