Healthcare Technology Featured Article

December 08, 2014

Medical Device Market Growth to Slow

The healthcare market in general seems like it might well be one of the biggest growth markets around, and with good reason. The graying of America, and much of the world, coupled with baby boomers rapidly heading toward retirement age, all add up to suggest that healthcare will be a growth sector almost universally. But a new report from Kalorama Information suggests that the medical device market has seen growth already, but may only see moderate growth in the future.

The Kalorama report in question, titled The Global Market for Medical Devices, 5th Edition, provides a look at the market in question, a market that did well by most objective measures but still proved something of a disappointment in the operation. The market was set to reach a substantial $361 billion by the end of the year, but the problem was that it was still growing at a slower pace than expected. Right now, the global medical device market is expected to see about three percent growth, putting it on track to reach $427 billion in 2018.

Hospitals prove to be the biggest customers, thus the success of hospitals helps to determine the success of the medical device market; every hospital that shuts down is one less customer of medical devices. There are some key issues in the hospital field that may well have negative impact on the medical device market; while revenues are growing at major hospital chains, so too are salary expenses and bad debts. With areas outside Asia, Europe and the United States accounting for nearly 20 percent of the market, there's some clear growth potential there as well.

The biggest issue in the market is there are plenty of competitors in the field, with a huge array of devices on hand, and thus plenty of fields in which to compete. But despite the substantial numbers of competitors, the market is reportedly dominated by 18 particular companies, ranging from GE Healthcare to Siemens to Medtronic, meaning there are plenty of competitors who are working the periphery of the market. However, as explained by Kalorama's publisher Bruce Carlson, this can be explained rather simply, in that there are certain businesses that focus on individual products that have an innovative edge that can't be readily duplicated elsewhere.

Indeed, there are clear issues here that will slow the growth of the sector, but by like token, may provide further advantages. Note the two clear problems for hospitals mentioned earlier: salaries are on the rise—something of a necessity given the numbers of physicians leaving the field for a variety of reasons—and bad debts are as well. Check the local news; has there been word of a spaghetti supper or the like to raise money for someone's operation? When said operation costs more than a house does in the area, it's clear that some people are likely to look at the hospital and say, hey, you can't get blood from a turnip. Those two points will drag on hospitals, but even here, there is hope. If medical devices can expand the purview out to devices that will save hospitals money, prices can come down. If prices come down; so too does bad debt. Plus, with some devices, certain medical personnel become less necessary, impacting salaries accordingly.

Only time will tell if the medical device field can keep up with hospital needs sufficiently to help preserve the biggest market such devices have, but there are certainly options to be had here and potential successes afoot.

Edited by Maurice Nagle

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