What goes around in regulatory terms comes around in financing terms in the world of medical devices and diagnostics. However, the same can be said for healthcare reform, an idea that received some support by an analyst for an investment bank during the CRT 201 sessions concluded earlier this week (see accompanying story).

Rick Wise, an equity research analyst with the investment bank of Leerink Swann (Boston), gave a Wall Street perspective on healthcare reform. "It won't come to you as a major surprise that bad news and uncertainty are not good for stock prices," he said.

Discussing the device makers who trade shares on Wall Street, Wise said, "historically these stock sold at a significant premium compared to" the Standard & Poor's 500 series of stocks, although these large cap firms' returns in 2009 aligned more or less with the S&P.

Wise said that as of three or four months ago, "I thought 2010 might be a better environment" due to a variety of factors, including the expectation that "sales growth should accelerate." He said that "earnings per share growth are expected to grow faster than sales" for a lot of Wall Street firms next year mainly thanks to management's emphasis on leaner operations.

All the same, "healthcare reform is still an overhang," Wise observed, adding that industry is "going to be on the hook for some kind of tax" if any sort of healthcare reform proposal makes its way to the Oval Office.

Another very prominent factor is that "the FDA environment is growing more complicated," but device makers – indeed U.S. firms in general – are starting to lose exports thanks in part to how the dollar is trading against foreign currencies. The dollar, "which I thought was going to be a positive, is going the wrong way again," Wise stated, a dynamic that may in part reflect the inability of some European economies to move into positive economic growth.

Addressing cardiovascular devices, Wise said, "The major large market ... has stabilized, but growth is slow," an observation he said extends to orthopedics. And while the Massachusetts special election has thrown healthcare reform for a temporary loss, he said he is "fascinated that some people are convinced that nothing is going to happen on healthcare reform."

Wise said that the number of 510(k) clearances is down and that one industry source says clearance times have doubled of late. He also noted of mergers and acquisitions that there is "lots going on and more to come." One way or another, "companies are still going to grow," he said, including by "marketing more vigorously in other nations," but said it is difficult to predict how the market would behave between now and 2015.

— Mark McCarty, Washington Editor