NEW
YORK, NY--(Marketwire - Jun 28, 2012) - While supporters and opponents of
President Obama's healthcare reform legislation let out boos or cheers for the
recent decision of the United States Supreme Court, one industry will not be
pleased, according to Kalorama Information. The healthcare market research publisher says
that the medical device industry
will face additional costs because of a tax provision in the act that is set to
begin in January of next year. This will likely be of concern to the $322
billion world medical device industry, according to Kalorama Information.
The Patient Protection
and Affordable Care law included new tax provisions intended to help fund
healthcare reform, which require device manufacturers to pay a 2.3% excise tax
on "taxable medical device" sales beginning January 1, 2013. The tax
applies to medical device
products intended for human use, but exempts eyeglasses, contact lenses, and
hearing aids, as well as devices that are "generally purchased by the
general public for retail or individual use." Some companies have warned
investors of the taxes they expect to pay in 2013 as a result of the tax:
·
Johnson and Johnson, the largest device company, estimated that it
will pay between $200-$250 million under the new law
·
Teleflex stated it would face $15 million in charges
·
Becton Dickinson said that 80% of its US revenues would be subject
to taxes
Source:
company 2011 annual reports
"These fees are not
large compared to total revenues of the companies, but the burden of the fees
is a concern for an industry that has been recovering from the recession,"
said Bruce Carlson, Publisher of Kalorama Information. "It will
affect costs and profits, may affect R&D spending and may encourage
cost-saving options such as outsourcing more production."
Kalorama notes that the
Medical Device Manufacturers Association (MDMA) and other groups have fought to
reduce the target size of the tax, as well as the rate. The group is currently
working to repeal or change the provision in the Healthcare Reform bill. The
repeal of the tax, popular in the medical device industry, has thus far been
unsuccessful.
Kalorama Information's
report, The Global Market for
Medical Devices, 3rd Edition, includes profiles of companies in the
industry, market sizing, forecasts and regional breakouts of the world device
market, products in development and much more information.
