New Survey: Medical Device Firms Plan Price Increases to Offset US Excise Tax

January 27, 2012

FOR IMMEDIATE RELEASE

Medical device manufacturers report plans to increase prices for their products in order to offset the effects of a proposed 2.3% excise tax on all device sales in the US starting in 2013.

A new industry survey conducted by global medical device regulatory consultancy Emergo Group queried nearly 200 CEOs, presidents and managing directors about their business challenges and plans to deal with the coming excise tax.

When asked which changes they plan to implement at their firms before the excise tax goes into effect, nearly 53% of survey participants stated they would pass along some or all of any increased costs associated with the tax to their customers. Roughly 37% of participants also plan to lower production costs without reducing staffing, according to survey results.

Although some medical device industry advocates have warned that implementation of the US excise tax would lead to layoffs, results of the 2012 Medical Device Industry Survey suggest that manufacturers would consider reducing staff only as a last resort. (Less than 17% of respondents indicated they would reduce headcount to absorb the excise tax’s impact.) Increasing prices, lowering production costs and investing less in research and development all ranked higher than layoffs as options for dealing with the tax.

Biggest Business Challenge: Regulatory Changes
Asked to identify their biggest business challenges over the past year, more than half of participants cited changing regulatory environments as their top concern. Other key challenges included access to capital and credit (41% of respondents), new product development (39%) and pricing pressures (39%).

Regulatory concerns were more pronounced among chief executives of North American and Asian firms. Most European executives, on the other hand, cited new product development as their biggest challenge.

Full results of Emergo Group’s 2012 Medical Device Industry Survey are available at: http://www.emergogroup.com/files/2012-medical-device-industry-survey.pdf

About Emergo Group
Emergo Group is a global medical device consulting firm providing a wide range of services for device registration, QMS compliance, clinical trial management, in-country representation, reimbursement and distributor search consulting.

Additional Information
Stewart Eisenhart
Regulatory Editor, Emergo Group
611 West 5th Street, Third Floor
Austin, TX 78701
se [at] emergogroup [dot] com
+1.512.327.9997