CEO's are scared.
I asked a friend of mine , the CEO of a medical device company enjoying a dominant market position , if he was considering hiring any additional sales and marketing people. Having recently made the decision to relocate his manufacturing from one European location to another in Asia, I thought he might be in need of some international sales talent.
Not only was the answer NO. It was damned NO. He responded that "I think we are a typical company right now. Our revenues actually jumped over 15% this year, but we're sitting on the biggest cash position we've ever been in since the companies start. BUT...we have no idea about the unknowns. Obamacare scares us. The possibility of a falling dollar or inflation not only scares us...it has hurt us and costs us more to manufacture at our European facility. So, we simply sit tight"
Reading about the 9.8% jobless rate, the flat economy, the budget deficit and other bad news is one thing. The human impact is another. My experienced, very talented unemployed friends continue to crank out resumes and network incessantly, while American competitiveness in the global bioscience innovation community continues to deteriorate.
A recently released report, "FDA Impact on US Medical Device Innovation" reinforces the point and notes that the average medical device company responding to their survey of 204/1023 device companies spent $31 M to get a 510(k) device approved by the FDA and $94 M to get pre-market approval. In addition,while it took 54 months to get PMA approval in the US, it took 11 months in the EU.
That said, keep in mind that the best time to innovate is during hard times like these. Great companies emerge from recessions. Talent is available, people are willing to take risks, suppliers are eager to cut deals, and there is always a need for a better mousetrap.