Medical exports from Minnesota register sharp drop

For most things in Minnesota these days, good news is almost always matched by bad or worse news.

First the good news: the state’s exports in manufactured goods during the second quarter jumped 19 percent to $4.3 billion compared to the same period a year ago, according to the Department of Employment and Economic Development (DEED). So far this year, Minnesota is close to reaching pre-recessionary export levels.

Now the bad: optic and medical products fell 10 percent to $723 million — the only major product group in Minnesota to register a decline. Worse yet, sales of optic and medical products for the entire country rose 15 percent.

You don’t need to be an economic genius to realize this is bad. Minnesota’s medical device industry is a crucial component of the state’s economy, producing most of its growth and high-paying jobs.

On a national scale, the medical device industry is one of the few to produce a trade surplus. That’s why the Obama administration chose Medtronic Inc.’s headquarters in Fridley in June to promote its National Export Initiative — a push to encourage small-to-medium medical device companies to pursue emerging overseas markets like China, Japan, Eastern Europe and Latin America.

The state report cited Ireland for the reason behind the drop in medical product sales. State exports to Ireland tumbled 51 percent to $109 million, dropping Ireland to Minnesota’s 13th largest market.

But the problem is not confined to Ireland. Last month, Medtronic sharply cut its fiscal 2011 profit and sales forecast after a weak first quarter, citing falling prices and less use of medical devices around the world.

“A softer global healthcare market impacted by decreased utilization and increased pricing pressure made for a difficult first quarter,” CEO Bill Hawkins said in a statement at the time.

In a later interview with Bloomberg News, Hawkins said Medtronic was surprised by the “magnitude of the market slowdown” in its spine and heart-rhythm device businesses, which accounted for more than half of sales.

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