Medical Device Makers May Move
Were going to lose a tremendous opportunity if medical device manufacturers leave the U.S., cautions former Sen. Scott Brown
As we report in this issue's cover story on emerging markets, U.S. dealmakers are finding more opportunities abroad. That may be good news for those growing economies and for the folks investing in them, but for the U.S. the trend translates into new competition for hosting industries, especially in manufacturing.
One bright spot in U.S. manufacturing in recent years has been the nascent medical device sector, which has been particularly vibrant in Massachsuetts. But now the 2.3 percent excise tax on medical devices, which went into effect on January 1, may make it harder for the state to hang onto medical device makers, argues Scott Brown, the former Republican senator from the Bay State. We caught up with Brown at Boston ACG's Growth Conference 2013, which brought together some 600 dealmakers and is considered the largest event focused on M&A in New England. (Watch the video interview, below.)
"The new medical device tax is changing the way medical device makers look at investing here in Massachusetts and in the United States," says Brown, who claims there are 350 companies in the sector in the state. Another government obstacle he says the growing industry faces is a "lack of understanding and consistency" on the part of the Food and Drug Administration. "You can't be marching along in the approval process, and out of left field, the FDA says, we were just kidding. 'Just kidding' costs jobs, money and investment rounds."
Brown says he is concerned that the U.S. will lose the opportunity to lead the world in the healthcare industry, and medical device manufacturers will move to countries where the taxes are lower and the regulations are fewer. "If we don't get this squared away very quickly, we're going to lose a tremendous opportunity."
Brown is best known for beating Democrat Martha Coakley, the former Massachusetts attorney general, in a 2010 special election for the U.S. Senate seat held by the late Ted Kennedy, a Democrat who served from 1962 to 2009. Brown later lost the seat in the 2012 general election to Democrat Elizabeth Warren, a former Harvard Law School bankruptcy professor who served as chair of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP).
In February, Brown became a contributor to Fox News and in March, he joined law firm Nixon Peabody LLP as counsel in the firm's Boston office. Will he move to New Hampshire to run for the Senate in 2014, as rumor has it? "New Hampshire is a great state," he says with a coy smile.
To watch our video with Brown, go to http://themiddlemarket.com/video. And for more on medical device makers, read the June issue of Mergers & Acquisitions.
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