Medtronic CEO sees shift toward deflation in device pricing

The medical device industry is shifting and entering a period of deflation after years of rising prices.   This according to Bill Hawkins, the CEO of Medtronic, who predicts the market prices for medical devices to decline 2 percent to 3 percent driven by healthcare reform and sluggish demand.

From an interview with Reuters: “We have adjusted our business model” Hawkins said.   “We’ve got certain cost reduction programs that have enabled us to manage our margins pretty well in this environment, and even with a 2 to 3 percent sort of decline going forward, we think we can maintain our margins.”

Medical device makers historically have passed on price increases by introducing new and improved products that could command a higher price tag.  So are we now witnessing a fundamental shift in the market, as Hawkins predicts?

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