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Needham sees the medtech sector growing by 7% in 2023 versus 5.7% last year, despite slowed growth in Q2, helped by double-digit growth in certain cardiology categories.
The investment bank noted that medtech growth slowed slightly in Q2, expanding by only 8.3% compared with 8.9% in Q1, but still beat its Q2 forecast of 5%. And despite forecasting a 7% increase for 2023, the bank sees growth slipping to 5.3% in 2024.
Needham added that AtriCure (ATRC) and Alcon (ALC) remain their top ranked companies in the sector, followed by Alphatec (ATEC), Glaukos (GKOS) and SI-BONE (SIBN).
For 2023, Needham sees electrophysiology achieving the highest growth, with worldwide sales climbing 14% to $8.73B led by Boston Scientific (NYSE:BSX), which is expected to see a 27% increase, followed by Johnson & Johnson (JNJ) at 17%. J&J should remain the dominant player, holding an estimated 49.8% of the market, with Abbott (ABT) in second place at 24.5%.
Despite a 14% jump in 2023, Needham sees growth slowing for the electrophysiology market in 2024 and 2025 to 12% and 11%, respectively.
Worldwide sales of transcatheter aortic valve replacement, or TAVR, devices are expected to grow by 10% in 2023, on a constant currency basis, to $6.74B. Abbott is expected to score the biggest gains, with sales up 26%, followed by Boston Scientific at 16%. As for market share, Edwards (EW) should continue to hold the No. 1 position with 57.9%, with Medtronic (MDT) at No. 2 with 28.5%.
Needham expects TAVR sales to grow by 10% in 2024 and 11% in 2025.
On the flip side, the bank expects the cardiac rhythm management and stent markets to show the least growth this year, with sales for CRM devices expected to rise by only 3% in 2023. Growth is then seen slowing to only 2% in 2024 and 1% in 2025, on a constant currency basis.
Worldwide sales growth for drug-eluting stents is expected to be even worse. Needham sees sales of the devices increasing by only 1% for 2023 on a constant currency basis, followed by a decline of 1% in 2024 and zero growth in 2025.
Despite slowing sales of CRM and stent devices, the cardiology market as a whole saw sales grow by 9.8% during Q2 compared with 8.1% in Q1. Needham now sees sales climbing 7.2% in 2023, help by TAVR and electrophysiology devices, compared with last year’s growth of 6.1%.
Meanwhile, sales of contact lens products have been slowing. The market posted growth of 7.8% in Q2 versus 10.7% in Q1. Needham is now estimating growth of 8.4% for 2023, compared with 8.6% in 2022. Growth is seen as sliding to 5.1% in 2024 and 4.7% in 2025.
The orthopedic device market also appears to be a bit choppy. Worldwide sales of the devices, which include artificial joints, increased by 7.1% in Q2, helped by a 10% increase in knee replacements, but still lower than the 10.3% jump seen in Q1. Needham now sees the sales growing by 7.2% in 2023 versus 5.3% in 2022.
