Despite Pressures, There's Still Opportunity in the Medical Device Sector

Posted by Bob Michaels on October 22, 2012

Recently, market research firm Frost & Sullivan remarked that although the medical device industry continues to be vital and dynamic, it is being forced to adapt to new business models based on changes in the U.S. healthcare environment. While top-line growth is a virtual certainty, according to the firm, cost-containment initiatives in the healthcare industry are putting pressure on prices. Companies are also concerned that the medical device excise tax, scheduled to take effect in 2013, could further strain profit margins.

"In retrospect, the medical device market witnessed unprecedented growth between 1995 and 2005," comments Frost & Sullivan Advanced Medical Technologies Industry Manager Venkat Rajan. "New technologies helped spur a revolution with minimally invasive tools and implants that improved function and safety. These novel developments allowed for new treatments and an expansion of addressable conditions." This growth caused many industry professionals to view the medical device market as resilient, if not immune, to recessions. But the Great Recession dashed those expectations. Not surprisingly, the industry has seen a range of layoffs, and there is no guarantee that more aren't on the way.

However, there are still opportunities, Rajan counsels. New business can be generated by the aging population and increased rates of chronic disease. Furthermore, research breakthroughs and technology advances are impacting medicine. Thus, cutting-edge companies should be targeting products that are aligned with where healthcare is going rather than where it is at present.