Big medtech's share price bloodbath

The worst half-year period for a decade leaves the biggest medical device companies half a trillion dollars poorer.

The first half of 2022 has been nothing short of disastrous for the largest medtech companies. All but one of the groups with a market cap greater than $10bn saw their share prices decline over the past six months, with this cohort as a whole shedding an astonishing $450bn in value.

While the wretched state of the markets in general is a major factor here, it is also clear that several of the big losers had been winners during the pandemic. The cosmetic dentistry specialist Align Technology, whose value soared as people became dissatisfied with their appearance on video calls, and Sysmex, which makes Covid tests, lead the fallers. 

The half-year change in indices of listed device makers shows just how miserable the situation is. All were up across 2021, by between 18% and 23%. Now all are down. European companies do not appear to be suffering as badly as US groups, though whether this counts as a glimmer of hope is debatable.

Stock index  % change in H1 2022
Stoxx Europe 600 health care -6%
Dow Jones US medical equipment index -24%
S&P composite 1500 healthcare equipment & supplies -26%

Japan seems to be more resistant to wider market woes than US or even European stocks, judging by the sole group which managed to grow its valuation in the first half of 2022. Stock in Tokyo-listed Olympus has risen by 3% so far this year, which counts as a triumph in these dismal times. 

The company’s shares rose sharply in mid-May after it posted strong results for its fiscal fourth quarter and projected record net profit for the coming fiscal year. Olympus’s profit more than doubled to ¥28.1bn ($216m) for the quarter that ended in March, thanks in part to a recovery from pandemic sales slumps. And it said it could achieve net profits a third higher than this in its fiscal 2022. 


The rest of the big caps can only look on in envy. Align had the most torrid time of all, with its 64% fall in valuation representing the only time a big cap company has shed more than half of its worth stock since Vantage began tracking this cohort in 2013. 

The reason for Align’s freefall is simple: sales of Invisalign, the transparent tooth-straightening system that is the company’s bread and butter, are falling. In the first quarter of 2022 the group shipped 598,835 Invisalign cases, down 5% from the final quarter of 2021. And the Q4 2021 figure was 4% below the quarter before that. 

As a company whose products are used electively and largely paid for out of pocket, Align is hugely exposed to the cost of living crisis bedevilling the Western world. The same factors are partly behind the fall in the shares in Straumann, which has an Invisalign competitor called ClearCorrect.

Large cap ($10bn+) medtech companies: top risers and fallers in H1 2022
  H1 share price chg H1 market cap chg ($bn) Market cap at Jun 30, 2022 ($bn)
Olympus (¥) 3% 0.2 30.4
Top 5 fallers
Align Technology ($) -64% -33.2 18.7
Sysmex (¥) -47% -13.7 14.9
Dexcom ($) -45% -22.8 29.3
Intuitive Surgical ($) -44% -56.3 72.0
Straumann (SFr) -41% -13.7 19.7

The drop in Dexcom’s market cap is more to do with competitive pressure. Abbott’s Freestyle Libre 3 continuous glucose monitors was approved by the FDA in late May. The device competes with Dexcom’s G7 in Europe, but the G7 has yet to gain US approval. 

One element that was not at play in Dexcom’s falling valuation was the bid it was said to be considering for the insulin pump maker Insulet in May. The company scotched these rumours after a week or so of fevered speculation, but its shares barely shifted during this period.

While the factors affecting individual companies are interesting, they are mostly outweighed by the macro issues hitting the sector. Makers of devices that patients pay for themselves are having a hard time and will likely continue to suffer in the months to come.  

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