Show Me Where It Hurts

But Demand Will Soar

Against this backdrop of sobering news, there is some good news. I’m convinced that demand for medical technology is going to soar. Much has been said about the tens of millions of uninsured Americans who soon will get some form of coverage under health care reform. The impact of this cohort on the fortunes of medical device companies is uncertain, however, because many of the sick but uninsured have already been getting some form of treatment.

Much more important are the Baby Boomers. They are a generation with wealth. They’ve also made a habit of seeking out fixes for their problems. A balky knee or a tired shoulder is not going to keep them off the bike or out of the pool. Treating this bolus of patients will be a boon for medical device companies in the next couple of decades.

As longtime stock pickers might tell you, if you pick the right industry segment, even while getting some of the details about individual companies wrong, you’re going to make money. Hang on to your Medtronic and St. Jude stock.