3 Undervalued MedTech Stocks To Stay Safe From Trade War

While U.S.-North Korea ties have strengthened of late, the ongoing trade war with China is a concern for the medical device fraternity. China has vowed to respond to U.S. tariffs on $34 billion of its imports. With President Trump warning that the United States may ultimately target more than $500 billion worth of Chinese goods, many apprehend possibilities of trade loss.

Going by data provided in an article by Christian B. Jones in Mondaq, MedTech firms in the United States currently sell $4.7 billion worth of goods annually to China, while the nation imports a total of $5 billion value of medical devices. U.S. exports of medical devices last year totaled $52 billion, creating a $1-billion worldwide trade surplus. Hence a war between the world’s two biggest economies is likely to negatively impact the medical device industry.

While the U.S. medical device market is currently facing huge trade-war related upheaval, let’s take a look at some tailwinds that are currently shaping the medical device industry.

Strong Growth Projection

The medical device market is currently expected to rise on a growing aging population and surging life expectancy rates. An Emergo article says that the U.S. medical device industry, valued at $147.7 billion in 2016, is projected to grow to $173 billion in 2019.

Medical Device Tax Suspension

The recent suspension of the controversial 2.3% Medical Device tax has been a godsend. The excise tax was implemented in 2013 under Obamacare on MedTech manufacturers, significantly restricting R&D activities.

Per an article published in tctMD, the Medical Device tax was responsible for a $3.7-million loss of overall sales of companies.

Hence, the tax deferral is likely to provide the companies a competitive edge.

Big Data in Healthcare

Big data analytics is revolutionizing the healthcare industry in the form of electronic health records (EHR), electronic medical records (EMR), predictive analytics and revenue cycle management services. A study by Research and Markets shows that big data in healthcare garnered $11.45 billion in 2016 and the market is expected to grow double-digits in the 2017-2025 period.

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