Changing regulations for medical devices will inhibit growth, but revenue will remain stable
Los Angeles, CA (PRWEB) January 15, 2013
During the five years to 2012, the Medical Device Manufacturing industry fared relatively well, with revenue expected to grow at an average annual rate of 1.2% to $34.9 billion. The aging population is a major factor driving demand, as the occurrence of health issues that require medical devices is higher in the elderly population. Nonetheless, despite the indispensable nature of medical device products, the recession took a toll on a number of companies. “As some hospitals struggled to raise capital for large assets, thus delaying the purchase of medical equipment, industry revenue plunged in 2009,” says IBISWorld industry analyst Anna Son. “However, the improving economy, the aging population and technological advances have bolstered demand for medical devices in the following years.” IBISWorld estimates that revenue grew 2.3% revenue in 2012.
The Medical Device Manufacturing industry has a medium level of industry concentration. Small operators are common in this type of industry, and typically specialize in developing technology and products for a niche area. “Larger operators, such as major players Medtronic Inc. and General Electric Company, frequently seek to acquire these firms to expand their product offerings or gain access to a particular technology,” adds Son. As a result of consolidation, concentration within the Medical Device Manufacturing industry has increased over the past five years. During the five years to 2012, consolidation has swept the industry. As a result of consolidation, concentration within the Medical Device Manufacturing industry has increased over the past five years.
In the next five years, industry growth is forecast to continue. While the aging baby boomer population and technological advances will further underpin industry growth, a changing regulatory environment will be the main hindrance. For example, the Patient Protection and Affordable Care Act of 2010 has placed an excise tax of 2.3% on the sale of medical devices starting January 1, 2013. As a result, industry profit is expected to contract through 2017. Many companies are already preparing for the effects of the new tax by reducing jobs, slashing research and development budgets and delaying expansion plans. Also, potential reform of the approval process for new devices will likely hamper innovation and encourage more companies to shift some operations overseas.
Foreign outsourcing of manufacturing, research and development and other operations, combined with industry consolidation, is forecast to decrease the number of industry operators. This decline represents continued consolidation from the past five years. Emerging markets like China and Brazil will attract medical device manufacturers as US customers face more stringent Medicare reimbursement requirements and other cost-cutting pressures. Demand for medical devices is forecast to grow in these emerging markets due to their improving economies, rapidly increasing and aging population and the prevalence of chronic disease. For more information, visit IBISWorld’s Medical Device Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes manufacturers of electromedical and electrotherapeutic apparatus, such as magnetic resonance imaging equipment, medical ultrasound equipment, pacemakers, hearing aids, electrocardiographs and electromedical endoscopic equipment. The industry also manufactures irradiation apparatus and tubes for applications such as medical diagnostic, medical therapeutic, industrial, research and scientific evaluation.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.