The medical device industry has been one of the fastest-growing economic sectors in recent years, and most analysts expect that the growth will continue for the foreseeable future. In fact, according to a report by Fierce Medical Devices the industry is on pace to outperform pharmaceuticals by 2018. But growth is only growth: what are the inside markers of this industry? What are the dynamics now, and how will they change? Is it an area that entrepreneurs should pursue?
The medical device industry began in the West, like pharma, is dominated by Western companies. Currently, 46% of the industry is located in North America, with American companies and interests also largely involved in international ventures.
However, as with every other area of technology, that is likely to change. One reason for this is that, in recent years, the increased outsourcing of manufacturing to developing nations has incubated potentially competitive industries throughout the world, especially in China, Southeast Asia, and India. Those markets don’t just have manufacturing labor; they also have the scientific and design communities to create new products.
The medical device industry is highly competitive, and while established companies certainly have significant advantages the barriers to entry for new competitors is lower here than it is in other industries. Because the cost of a medical device tends to be high, competitors in the developing world, where materials and labor is significantly less expensive, will be able to compete effectively against their North American counterparts.
While competition from the developing world will present an increasing challenge for Western companies in the coming years, the improving economic conditions in much of the developing world also presents an opportunity. As medical services improve worldwide, the market for medical devices will continue to grow, and the reach and supply chain of larger, existing companies will likely give them an advantage in pursuing those markets.
Although the industry is highly competitive, it also has some characteristics that make it especially welcoming to entrepreneurs. One is accessibility: in any major American city there are enough hospitals and doctors’ offices to build an initial revenue stream, while the world waits beyond. Entrepreneurs can create a local foundation, from which they can rapidly create a global business.
Another characteristic is the availability of quality design flow consultants who can help to take an idea from concept to completion. Companies like Device Lab combine artistic skill, scientific knowledge, and high technology to facilitate design, fabricate prototypes, and prepare manufacturing specs. That shortens the distance between an idea and a product dramatically.
Finally, entrepreneurs will likely find that their funding sources will be more interested in business proposals in the medical device industry than in others. With the industry expected to reach over $300 billion by 2017 there is a lot of opportunity to go around. A solid business in a booming industry is likely to share the growth and reward its investors.