Medtech firms see benefit from Democratic plans

By Kim Dixon - Analysis

WASHINGTON (Reuters) - Makers of medical devices ranging from diagnostic tests to defibrillators stand to reap big benefits from U.S. health care system reforms backed by the leading Democratic presidential contenders.

While some health care companies fear Democrats' plans to extend the reach of government's regulatory hand, that risk is offset for device makers by the prospect of a Democratic president broadening the market by extending insurance coverage to many of the 47 million individuals now without it.

The most likely candidates, Sens. Hillary Clinton or Barack Obama for the Democrats and Sen. John McCain for the Republicans, back major changes that are anathema to the pharmaceutical industry. But device companies are less vulnerable to pricing pressure, a key to many of the candidates' proposed reforms.

"If you look at the industry at large, it's not very price-sensitive," said Stanford Group analyst Jan Wald. "Under the Democratic proposals, there is more coverage and more opportunities to sell products."

Product sales by the U.S. medical device industry reached an estimated $123 billion in 2006, according to the Advanced Medical Technology Association, or Advamed. The group represents giants like Medtronic Inc (MDT.N: Quote, Profile, Research, Stock Buzz), whose products include defibrillators to stabilize heart beats, as well as scores of smaller players.

The escalating cost of medical care and increasing number of people without health insurance rank among the top domestic policy issues in recent voter surveys. As the U.S. economy teeters on recession, the issue of broadening coverage is likely to gain even more steam.

McCain, the presumptive Republican nominee, proposes offering tax credits and loosening regulations to make it easier for individuals to buy coverage.

The Democratic hopefuls take a more aggressive approach and attempt to achieve universal insurance coverage. Clinton calls for a mandate that all individuals buy insurance, and both she and Obama want to require employers to contribute to expanding coverage.