Five Reasons to Be Bullish on Medical Devices

Five Reasons to Be Bullish on Medical Devices
It’s a good time for medical devices as the market for them rebounds from past years due to a number of positive developments.  The medical device market, which has seen sluggish growth in recent years, will grow to $483.8 billion in 2022.  A full percentage point greater than our estimates from last year.  While the overall market is at this level, individual markets will see greater growth rates.  This according to our yearly report on Medical Devices, The Global Market for Medical Devices, 8th Edition

Five reasons for positive performance in medical devices stand out:

1. Higher prices for advanced, innovative devices that are not easily restricted by payor cost-cutting schemes.

2. The hospital business in the US, the largest world market, as reflected by the three major chains (HCA, Tenet, Community) greatly improved in terms of net income, revenues, hospitals owned.  Doubtful debts saw a large reduction due to the increase in insured patients and Medicaid expansion.  Supply spending was increased at all concerns.

3. The search for non-pharmaceutical methods, eliminate side effects often associated with prolonged drug use.   For example the use of sacral nerve stimulation, gastric bands or occular stents rather than prescribing drugs for treatment of those diseases.

4. Acquisitions drove growth.  There were 225 significant device market mergers and acquisitions since 2015, leading to efficiencies, improved products, better distribution.

5. Emerging markets, including China, India and Poland will post higher growth next five years.

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 who are able to develop products that can command higher prices. The growing attention to real-world evidence to improve outcomes, reduce risk and lower overall cost will be an increasingly important strategy to remaining competitive in the device market.
real-world evidence to improve outcomes, reduce risk and lower overall cost will be an increasingly important strategy to remaining competitive in the device market.
The medical device market, in terms of revenues, is not even half as large as the global pharmaceutical market, though it sees many more transactions. This is due to pricing, as in volume terms there are more units sold in the device market.  However, growth prospects in medical devices in the aggregate are more promising than in the current pharmaceutical industry, challenged by patent expirations and regulatory activity.  Although the largest component of the market is in the United States, the majority of sales are non-US, and considerable future growth is occurring in other markets.