Despite cutting-edge developments and an aging population, regulatory uncertainty and the push for lower healthcare costs will allow for only modest growth in the medical device sector, according to new analysis from Frost & Sullivan. If devicemakers want to stay successful, they'll need focus on where healthcare is heading, not where its now, the firm says.
The device market, valued at $102.1 billion in 2011, will grow to $156.8 billion by 2018 with an annual growth rate of 6.3%, according to Frost & Sullivan. Top-line growth is all but assured for the industry, but the pending medical device tax and mounting pricing pressures from regulators around the world will likely blunt profits for device companies, the firm said.
After unprecedented growth between 1995 and 2005, the medical device market seemed to be a recession-proof sure bet, but the economic disaster of 2008 only gave way to the current era of changing regulations and escalating cost-cutting pressures, Frost & Sullivan said. Many devicemakers have had to thin their ranks and realign their businesses to stay solvent, but the analyst firm says those transformations will help medical device companies remain competitive in their new economic reality.
"In spite of the challenges, that is not to say that there are not significant opportunities in the market that can be taken advantage of," said Venkat Rajan, Frost & Sullivan's advanced medical technologies industry manager. "A historic surge in demand resulting from an aging population with escalating incidence rates for chronic disease is creating new needs and customer requirements. Furthermore, significant research breakthroughs and leaps in technology are drastically advancing the state of modern medicine."
And device execs seem to be learning the lessons of the downturn, Frost & Sullivan says, with many focusing their R&D efforts not solely on clinical efficacy, but also ease of use, reimbursement and long-term cost, tailoring their new products for a more price-concerned market.
- read Frost & Sullivan's release