Intensive Care Canada

OVERVIEW:

The world market for medical devices is forecasted to grow at 5% CAGR from 2011 to 2016 and will eventually reach US$350 billion. This significant growth is driven by the rising demand for new and effective healthcare technologies and the desire to contain escalating healthcare costs (PRWEB, 2011). Canada's US$ 7 billion medical devices industry is one of the largest in the world. The industry is comprised of over 1,000 firms that employ 26,000 quality workers. In 2010, Canada had the lowest costs for establishing and operating a medical device manufacturing facility among G-7 countries (Government of Canada, 2011). The industry also has access to the world-class research conducted in universities, research institutes, and hospitals located across the country. One of GE's strategic growth plans is to expand its healthcare business by investing $100 million on the intensive care medical device business. Canada is one of the countries under consideration as a potential location for this new capital investment.

ISSUE AND KEY FINDINGS:

The overall economic behavior of the country and the implication it has on the specific industrial sector to which the investment will be made is one of the critical considerations in making the investment decision. The purpose of this report is to identify the macroeconomic strengths and weaknesses of the Canadian economy and assess the impact of these factors have on the medical device industry. While there are numerous factors that affect the medical device industry, the most significant ones are discussed below:

1. GROSS DOMESTIC PRODUCT (GDP): - Canada is the 9th largest economy in the world with a GDP of US $1.57 trillion (nominal rate) and the 14th largest based on GDP of US $ 1.33 trillion (Purchasing Power Parity) in 2010 (Government of Canada, 2011). The relative percentages of each GDP component are as follows: 58%Consumption, 22%Investment, 22%Government Expenditures and -2%Net Exports (OECD, 2011). The negative growth posted on net exports has been largely due to the recession in the US, which is its biggest trading partner. An obvious feature for Canada's GDP data is its steady growth over time. The real GDP in 2010 was more than three time its 1970 level (Gregory Mankiw, 2008). From 2001 to 2010, Canada's average real GDP growth of 1.9% outperformed rest of the G7 countries and from 2010 to 2012, Canada's real GDP is estimated to be at an average of 2.8% (Government of Canada, 2011). Based on the general consensus, a 2.5-3.5% per year growth in real GDP is the range of best overall benefit (Barnes, 2010).

Yet another good indicator of the relative attractiveness of Canada is its GDP and GNP gap analysis, which signifies the extent of foreign ownership of the country's productive capacity. Since 2000, the gap has been minimized which means Canada