Medical Device Industry – Trends

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. 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! 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. 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.

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.

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.