Congress fights over medical device tax as companies merge

As medical device companies are anticipating whether the tax on their industry products will be repealed in Congress, some are looking to expand in the future. MedPlast recently acquired Orthoplastics in its effort to grow in the European medical device and implantables market, Plastics News reported.

MedPlast, a U.S.-based medical molder and contract manufacturer that had $222 million in sales in 2012, announced it was acquiring Orthoplastics, a manufacturer of polyethylene products and parts for orthopedic device implants located in the United Kingdom. MedPlast previously acquired United Plastics Group, which makes plastic products for medical and industrial companies, last year.

While MedPlast develops medical devices used in surgery, oncology and other health applications, it aims to increase its opportunities in the orthopedic implant market, which counted on Orthoplastics as a major supplier. Harold Faig, chief executive officer of MedPlast, said the company expects that MedPlast can grow faster into the medical device assembly and implantable markets after acquiring Orthoplastics.

By combining with Orthoplastics, MedPlast can expand its existing range of processing technologies in an increasingly regulated market.

"This acquisition allows MedPlast to combine its technical capabilities with Orthoplastics' implantable technologies to become a significant player in the implantable market," David Brooks, managing director of Orthoplastics, said in a statement.

Medical device tax up for debate in Congress

Recently, the tax on medical devices was the subject of heated debate in Congress, Bloomberg reported. The Republicans planned to vote on a bill to delay the medical device tax, which is expected to generate $30 billion over a decade. The revenue from the tax would serve to help fund the Obama administration's health care programs under the Affordable Care Act. The Democrats said they intended to strike down budget resolutions or debt deals that specified a repeal of the medical device tax. Medical device manufacturers argue a tax would deter innovation. Some legal experts counter that the medical device tax would result in a drop in funds needed for the health care reform and cause the Obama administration to find other avenues for revenue.

"A repeal of the medical-device excise tax would result in large drop in tax revenues that would need to be offset by tax increases or spending cuts," Martin Milner, a tax partner in the Washington office of McDermott Will & Emery, said in an e-mail to Bloomberg. "As a result of the necessary revenue offset, I do not think the medical device excise tax will be repealed absent a grand bargain that includes fundamental tax reform."

Share To:

Strategic Sourceror

Post A Comment:

0 comments so far,add yours