Large Capitalization Medical Device Companies Starting to Dominate Field, Nationsbanc Montgomery Securities Analyst Tells Investors.

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 17, 1998--A handful of large-capitalization companies are beginning to dominate the medical products field and are well-positioned to expand on their lead in the coming years, according to a medical products industry analyst for NationsBanc Montgomery Securities.

The major players, including Boston Scientific Corp., Medtronic, Inc. and Guidant Corporation, are highly diversified and in dominant positions in the biggest market segment - products to treat cardiovascular conditions - but they also are poised to take leadership roles with new products to treat neurological and peripheral vascular diseases and disorders, according to Kurt H. Kruger, medical products analyst for NationsBanc Montgomery Securities. As a result, Kruger said, these players should grow more and more powerful and begin to control an ever-increasing share of the medical products market.

"These medical products companies are starting to produce predictable growth and should start to command the same price-to-earnings multiples as the major pharmaceutical companies," Kruger said.

Kruger's comments came at the 28th Annual NationsBanc Montgomery Securities Investment Conference, which is running this week in San Francisco. The conference, which is the firm's largest to date, features 245 companies with a combined market capitalization of $1.6 trillion making presentations to more than 1,900 portfolio managers. These managers represent 280 different institutions with a combined $3.5 trillion in assets under management.

Kruger said that the healthcare industry is undergoing a metamorphosis, with medical products beginning to become a greater component of healthcare spending while direct care from doctors and nurses commands fewer healthcare dollars. This bodes well for the medical products companies, which are growing increasingly sophisticated in their development of high technology products that can be used to treat a variety of medical conditions.

Kruger said that cardiovascular remains the leading segment of the field, since cardiovascular disease is the leading cause of death in the United States and because new products continue to come on the market to treat cardiovascular disorders. For example, Kruger said, in just the past four years, the market for stents - which are small synthetic coils that are used to prop open diseased coronary arteries - has grown from scratch to become a $2 billion market in 1998.

Other markets that are ripe for expansion include treatments for congestive heart failure, peripheral vascular disease and neurological disorders. Kruger said that products to treat peripheral vascular disease have the potential to become a $1.3 billion category by 2003, while the neurological market could grow to become a $6 billion industry within the next five years.

Kruger's stock recommendations include Arterial Vascular Engineering(1), a new player that has gained dominance in the stent area, and Boston Scientific and Medtronic, both of which are large, diversified medical products concerns with major growth prospects in all key markets. Kruger also recommends Cyberonics, Inc.(1), a small-cap company with a novel treatment for epilepsy.

NationsBanc Montgomery Securities LLC (NMS), a subsidiary of NationsBank Corporation, is a full-service investment bank and brokerage firm with approximately $900 million of regulatory capital. The company provides research, trading and issuance in the equity and fixed-income markets (high yield, emerging markets, high grade and mortgage-backed markets). Other services include M&A advisory, financial buyer coverage, loan syndications, global investment banking, real estate finance, mortgage finance, money markets and the primary dealer.

Through NationsBank, NMS clients can also access products and services that include senior bank debt, bridge financing, real estate banking, treasury management, trade finance and risk management (derivatives products and foreign exchange).

NMS is a registered broker-dealer with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers and the New York Stock Exchange. NMS employs more than 2,700 investment professionals.

Note: (1) NationsBanc Montgomery Securities LLC currently maintains a market in this security. NationsBanc Montgomery Securities LLC was manager or co-manager of a public offering and/or has performed investment banking or other services for this company in the last three years.