The world's medical equipment and supplies industry was worth $80 billion in 2005, with the United States being the the largest consumer country of medical and dental equipment.
Although the 2009 financial crisis
has been and will be tough on the medical industry, a number of factors
including growing and aging population, higher consumer expectations for better healthcare in both developed and developing nations, surfacing of newer therapies owing to technological advancements, growing medical tourism, increasing direct to consumer advertising, will influence the demand for medical equipment and supplies.Medical Equipment and Supplies Industry
According to the North America Industry Classification System, the medical equipment and supplies manufacturing industry comprises “establishments primarily engaged in manufacturing medical equipment and supplies. Examples of products made by these establishments are laboratory apparatus and furniture, surgical and medical instrument
, surgical appliances and supplies, dental equipment and supplies, orthodontic goods, dentures, and orthodontic appliances.”Medical Equipment and Supplies Industry Overview
There were about 8,000 medical device companies in the United States around 2004. While the number of large and mid-sized medical device companies was less, over 80 percent of firms employed no more than 50 people. One reason for so few mid-size companies is that from the mid to late nineties the industry has witnessed a number of mergers and acquisitions. The consolidation in the industry is fueled by a the fact that many smaller players find it hard to devote the financial resources needed to eventually bring out products in the market. This is also a trend that is expected to continue in 2009, albeit the deals in the current economic scenario will be characterized by high volume and low value. At the same time cash rich companies that focus on innovation will benefit during the current economic state of affairs.
The US medical/hospital equipment and supplies
industry is the leader in the world market. After 2002, production within the sector increased at an annual rate of 6 percent reaching $82.4 billion in 2004. The country derives its competitive edge on the basis of advancements in related industries including biotechnology, instrumentation, telecommunications, software development, microelectronics, etc.
A highly degree of regulation is the characteristic of the industry affecting its performance. As a result medical device companies need to infuse a lot of resources toward product approval processes, user fees, clinical trials, and plant audits. Related to this is the issue of reimbursement rates, which often determine whether medical device products will be viable of being introduced in the market or not.
Further, despite a high requirement of venture capital in creating opportunities for small and medium-sized companies, it is hard to get due to the regulatory and policy risk investors must face. This may at times discourage innovation.Factors Affecting the Medical Equipment IndustryDemographic Influences
The number of senior adults in the US is increasing, with the percentage of people 65 and older is expected to rise
from 12.4 percent in 2000 to 20.7 percent by 2050. The scenario becomes clearer when the percentages are translated into numbers, with the number of people 65 and older being 35 million in 2000, expected to be 54 million by 2020, and 86 million by 2050.
The changing demographics have several implications such as changing health needs, increasing life expectancy giving rise to sophisticated and longer-term healthcare, and increase in home healthcare services due to increasing pressure to keep health care costs down. All of which is not conceivable without introducing a variety of next-generation and innovative medical equipment and devices.
Further, the young and middle aged patients are expected to propel the US market for hip replacement in 2009, while medical equipment associated with women’s health too will be a part of the medical device industry outlook
for 2009.Technological Changes
The pace of research and development within the industry is leading to the development of medical technologies
that enable early detection and aid more effective treatment options for diseases e.g. integration of radiology and information systems.
Widespread use of electronic health records by health care providers and patients will translate into workplace efficiencies and improved health care delivery for patients.
Higher investments in research and development of medical devices will have a significant impact on medical equipment and supplies industry. Investments in R&D by US manufacturers grew by over 100 percent during the 1990s. By 2004 these investments reached $95 billion on an annual basis.
Availability of next-generation of materials and formulation of better manufacturing processes will also benefit the medical devices industry. Medicines and therapies developed out of biotechnology, and genetic engineering research may require drug
delivery via medical devices rather than in the form of pills, leading to a convergence between the disciplines.International Regulation
International trade of medical devices sometimes faces obstacles from the existence of non-uniform regulations
for medical devices around the world. As a result, even though a device may have gained approval within the home country, the manufacturer may have to initiate an approval process afresh, to be able to export her products. To address the issue the Global Harmonization Task Force (GHTF) was conceived in 1992 and it works to encourage convergence in regulatory practices surrounding the safety, effectiveness/performance and quality of medical devices, thus encouraging technological innovation and international trade.Increasing Competition
The competitive landscape of the industry is becoming increasingly challenging as a number of multinational companies aggressively attempt to seize global opportunities. Companies are focusing more and more on their international sales and revenue, joint ventures, and mergers and acquisitions.
Opportunities abound in the world market due to the rising demand for medical and dental equipment and supplies. This demand is driven be a greater stress being laid on building hospitals, establishing public health insurance, increases in care by countries for the health of citizens. The demand, as a result, has already surged witnessing double-digit growth rates in most regions of the world. Developing economies, in particular, offer promising opportunities for future growth.