NEW YORK — The medical device marketplace is rebounding and optimism among executives is at its highest level in five years, according to a recent survey and interviews with industry officials at the Medical Design & Manufacturing East '97 show. Almost 60 percent of executives rate the climate good or excellent this year and only 11 percent rate it poor, the lowest percentage giving it a negative ranking in five years, according to an annual survey by Medical Device & Diagnostic Industry magazine.
Capital-raising is likely to remain strong, and 1997 probably will be the second-best year ever for the industry, trailing only record-setting 1996, according to an estimate from the medical device unit of Jefferies & Co. Inc., a Skokie, Ill., investment banking firm.
``We share that optimism, although we still need to take the cost pressures into consideration,'' said José Domingos, industry product manufacturer for AMP Inc. in Harrisburg, Pa.
AMP makes medical cable assemblies and packaging for medical uses, but Domingos said it wants to make complete components.
AMP expects to spend $10 million to $15 million in the next year to expand its medical production capabilities and boost its medical sales of about $100 million a year, Domingos said. He did not provide details.
``This is almost like the automotive industry,'' he said. ``People want to know you will be there.''
Industry officials pointed to two main reasons for the renewed optimism: an improving Food and Drug Administration approval process, which lends stability to the industry; and medical manufacturers getting better at dealing with cost pressures from health maintenance organizations and other health-care alliances.
The industry also is seeing increasing merger and acquisition activity, according to the Jefferies & Co. analysis.
For smaller processors such as Crystal Thermoplastics Inc., that means more joint ventures and alliances as customers want production on a global scale.
``To cut costs, you need capital to invest in new machines,'' said Michael Brown, vice president of sales and marketing with the Cumberland, R.I., firm.
``If you look around at the consolidation in our industry, it is capital-driven.''
Crystal has formed a joint venture with a Puerto Rican firm, Flexible Packaging Group. The thermoforming companies recently spent $300,000 on another line at the Bayamon, Puerto Rico, facility, he said.
The pressures from HMOs and health-care purchasing groups also have been accepted as part of the business climate, said Greg Bischak, director of marketing and business development for tubing and connector manufacturer Raychem Corp. in Menlo Park, Calif.
``The industry has digested the need to be more cost-sensitive,'' he said.