At this year’s MD&M West, it was clear that sentiment is improving across the medical device CMO segment, driven by normalizing volume trends and sustained demand from OEMs. Our senior professionals saw higher attendance from the financial community, meeting with CMO executives and healthcare investors to discuss a growing set of opportunities.

Throughout the space, medical device CMOs will continue to capture investor attention thanks to their diverse range of high-growth end markets, potential to expand into more end-to-end capabilities, and fragmented landscape primed for M&A.

Below, we share the key themes driving CMO M&A activity and traits investors should prioritize in leading businesses.

A Normalizing Environment

Several dynamics were top of mind among MD&M West attendees, driving increased enthusiasm and investor interest across the medical device CMO ecosystem.

For instance, issues related to inventory destocking by OEMs have abated. OEMs are back on a typical ordering cycle, creating steady demand and revenue for their CMO partners. “The medical device CMO market is normalizing after prolonged destocking challenges that persisted throughout 2024, though varied by end market and customer type,” says Tyler Bradshaw, a managing director in our Healthcare & Life Sciences Group.

At the same time, a rising number of OEMs are accelerating R&D, new product development, and new product introductions. As OEMs continue to ramp up product launches and outsource more business functions that fall beyond their core competencies, leading CMOs will be poised to generate new program growth.

“The CMO executives we spoke with at MD&M West are reporting consistently improving volume trends,” says Bradshaw. “Operators are more confident about 2025 growth throughout the segment, and we expect M&A momentum to pick up.”

The impact of potential tariffs was also discussed at the event, with many industry participants keen to gain clarity on this evolving topic. While most aren’t planning sudden changes to how they source or manufacture their products, tariffs may open opportunities for some CMOs to take market share.

“The companies with established nearshore and onshore manufacturing and diversified ways of sourcing materials are already in a great position to navigate tariff uncertainty,” explains Taylor Will, a director in our Healthcare & Life Sciences Group. “These businesses will have a head start on the competition amid any tariff related disruptions.”

To view our market map of actionable opportunities across the medical device CMO landscape, contact our senior professionals at MedicalProductsandDevicesTeam@harriswilliams.com.

Capability and End Market Expansion

Against this encouraging backdrop, many medical device end markets—from minimally invasive surgery and interventional procedures to robotics—are constantly innovating and expanding, offering particularly strong investment potential.

In these areas, best-in-class CMOs are showing strong organic growth while offering a variety of value-creation opportunities for private equity groups and strategic buyers. “CMO investors can create further growth by expanding into complementary solutions, more manufacturing processes, and different end markets,” says Will. “Corporate and sponsor-backed platforms continue to be especially active, using M&A to fill key product portfolio gaps or add capabilities that unlock access to a new market or therapeutic area.”

For potential buyers, the most sought after CMOs are offering a broader suite of differentiated and value-added services to their OEM partners, ranging from prototyping to commercialization. “Leading CMOs are engaging early in a product’s lifecycle, providing product design and manufacturability expertise while guiding the end product through complicated regulatory approval requirements,” notes Bradshaw. “These CMOs can establish long-term OEM partnerships and drive repeat business.”

In addition, top CMOs are combining these broader capabilities with a superior technical engineering skillset. “Having an engineer-to-engineer relationship with an OEM is highly valuable, allowing the CMO to translate the goals of a device into a product that’s manufacturable at scale,” adds Will.

Packaging provides yet another avenue for investors to get involved across the broader healthcare and life sciences industry. “Healthcare packaging is essential to protect expensive and critical products—such as medical devices and specialty therapeutics—to ensure safe, timely, and error-free delivery to patients,” says Chuck Walter, a director in our Industrials Group. “Ultimately, the most sought-after healthcare packaging solutions maintain high performance while pushing the envelope on innovation to comply with evolving and complex regulatory standards.”

M&A Poised to Accelerate

With resolving inventory destocking challenges, OEMs returning to new product development, and plentiful opportunities to expand into more capabilities and end markets, the medical device CMO market is primed for increased M&A activity.

Growth in the space will continue as OEMs focus more on their core competencies, leading to a greater need for outsourced development, pre-production, manufacturing, and post-production services. “The most sought after CMOs are providing these end-to-end solutions within appealing end markets, and we look forward to seeing those companies continue to pique investor interest,” says Bradshaw.

To discuss the value-creation potential within medical device contract manufacturing, please contact our senior professionals.