A Quarter-Trillion-Dollar U.S. Market by 2020
The medical device sector—which includes products ranging from surgical gloves and prosthetics to implanted devices and imaging equipment—is a large and growing segment of the overall healthcare industry. In the United States alone, the sector’s revenues jumped from $136.5 billion in 2014 to an estimated $169 billion in 2019—and are expected to swell to $228 billion by 2025 (Figure 1).1 The U.S. is the largest medical device market in the world, accounting for 40% of total sector global revenues.2
Source: Grand View Research
Driving this growth is a continued, steady increase in surgical procedures tied to an aging population, rising incidences of chronic diseases, and greater access to care.
Americans are living longer and, as a result, need more ongoing healthcare. According to the U.S. Census Bureau, since 2010 the population of citizens aged 65 and older has increased by more than 12 million people, making up about 16% of the total U.S. population.3
At the same time, the prevalence of chronic diseases also has been growing, driving greater need for treatment. Chronic diseases—including, cancer, diabetes, hypertension, stroke, heart disease, respiratory diseases, arthritis, obesity, and oral diseases—are among the most prevalent and costly health conditions in the United States, with approximately 45%, or 133 million, of Americans suffering from at least one chronic condition.4
The fastest-growing sub-segment of healthcare is minimally invasive surgery (MIS). With technology advances making MIS easier, more effective, and more accessible, the MIS market in the U.S. is forecast to grow from $36.5 billion in 2018 to $58.2 billion in 2024, for a CAGR of 8% (Figure 2).
Source: Minimally Invasive Surgery Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019-2024, IMARC Group
However, the sector’s growth is not just spurred by exploding U.S. demand. “Continued global expansion is also playing a major role, as U.S. medical device companies take proven devices and therapies from the U.S. and Europe into new international markets, especially China,” notes Bradshaw. Globally, the medical device market is expected to grow from $429 billion to $595 billion, or by 5.6% CAGR, between 2018 and 2024 (Figure 3).
Source: Global Medical Device Market Projected to Reach $595 Billion by 2024, FinancialNewsMedia.com
Meeting Demand with Contract Manufacturing
Keeping pace with such accelerating growth can be challenging, which is why large and small medical device OEMs are turning to contract manufacturing. In fact, the contract manufacturing market is predicted to grow by 10.6% CAGR between 2018 and 2024, going from $49.7 billion to $91 billion (Figure 4).
Source: Medical Device Contract Manufacturing Market, Markets and Markets Research
“By outsourcing manufacturing, medical device OEMs can focus their resources on core and differentiating capabilities such as R&D—the ultimate growth driver—as well as marketing and regulatory compliance, while gaining access to specialized capabilities and additional capacity that would be costly for them to build on their own,” notes Bradshaw. “Outsourcing also enables OEMs to not just reduce manufacturing costs, but also boost quality control—which is critical to meeting strict regulatory guidelines and avoiding adverse effects when used in therapies or treatments.”
Published December 2019
1. Statista, Grand View Research
2. SelectUSA, https://www.selectusa.gov/medical-technology-industry-united-states, accessed October 17, 2019
3. “Census: American Population Is Living Longer,” Amanda Pampuro, Courthouse News Service, June 19, 2019, https://www.courthousenews.com/census-american-population-is-living-longer/
4. “An Empirical Study of Chronic Diseases in the United States: A Visual Analytics Approach to Public Health,” Wullianallur Raghupathi and Viju Raghupathi, International Journal of Environmental Research and Public Health, March 15, 2018, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5876976/