President Trump’s tariffs on Chinese imports could cost American medical device makers more than $1.5b annually, according to some estimates. MRIs, CT scanners, pacemakers, sonograms and other imaging components were all included in the list of items subject to the 25% tariffs that went into effect on June 6. Also included are a variety of medical supplies and instruments made in China. Some device makers may choose to scale back operations and cut R&D budgets. For years, device makers have been staking out quality and low cost “China manufacturing solutions”. While tariff exemptions are possible, uncertainty prevails. Dozens of drugs and medical devices are among the Chinese products and ingredients that the Trump administration targeted. Chinese manufacturing of medical equipment has undergone a major shift from low-end surgical gloves to more complicated products like magnetic resonance imaging scanners. An International Trade Commission report in January said the fastest growth was in sales of implantable orthopedic devices, plates and screws, mostly made of titanium and used for surgery and sports medicine. One analyst estimates that about 12% of medical devices imported into the U.S. come from China. Device makers are now adjusting to tariffs and costs are likely to passed on to patients and payors.
Keywords: Healthcare Investment Banking, Healthcare M&A, Healthcare mergers