• by bcarlson@marketresearch.com
  • May 26 2016

Medical Devices: Growth Through Acquisitions, US Sales and R&D

Medical Devices: Growth Through Acquisitions, US Sales and R&D

Even with slight growth in the medical device industry, prospects in medical devices are promising for many firms. More promising than, for example, in the pharmaceutical industry, challenged by patent expirations and regulatory activity. Innovative medical device companies can still win.  This is the finding of Kalorama Information’s yearly study, The Global Market for Medical Devices, 7th Edition. While the majority of medical technology sales occur outside the U.S., the United States remains the single largest country medical device market, and in 2015 firms found increased sales in the U.S. as European markets for medical devices slowed and world markets provided less promising growth than in past years.  The world market for medical devices reached $381 billion in 2015.  Though these are challenging times in the medical device industry, there is still plenty of opportunity for success for companies that remain optimistic and seek innovation.  

Toward that end and in search of new growth prospects, medical device companies spend a higher percentage of their revenue on research and development (R&D) than companies in other industries do.  Also, in addition to R&D outlays, many medical device companies are merging to build revenue growth and present combined offerings to hospital and physician customers.  

The definition of a medical device is a broad one.  A medical device is a product that is used in treatment, diagnosis, or injury repair in a patient that does not achieve its effect through chemical action or metabolism in the human body.  Most importantly these are devices that are regulated.  This is a scattered market in which hundreds of companies worldwide participate. Despite this, fifteen companies earn 40% percent of the revenue in this market and much of the revenue is earned in a few discernible categories, cardiovascular, respiratory, patient monitoring, wound care imaging and orthopedics being top areas.   

Trends & Opportunities in the Medical Devices Market

One of the most significant drivers of all healthcare services is population and specifically, the population of older persons.  The aging of the population increases a host of statistical events that lead to more medical device demand, such as injuries, surgical procedures, hospital admissions, and chronic disease.  The population is aging in the largest healthcare market of the United States, which alone is significant.  However, other significant world healthcare markets are dealing with the challenge of aging populations, including those of Europe, Japan, and China.  

The coming years will test the strategies of device companies to innovate and develop emerging markets as some of the traditional sources of revenues will be challenged.  Reimbursement reduction schemes in the U.S. and Europe will disrupt even the most innovative of device companies able to develop products that can command higher prices.  The United States remains the largest market for medical devices, but growth in device sales will be slower in the long term due to cost-cutting measures, group purchasing consolidation, and reimbursement challenges.  Various activities in the European market are ongoing, from the revision of the Medical Devices Directives (MDD) to European collaboration in the field of Health Technology Assessment (HTA).  These need to keep moving forward to safeguard patient access to medical devices and innovation in medical technology in Europe. 

In terms of market leadership, Medtronic has moved to the top of the medical device market due to its merger with Covidien, completed in 2015.  This market share change is also due to the medical device company asset sales of Johnson & Johnson, now second in the market.  GE Healthcare, Philips, Boston Scientific, and St. Jude Medical are also among the top medical device companies.  The coming years will test the strategies of these and other device companies to innovate and develop emerging markets as some of the traditional sources of revenues are challenged. 

The seventh edition of Kalorama Information’s Global Market for Medical Devices contains: an overview of medical devices and their regulation in several world markets; market size estimates and forecasts to 2020 for the global market, the United States market, and several country markets, including China, Japan, India Brazil, Germany, Canada and other nations; an index of bellwether device companies; markets for specific categories of medical devices; a look at market drivers and limiters; and company profiles of major device concerns.

 The Global Market for Medical Devices, 7th Edition, can be found at Kalorama Information: http://www.kaloramainformation.com/Global-Medical-Devices-10058730/.