Setting the Stage for what is next in Medical Devices

The medical device industry continues to be one of the most vital and dynamic sectors of the U.S. economy and a leading force in the revolution that is transforming the U.S. healthcare system. However, the industry is undergoing a transition to adapt to new business models that are changing the way care is delivered and paid for in the United States. 

New analysis from Frost & Sullivan’s 2012 United States Medical Devices Outlook finds total market revenues in 2011 were $102.1 billion, with a forecast of $156.8 billion projected in 2018. The overall compound annual growth rate (CAGR) for the forecast period is a modest 6.3 percent. While top-line growth is a virtual certainty, cost-containment initiatives in the healthcare industry are forcing pricing pressure with a medical device excise tax to go into effect in 2013 that could strain margins for most companies.

"In retrospect, the medical device market witnessed unprecedented growth between 1995 and 2005. New technologies helped spur a revolution with minimally invasive tools and implants that improved function and safety," states Frost & Sullivan Advanced Medical Technologies Industry Manager Venkat Rajan. "These novel developments allowed for new treatments and an expansion of addressable conditions."

That growth, coupled with the potential impact of the baby boomer population, led many in the industry to assume that the marketplace was recession-resilient, if not recession-proof. However, the impact of the global economic crisis in 2008 combined with healthcare reform measures aimed at cost containment have significantly altered those expectations. In order to better align with the realities of the current market, a number of companies have undergone significant restructuring, such as major divestitures, staff cuts, and turnover in senior management.

"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," Rajan says. "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."

Cutting edge companies are targeting products that fit in the vision of where healthcare is heading, as opposed to where it is now. They have realized it is not just about innovations to their products, but the business model as well. Decisions are not made purely on clinical efficacy, but must also take into account factors like ease of use, reimbursement, long term cost of care, wellness, prevention and other advanced healthcare outcome measures.

The 2012 United States Medical Devices Outlook is part of the Advanced Medical Technologies Growth Partnership Services program, which also includes research in the following markets:

• Surgical Tools and Medical Implants
• Medical Imaging Systems
• Patient Monitoring and Diagnostic Tools
• Chronic and Acute Disease Management Treatment Products

All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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