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Outlook for the Medical Device Industry in 2013

Manufacturing Group | February 27, 2013

Emergo Group’s 2013 Medical Device Industry Survey was conducted in January 2013, with 3,509 respondents.

Survey questions were emailed to an in-house list maintained by Emergo Group, and only one response per person was allowed. A publicly available online link to the survey also solicited responses from industry via social media channels.

Due to the nature of our business, QA/RA professionals make up a much higher percentage of respondents than they would otherwise represent in the industry. Some results should be interpreted bearing this in mind.

Click here to download the PDF of the survey.

  1. When you think about the overall business environment for the medical device industry, which statement best describes your personal outlook for 2013?
    Compared to our January 2012 survey results, medical device firms are even more positive about 2013 than there were about 2012. Overall, roughly 71% of all respondents are positive about 2013, up from 67% a year earlier. Respondents located in Asia were significantly more optimistic than their western colleagues were. Despite global economic uncertainty, results suggest that medical device firms expect growth opportunities driven by aging populations and growing middle classes in emerging markets including Brazil, India, and China.
  2. When you think about the overall business environment for the medical device industry, which statement best describes your personal outlook for 2013?
    Asia Pacific firms were more upbeat about 2013, while North and South American firms showed more caution.
  3. How do you feel about prospects for your company in 2013?
    We find it interesting that our respondents are more optimistic about prospects for their own company (80.3%) than the medical device industry as a whole (71.1%). We also note a difference between respondents in North and South America and those in the EMEA region. This difference highlights the significant ongoing economic challenges within the European Union. Despite a dampened sense of enthusiasm among European companies, prospects for the industry remain bright for 2013.
  4. How do you feel about prospects for your company in 2013?
    EMEA companies were slightly less optimistic about 2013. North and South American firms were optimistic about their company, but less so about the industry, with 14.0% negative about industry prospects versus 6.0% negative about their company.
  5. Did your company experience an increase or decrease in worldwide sales during 2012?
    More than 43% of companies reported sales increases of 10% or more in 2012. Small to mid-sized companies reported much stronger sales growth in 2012 than those with 250+ employees.
  6. Did your company experience an increase or decrease in worldwide sales during 2012?
    Results show that there seems to have been strong growth among smaller companies in 2012.
  7. Did your company experience an increase or decrease in worldwide sales during 2012?
    Noted for Sales Growth of 10% or More….
    • Firms in North/South America: 31.0%
    • Firms in Europe/Middle East/Africa: 35.1%
    • Firms in Asia Pacific: 44.1%
    Strong sales among Asia Pacific firms comes as no surprise given the region’s rising middle class and government investments in healthcare, especially in China.
  8. What are the biggest challenges you face?
    We asked this question of 1,000+ Senior Management but further isolated the 420 people who identified themselves as being the president, CEO, COO, or managing director of their company. Roughly 80% of them run companies with fewer than 50 employees. Regulatory issues and new product development rank high on the list of concerns keeping C-level executives awake at night. Employee size breakdown of the executives who answered this question:
    • 1-9 employees: 186 (43.6%)
    • 10-49 employees: 145 (34.0%)
    • 50-249 employees: 55 (12.9%)
    • 250+ employees: 34 (8.0%)
  9. What are the biggest challenges you face?
    When we examine this question by size of company, the results vary dramatically. While all companies struggle with regulatory issues and new product development, smaller companies indicate that getting access to financing is their biggest challenge. Larger companies struggle with employee recruiting and increased competition. Likewise, large companies seem to feel more pressure on pricing. Our survey list is heavily skewed toward QA/RA titles so the concerns about a changing regulatory environment are overstated. However, the difference of opinion between small and large companies is very real. Mid-sized and large companies struggle with regulatory issues more than smaller companies. This may be because larger companies are more likely to sell in markets with less transparent regulatory systems.
  10. What are the biggest challenges you face?
    North and South American companies are more likely to struggle with regulatory issues, while companies in Asia struggle with employee recruiting and increasing competition.
  11. On January 1, 2013 the United States imposed a new 2.3% tax on US sales/turnover for medical device companies. What overall impact will this tax have on your company in 2013?
    Nearly 64% of North American companies see negative impact from the new MDET.
  12. Does your company plan to make any of the following changes in response to the US medical device excise tax?
    We asked this question of senior management worldwide, but isolated 657 senior executives at companies located in North or South America (majority in U.S. in Canada). The majority of participants said they plan to pass along the 2.3% tax increase in their prices and/or work to lower their production costs without laying off employees. Only 11% of senior managers we surveyed plan to reduce staff in response to the MDET. It remains to be seen what impact the MDET will have on employment.
  13. How would you rate the growth potential of these regions for medical devices in the next five years?
    Medical device companies remain bullish about Asian markets. Japan is still #1 in healthcare spending but China will soon pass Japan and is the engine of growth in the region. Emerging markets in SE Asia are also garnering more attention. Survey participants in all regions – North and South America (61%), EMEA (70%), and Asia-Pacific (71%) rated Asia-Pacific markets highest in terms of five-year growth; interestingly, firms based in Asia rated their own region more highly than firms based in the Americas or EMEA. In terms of company size, 72% of the survey’s largest respondents rated Asia high-growth, as did 60% of small and 62% of mid- sized firms.
  14. Does your company plan to introduce a medical device/IVD in these emerging markets for the first time in 2013?
    Interest in the BRIC markets (Brazil, Russia, India, and China) continues to grow among survey participants. Mexico is also drawing more attention as its regulatory system becomes more efficient. As in 2012, Brazil led the pack for small (20%), midsized (21%) and large (17%) firms alike. China came in second for midsized and large companies, but smaller firms ranked India slightly ahead of China – suggesting a less complex path to market in India for manufacturers with fewer resources. Nearly 18% of firms in the Americas and 19% of EMEA firms plan to expand into Brazil this year. Among Asia-Pacific firms, China ranked highest – 29% of these firms plan to enter the Chinese market.
  15. Does your company plan to introduce a medical device/IVD in these emerging markets for the first time in 2013?
    The previous questions showed interest in Brazil and China are strong overall. However, manufacturers in different regions are focusing their expansion efforts differently.
  16. Do you think the process of obtaining regulatory approval in these markets is easier or more difficult today than it was one year ago?
    A more aggressive regulatory stance by the U.S. FDA, an evolving Chinese registration process, and ongoing challenges in Brazil likely explain the rise in frustration evident in these results.
  17. Do you think the US FDA is taking positive steps toward making the regulatory process easier and more transparent?
    Almost 42% of our QA/RA respondents said the U.S. FDA process is more difficult that it was one year ago. The FDA seems to have taken note. Nearly half of our respondents gave the U.S. FDA positive marks for their efforts to make the registration process easier and more transparent.

To see the accompanying charts, click here.

To download the complete study, click here.

 

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