Medical Device Outsourcing Market Overview
The global medical device outsourcing market was valued at approximately $45 billion in 2016 and is projected to grow at a CAGR of around 9.7% during the forecast period. This growth would be mainly led by the need to curb the rising cost of medical equipment and thereby the healthcare expense. Further, the demand to provide high quality products that clear the stringent regulatory requirements is also a key factor driving the market demand. Among the various products, electronics is the largest revenue generating category, due to the high dependency of healthcare providers on electronic products for wireless and robotic technology.
GLOBAL MEDICAL DEVICE OUTSOURCING MARKET, BY SERVICE, $M (2016–2023)
The medical device outsourcing market is expected to be led by Class II medical devices, that primarily includes non-invasive and include x-ray machines, PACS, infusion pumps, powered wheelchairs, surgical needles and suture material, surgical drapes, and acupuncture needles, on the basis of device type. This large contribution is attributed to the increasing surgical procedures, globally. The devices falling under Class II category require special labeling, maintenance of performance standards, and post-market surveillance, owing to the design complexity of these devices. Class III devices are expected to witness the fastest growth in demand, with the CAGR of 10.2% during the forecast period.
Cardiovascular is one of the major application of medical device outsourcing, owing to the high prevalence of cardiovascular diseases. According to the WHO, approximately 17.7 million people died from cardiovascular disease in 2015, representing 31% of the global deaths. Of these deaths, approximately 7.4 million deaths were due to coronary heart disease and 6.7 million were due to stroke. The category accounted for more than 17.0% of the medical device outsourcing market in 2016, globally.
On the basis of service type, testing and certification services are expected to witness the fastest growth in demand in the medical device outsourcing market, at a CAGR of 10.7% during the forecast period. New market entrants and original equipment manufacturers (OEMs) in medical device industry are actively seeking assistance for testing and certification for their devices to meet regulatory standards set by regulatory authorities such as the European Medicines Agency (EMA) and U.S. Food and Drug Administration (FDA), which is a key factor leading to the highest growth in demand for these services.
North America is the largest medical device outsourcing market, globally, mainly due to factors such as the presence of large number of medical device manufacturers, and domestic availability of technologically advanced high-end medical devices in the region. The region contributed more than 45% to the global market in 2016. Asia-Pacific is expected to witness the fastest growth in demand for the medical device outsourcing market during forecast period. The major factors driving the region’s growth are the availability of low cost labor and comparative less expensive infrastructure cost as compare to other developed economies of the world.
Medical Device Outsourcing Market Dynamics
The major factor leading to the growth of the medical device outsourcing market is the need to curb the rising cost of medical equipment. Also, the demand to provide high quality products that clears the stringent regulatory requirements is expected to drive the market for services offered by the regulatory consulting services. Geriatric population is more prone to chronic and age-related diseases as well as musculoskeletal injuries and hence, require medical attention. Need for low cost portable and efficient medical devices becomes more significant while treating older people. Therefore, considerable increase in geriatric population is creates increased demand for medical device outsourcing products.
According to a publication by the UN Department of Economic and Social Affairs on the World Population Prospects, the global number of people aged 80 or over is projected to grow three times by 2050, from 137 million in 2017 to 425 million in 2050. The number is expected to increase to 909 million, by 2100, nearly seven times its value in 2017. Moreover, in the Europe, around 25% of the population is already aged 60 years or over, and this proportion is projected to reach 35% in 2050.
Some of the factors hindering the growth of the market are inadequate reimbursement policies and threat of information loss to the OEMs. OEMs in medical device industry are bound to share proprietary information about their product, collaboration and agreements, while medical device outsourcing to third party vendors. This creates risk of data theft or loss which might hamper the business of OEMs. Therefore, OEMs are still hesitant to adopt medical devices outsourcing as means of cost reduction, which directly hampers the growth of the medical device outsourcing market.
The key players in developing countries of Asia-Pacific and Latin America are witnessing considerable increase in their revenue due to the growth in opportunities offered by these regions. Medical device OEMs are outsourcing the production of their devices to these economies due to availability of labor, raw materials and components at lower cost.
Medical Device Outsourcing Market Competitive Landscape
The growing number of acquisitions are expected to increase the market share of key market players in the coming years. For instance, in August 2016, Cirtec Medical, completed the acquisition of Stellar Technologies, Inc., a medical device machining and component manufacturer, based in Minnesota, the U.S. The acquisition was done to enhance the technology, specifically for the customers in the high-growth neuromodulation market.
Similarly, in July 2017, GE Healthcare announced the expansion of its U.S. healthcare consulting business by completing the acquisition of Novia Strategies, Inc., a healthcare consulting firm. The acquisition was done to enhance GE Healthcare outcomes-based solutions and to help healthcare organizations meet the market demand for increased access, enhanced quality and more affordable healthcare for their patients.
Some of the major players in the global medical device outsourcing market include Cardinal Health, Inc., Integer Holdings Corporation, Onex Corporation, TE Connectivity Ltd., Flex Ltd., Heraeus Holding GmbH, Plexus Corp., West Pharmaceutical Services, Inc., and Sanmina Corporation.