Medical Device Industry – Trends in 2020

Several global companies from the Medical Device industry like Becton Dickinson, Roche, Emerson or Zimmer Biomet are longterm customers of iPoint and rely on our software solutions in the field of compliance, risk and sustainability. Those relationships provide us with detailed industry insights but we also keep an eye on the market trends in 2020 to develope the best software solutions possible to serve the specific needs of the Medical Device Industry e.g. the new EU Regulation of Medical Devices – MDR.

MDM (Medical Device Manufacturing) consists of everything from the fabrication of a medical device to the designing of a manufacturing process to scale-up ongoing process improvements, to sterilization and packaging of a device for shipment. (1)

The Medical Devices industry is showing an upward tick in terms of growth – in 2016 market size was $37.8 billion, followed by $38.3 billion in 2017 and $39.2 billion in 2018. The industry is estimated to reach a total of $40.2 billion in 2019, a $2.4 billion growth in only 3 years – clearly growing at a healthy pace (2). With the additional spotlight put on this industry with some big asian countries, the growth could be exponential.

Needs are Expanding Worldwide

One of the key indicators that this industry is growing is the ever increasing life expectancy worldwide. Populations as a whole are aging and are expected to live longer than ever before. Some of the contributing factors are increased availability of healthy food and improved healthcare accessibility. Transversely, this leads to the need for more medical devices to support these lives

The geriatric population is estimated to reach 1.5 billion people by 2050 – 16% of the total world population! (3) While the population is indeed living longer, there is also an increase in chronic diseases such as cancer, diabetes and obesity – all of which play a role in the strengthening of the medical device manufacturing market (3). While they’re not the best for people of the world, the lifestyle disease, as some call it (alcohol, drugs, smoking) also plays a contributing role in strengthening the outlook for the market (3).

OEMs are Outsourcing and Turning to CMOs

This is one of the most impactful trends occurring in the industry; OEMs are buying other OEMs. Securing the most market share is something that all companies pine for and a new strategy in this industry is to buy other OEMs that already have some of the market share. Instead of a large OEM having to start a new division, interviewing and hiring new employees, training them all, researching and developing in a new area to capture some of that market – they can instead find a company that already has market share, and buy them. Now the original OEM adds to their market share without having to start from scratch.

Now as more companies are buying other OEMs and arguably, buying market share, they’re also turning to CMOs (Contract Manufacturing Organization) to fulfill their technical and production services. OEMs are starting to focus on designing and developing, and leaving the actual production work to CMOs. With CMOs getting more business for production, the facilities are moving into smart production meaning internet integrated machines allowing for a high level of adaptability, rapid design changes and more flexible technical workforce training.

Better and faster production in turn means the product gets out to the customer faster, selling more units and meeting demand quicker, which can lead to more revenue for the OEM.

Hiring Dilemma

The industry is growing, but is it sustainable? Aerotek points out that the manufacturing industry in general is facing issues with hiring, and this is especially true for the medtech market. Assembling medical devices requires know-how and experience and this is what companies used to require from potential employees; 2-3 years of experience. However, since there’s a large need for people, the companies are training new employees for 6-8 weeks and putting them on the job.

To further support this tight labor market, Deloitte points out that there are roughy 400,000 job openings in manufacturing since January 2018, but at the same time there have been historically low unemployment rates. While the two look great, alone – numerous opportunities for people to become employed and high number of people employed, it’s when they’re looked at together that it no longer looks good for the industry. Low unemployment means there are not many people to fill the 400,000 open jobs, leading to scaling and growth issues for the companies down the line.

New compliance requirements in 2020

A new Medical Device Regulation (MDR) will  essentially apply in the European Union (EU) from May 26^th of 2020.  The new MDR (EU 2017/745) will bring in a new wave of extended requirements for ‘medical devices’ produced, sold, and distributed in the European Union that all manufacturers need to adhere to.

Summary

Current trends in the Medical Device industry are pointing to a bright future from longer life spans, lifestyle choices, chronic diseases, but some trouble the industry has to work through if it wants to grow due to hiring shortages and extended legal requirements.

1) https://www.meddeviceonline.com/resource/medical-device-manufacturing
2) https://www.ibisworld.com/industry-statistics/market-size/medical-device-manufacturing-united-states
3) https://www.todaysmedicaldevelopments.com/video/tmd-2019-webinar-medical-outlook-kyocera-sgs-031919/?registered=true
4) https://www.aerotek.com/en/insights/help-wanted-the-manufacturing-hiring-dilemma