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The US government is planning to make some major changes for managed care and Medicare recipients beginning in Nov 1998 and this will have an effect on provider cost controls. Medical supply manufacturers, especially the orthopedic sector, will be affected by this, but new products will aid sales and margins in 1998 and through the years 2001-2003. Investors, however, should select the most timely stocks for commitment.

Diabetes has become more prevalent in the US, and the world at large, with the ageing of the US population and other factors. The market for diabetes and glucose test equipment, as well as insulin therapy needs, has become more important to medical supplies companies, such as Johnson and Johnson and Abbot Labs. Cost controls and new products have combined for good 1998 profit prospects for the industry, and investors should seek timely stocks.

There have been efforts by the Food and Drug Administration in the US and similar agencies in Europe for workload reduction, fewer demands on medical supply companies, and other forms of regulatory reform. There have also been drug and diagnosis innovations which will personalize medical care, and heart disease has been targeted for greater health care spending. Investors need to select stocks in this industry on an individual timeliness basis.

Medical supply stocks are not expected to do well in 1997 because of the proposed Medicare budget and some collaborations among companies. Those stocks that are expected to do well can be invested in to diversify a portfolio that is strong in favorable investment stocks. Some medical supply stocks will not increase their earnings in 1997 and 1998 because of the value of the US dollar against foreign currencies.

The medical supplies industry as a whole appears to have a bright future but since the industry is large and varies in products produced, investors should check Safety and Timeliness ratings for individual companies to avoid risks. New products will be the key to increased sales, but since these require additional research and development costs and are often delayed by government regulations, the beneficial results are often slow in coming.

The medical supplies industry has always depended upon technological advancements but it is necessary for the benefits of new medical instruments to be worth more than the costs. The cyclical nature of the industry does not preclude that there are stocks that will interest investors. It is necessary to study their value and it may not be wise to hold on to them until the year 2000.

Potential investors in the medical supplies industry should be cautious and carefully check individual Timeliness and Safety rankings. Although the industry is attracting interest with double-digit earnings growth in some cases, it will be affected by the effects of information technology and the potential restructuring of the FDA merit watching system. Consolidation is likely in the manufacturing sector.

There was further consolidation in the medical supplies industry in 1995, especially in the interventional cardiology field. Revenues and earnings for the industry have also been strong in 1995. There will be increased demand for medical supplies and services in 1996 with improved living standards and the aging population worldwide, which will benefit profit margins. There are a wide variety of timely stocks in this industry for investor selection.