How exchange rates are affecting the medical device industry

By Kate Jablonski, Emergo Group

In mid-2015, Emergo surveyed more than 260 medical device executives to examine how fluctuating exchange rates affected their company’s profitability and sales/turnover and whether they made marketing or pricing adjustments to control potential losses. Results are presented as a whole and by region to show which markets were most affected by recent currency rate changes.

The US Dollar grew strong against the Euro and other major currencies throughout 2015. You might expect a strong Dollar to cause celebration, as it marks a growing US economy. But the Dollar grew so quickly that many industries, including the medical device industry, struggled to adjust.

US-based medical device exporters suddenly saw their products become more expensive to foreign buyers, particularly in Europe. They noticed slower sales rates and strained export negotiations, which left some companies facing tough decisions on pricing and market strategy. In order to secure new sales agreements and ease the pain for European clients, some manufacturers lowered their prices. However, pricing reductions that produced increased sales did not necessarily raise profits and some manufacturers found themselves working harder just to maintain their current margins.

While 2015 was a challenging year, some device manufacturers benefitted from the stronger US Dollar, especially those in countries beyond the United States and Europe. And many felt no impact on their business. Currency rates shift constantly, so over-correcting can leave you scrambling when the tide changes again, as it is sure to do. Because of this, some manufacturers are taking a “wait and see” attitude before making any adjustments in their business.

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The opinions expressed in this blog post are the author’s only and do not necessarily reflect those of MassDevice.com or its employees.

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