(Adds Becton Dickinson CEO comments, updates share prices)
By Debra Sherman
CHICAGO, Aug 16 (Reuters) - Shares in medical technology companies are likely to remain a durable safe haven for investors as a credit crunch drives stock market volatility, analysts said on Thursday.
The broad Standard & Poor’s 500 Index .INX has shed roughly 10 percent during the past month, while the S&P Health Care Equipment Index .GSPMED, which includes 11 health-care companies, has fallen around 7 percent.
While the sector is not impervious to current market conditions, it is likely to hold up better, since medical technology companies tend not to hold as much debt and since spending on their products is far less discretionary, said Debbie Wang, a medical technology analyst at Morningstar.
“These (medical technology) stocks will be buffeted during these market conditions. Considering what’s driving the market right now, a credit crunch won’t hurt this group nearly as much because most of these companies, with the exception of Boston Scientific Corp. (BSX.N), do not carry a lot of debt.”
An aging population, coupled with relatively stable pricing and the nondiscretionary nature of medical devices should provide a stable base during this volatile period, Wachovia analyst Larry Biegelsen wrote in a research note to clients.
“We believe the fundamentals of the cardiology, ophthalmology, orthopedics, sleep therapy and diversified medical device sectors are more stable than the general market, which has more exposure to discretionary spending,” he added.
Tom Werner, chief financial officer of Hospira Inc. HSP.N, a maker of hospital products and generic injectable drugs and a component of the S&P Health Care Equipment Index, said: “Generally speaking, the healthcare industry is less affected by market turbulence, as it doesn’t really impact demand for patient care.
Looking specifically at Hospira, he said in an e-mail interview: “The current environment hasn’t introduced any significant challenges for us, nor has it impacted our investment decisions. We’re actually increasing our investments in R&D, as we view new products as a primary driver of future growth.”
In a telephone interview, Becton Dickinson & Co. (BDX.N) Chairman and Chief Executive Officer Edward Ludwig said: “The balance sheets in (the sector) are very strong and this definitely is not a cyclical industry. We are almost impervious to interest rate changes.”
The equipment index was down 1.62 percent to 542.07. Among its components, Medtronic Inc. (MDT.N) shares were down 74 cents to $51.91; Boston Scientific shares were off 24 cents to $12.67; Hospira shares were off $1.23 to $37.21; Zimmer Holdings Inc. ZMH.N shares slipped $1.23 to $75.76; and Becton Dickinson dipped 60 cents to $74.29.
(Reporting by Debra Sherman)
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