NEW YORK, NY -- (Marketwire) -- 12/07/12 -- The Medical Devices Industry has shown admirable gains in 2012, but a medical device excise tax set to kick in next year will have a major impact on companies' profits going forward. The iShares Dow Jones US Medical Devices ETF (IHI) has gained over 15 percent year-to-date. The Paragon Report examines investing opportunities in the Medical Equipment and Supplies Industry and provides equity research on Edwards Lifesciences Corp. (NYSE: EW) and Zimmer Holdings, Inc. (NYSE: ZMH).
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The medical device excise tax, which was designed to support the Affordable Care Act, places a 2.3 percent levy on all sales of medical devices regardless if a company makes a profit or not. Despite not taking effect until January 1, 2013, many companies have already announced job cuts and delayed expansion plans in preparation for the tax.
"America already has the highest corporate tax rates in the world," AdvaMed senior executive vice president David Nexon told reporters today. "To load this additional burden on an industry which is so important to our economy and which is facing a strong international competitive pressure makes no sense at all; it flies in the face of everything tax reform is supposed to achieve."
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Edwards Lifesciences is the global leader in the science of heart valves and hemodynamic monitoring. The company has recently reported that global sales of their transcatheter heart valve are projected to be $390 million to $440 million in 2013. Shares of the company have gained nearly 30 percent year-to-date.
Zimmer designs, develops, manufactures and markets orthopaedic reconstructive, spinal and trauma devices, dental implants, and related surgical products. Zimmer's 2011 sales were approximately $4.5 billion. Shares of the company have gained over 20 percent year-to-date.
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