Shares of Merit Medical Systems (NASDAQ:MMSI) dropped over 10% intra-day today after China unveiled a 34% tariff on imported goods in response to the U.S. tariffs announced on April 2. While many medical device firms are expected to weather the impact relatively well due to limited cross-border trade, Merit may be a notable exception.
The broader medtech industry has spent recent years localizing production within China, reducing reliance on imports. Companies like Intuitive Surgical (ISRG) have even launched China-specific products through local joint ventures. GE HealthCare (GEHC), for example, earns 12% of its revenue from China but manufactures over 70% of its equipment there, effectively shielding itself from import-related risks.
Merit Medical, however, could be more vulnerable. With 11% of its sales stemming from China and no manufacturing presence in the country, it lacks the localized infrastructure that many of its peers have built. The extent of the impact remains uncertain, as the origin of Merit’s imports to China has not been disclosed.
Investors appear concerned that the company’s lack of local production could put it at a competitive disadvantage, especially if Chinese buyers pivot to domestically produced alternatives to sidestep tariff-related costs.
