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Needham Forecasts 7% Growth for Medtech Market in 2023 Despite Slower Q2 Performance

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Despite a slower second quarter, Needham predicts a 7% growth for the medtech market in 2023, compared to 5.7% last year. This growth will be driven by strong performance in certain cardiology categories.

Growth in the medtech sector experienced a slight slowdown in the second quarter, expanding by 8.3% compared to 8.9% in the first quarter. However, it still exceeded Needham’s Q2 forecast of 5%. Although the bank forecasts a 7% increase for 2023, it anticipates growth to decline to 5.3% in 2024.

Needham identified AtriCure (ATRC) and Alcon (ALC) as their top-ranked companies in the sector, followed by Alphatec (ATEC), Glaukos (GKOS), and SI-BONE (SIBN).

Electrophysiology is expected to achieve the highest growth in 2023, with worldwide sales projected to climb by 14% to $8.73 billion. Boston Scientific (NYSE:BSX) is expected to lead with a 27% increase, followed by Johnson & Johnson (JNJ) at 17%. With an estimated 49.8% of the market, J&J is predicted to remain the dominant player, while Abbott (ABT) takes second place with 24.5% market share.

However, growth for the electrophysiology market is expected to slow to 12% in 2024 and 11% in 2025.

In terms of transcatheter aortic valve replacement (TAVR) devices, worldwide sales are forecasted to grow by 10% in 2023 to reach $6.74 billion. Abbott is expected to achieve the highest sales gains with a 26% increase, followed by Boston Scientific at 16%. Edwards (EW) is projected to maintain its position as the market leader with 57.9% market share, while Medtronic (MDT) holds second place with 28.5%.

Projections indicate that TAVR sales will continue to grow by 10% in 2024 and 11% in 2025.

In contrast, the cardiac rhythm management (CRM) and stent markets are expected to display the lowest growth this year. Sales of CRM devices are projected to rise by only 3% in 2023, with growth slowing to 2% in 2024 and 1% in 2025.

The outlook for drug-eluting stents is even worse, with an estimated 1% sales increase in 2023, followed by a decline of 1% in 2024 and no growth in 2025.

Despite the slower sales in CRM and stent devices, the cardiology market as a whole experienced a 9.8% growth in the second quarter compared to 8.1% in the first quarter. Needham now projects sales to climb by 7.2% in 2023, driven by TAVR and electrophysiology devices, compared to last year’s growth of 6.1%.

Meanwhile, sales of contact lens products have been showing a deceleration. The market saw growth of 7.8% in the second quarter, down from 10.7% in the first quarter. Needham estimates a growth rate of 8.4% for 2023, compared to 8.6% in 2022. Growth is expected to further decline to 5.1% in 2024 and 4.7% in 2025.

The orthopedic device market exhibited mixed performance, with worldwide sales growing by 7.1% in the second quarter. Although knee replacements increased by 10%, this growth rate was lower than the 10.3% seen in the first quarter. Needham predicts a 7.2% growth in sales for 2023, surpassing the 5.3% growth in 2022.

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