The changing regulatory environment will be the main hindrance for growth in the medical device industry
Los Angeles, California (PRWEB) November 30, 2011
The government-mandated healthcare reform of 2010, titled the Patient Protection and Affordable Care Act, has created a degree of uncertainty for medical device companies, according to a report from IBISWorld, the nation’s largest publisher of industry research. The reform has tightened the pricing environment for these companies and may pressure pricing across the board, while the proposed tax on device companies is expected to hurt profitability. However, according to IBISWorld, the act may benefit the industry, as it aims to reduce the number of uninsured people. Revenue is forecast to increase by 7.4% in 2012, and it is projected to grow by a lower average annual rate of 6.4% to $82.1 billion during the five years to 2016. The new Medical Devices Industry report from IBISWorld covers industry statistics, major companies, growth, trends, market size and analysis.
The Medical Device industry has enjoyed strong revenue growth recently and is forecast to continue expanding in the years ahead. Since 2006, revenue increased at an average annual rate of 16.3%, and sales are expected to grow by 8.7% in 2011 alone to $60.2 billion. The US economic downturn did little to deter hospitals and other customers from purchasing medical devices. In fact, more industry companies gained sales in 2008 and 2009 than those that experienced declines. The aging US population is a major factor driving demand, as the occurrence of health issues that require medical devices is higher in the elderly population. This demographic is forecast to expand further as a percentage of the total population during the five years to 2016, which will help maintain industry growth.
According to IBISWorld analyst, Nima Samadi, by 2016, revenue is forecast to reach $82.1 billion. While revenue is forecast to grow at an average annual rate of 6.4% from 2011 to 2016, this percentage represents a decline from the previous five-year period. “The changing regulatory environment will be the main hindrance for growth in the medical device industry,” says Samadi. For example, the Patient Protection and Affordable Care Act of 2010 will place an excise tax on medical devices, reducing industry profitability to about 8.5% of revenue in 2016, versus 9.0% in 2011. Also, potential reform to the approval process for new devices will likely hamper innovation and encourage more companies to shift functions overseas.
Foreign outsourcing of manufacturing, research and development and other operations, combined with industry consolidation, is forecast to decrease the number of industry operators at an average of 5.5% per year during the next five years to total 655. This decline represents the continuation of the consolidation trend between 2006 and 2011, when the number of companies decreased at an average annual rate of 2.8% to 868. Emerging markets such as China and Brazil will attract medical device manufacturers, as US customers face more stringent Medicare reimbursement requirements and other cost-cutting pressures.
Get For more information on the Medical Devices Industry in the US, including insightful industry analysis and research into the major medical device comapanies at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The Medical Device Industry report contains key industry statistics, market size, market share, industry trends, and growth and profit forecasts for a 5-year outlook period.
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