The med tech sector is
faring better than most

Medical technology industry weathers economic turmoil

June 10, 2010
by Brendon Nafziger, DOTmed News Associate Editor
Medical technology jobs were largely spared the devastation that befell the rest of U.S. manufacturing in recent years, according to a report released Wednesday.

The survey commissioned by medical device lobby Advanced Medical Technology Association found med tech also drove state economies through both direct employment and knock-on effects.

According to the survey, from 2007 to 2008, while U.S. manufacturing shed 4.8 percent of its jobs, the medical technology industry only lost around 1.1 percent.

What's more, in 2008, the U.S. industry employed nearly 423,000 workers, paid nearly $25 billion in payroll, and sold almost $136 billion worth of goods, according to the report.

"The medical tech industry is a vibrant and growing contributor to the U.S. economy. No doubt about it,' James V. Mazzo, president of Abbott Medical Optics and chairman of the board of AdvaMed, told reporters in a conference call Wednesday.

The jobs weren't meagerly reimbursed, either. They paid 40 percent higher than the national average, around $58,000 versus $42,000, the report said. They even paid a 22 percent premium on the average U.S. manufacturing job, with its $47,500 mean wage, in part because med tech requires a skilled, schooled workforce that can command higher earnings, according to the survey.

"These are the kind of well-paid 21st century jobs being created by companies large and small," Mazzo said.

The jobs also had knock-on, or multiplier effects, with each med tech job generating on average 1.5 additional jobs in each state. Each med tech payroll dollar, and each med tech sales dollar, also generated an extra 90 cents for payroll or sales in the state.

Abbott, where Mazzo works, creates jobs for the service providers needed to complete sales and for local retail and restaurants, he said.

The medical technology industry is not spread across the country evenly. The biggest med tech employer in 2007 was California, with its 84,000 workers, followed by Minnesota, Massachusetts, Pennsylvania and Florida, with a disproportionately high 21,700 to 26,900 med tech employees each.

Unsurprisingly, medical device hubs Minnesota and Utah had the highest concentration of such jobs, over three times the national average, according to the survey.


Before 2008 at least, the industry experienced rapid growth. From 2005 to 2008, med tech jobs increased 12.5 percent, from 375,961 to 422,778; payroll jumped 11.4 percent, from $22.1 billion to $24.6 billion; and U.S. med tech product sales leaped 11.6 percent from $121.8 billion to $135.9 billion, according to the report.

But AdvaMed cautions there are some "headwinds" in the future, such as the medical device excise tax bundled into the health reform bill.

"There are trends that give me pause," Stephen J. Ubl, president and CEO of AdvaMed, said in a call to reporters.

Driving the group's worries are concerns about the U.S. Food and Drug Administration tightening regulations on approval of new devices; unpredictable foreign regulatory decisions; and whether Medicare is reimbursed enough to adequately pay for new products.

Venture capital funding is down nearly $1 billion from 2008 to 2009, Ubl said.

"In my conversation anecdotally many of [the VC investors] are rethinking investment in our sector due to regulatory and payment uncertainty," he said. "Many are investing in fewer companies and delaying investment until products are further along in the development process, which is not good for startup companies."

The survey, "State Economic Impact of the Medical Technology Industry," was carried out by the Lewin Group, based on U.S. Census and U.S. Department of Commerce data, in all 50 states and the District of Columbia.