The largest medical device companies have had a good run on the stock markets this year, with many clocking in double-digit percentage growth in stock prices over the past 12 months. There are always exceptions to the rule, however.
Here are five companies, including such industry standard-bearers as Intuitive Surgical and Edwards Lifesciences, where executives likely want to forget this year's stock performance:
Intuitive Surgical makes a futuristic-looking robot known as the daVinci (shown here), which costs between $1–2 million. In theory, the technology offers unprecedented precision and reduces surgical complications. But the backlash against the daVinci became hard to ignore in 2013. A prominent Columbia University study was published early in the year that cast doubt on superiority of robotically assisted surgery over the traditional minimally invasive version. A growing number of patients and relatives decided to sue Intuitive for injuries and deaths they allege were caused by the device. In November, the FDA linked the daVinci to a substantial number of injury and death reports stretching back to 2004.
All of this negative attention has wrought havoc on the company, whose stock was formerly one of the best-performing in the medical device sector. A year ago, Intuitive Surgical’s stock was worth roughly $535 per share, then it March it fell to around $500. Several months later, it took a nosedive, falling from $500.08 on July 8 to $422.68 on July 9. After that, it dipped below $400 and in midday trading on December 9, it was valued at $377.25.
Over the years, Edwards Lifesciences has seen its stock rise steadily over the long term. But 2013 was not a good year for the firm. The company’s stock fell 28.01% from December 10, 2012 to December 6, 2013. A large part of the decline can be linked to the company’s trouble meetings U.S. sales projections for its flagship product: the Sapien percutaneous heart valve, which is still the only transcatheter aortic valve replacement (TAVR) product on the domestic market. New competitors, including Medtronic, are planning to introduce TAVR devices to the domestic market soon. In addition, competition in the European TAVR market is also growing.
Spinal implant maker Orthofix International has seen its stock performance fall by nearly 45% in the past year. Sales of its device have languished in Brazil and Europe. In addition, the company faces a complain from the SEC, which alleges that the firm’s Mexican subsidiary, Promeca, bribed Mexican officials over a seven year period. Last year, the company was ordered to pay $42 million to settle a lawsuit alleging the illegal promotion of its bone growth stimulators. The company is now trading near a 52-week low; its stock has fallen by nearly 50% in the past year.
The French lens and optical equipment maker Essilor International has seen its stock fall in value more than 3% over the past 12 months amid a longer than expected North American rollout of its Varilux S series of lenses, which boast 50% wider field vision through a design that utilizes both eyes working together. The U.S. back-to-school season was also a disappointment, and significant contracts” were discontinued in North America. The company is now only predicting 6% revenue growth for the year. “Overall, therefore what can we say? There is merely a time lapse for a few months in our growth, and this will have no implications on the confidence that we have in our growth model, profitability or cash flow generation. Indeed, we continue to expect a higher margin than last year at somewhere between 17.9% and 18.3%,” CEO Hubert Sagnières said during a late October conference call with analysts.
It has also been a lackluster year stock-wise for Deerfield, IL–based Baxter International, with its roughly $68 per share price up only 2.9 percent from where it was 12 months ago. Baxter’s profits for the first nine months of 2013 were $1.69 billion, down 8 percent from the same period last year. Sales were up 4 percent, to $10.89 billion. Company officials, though, say they are moving forward with products in the pipeline, and they expect to benefit from Baxter’s roughly $4 billion acquisition of Swedish medical equipment company Gambro.
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