Prepared for Ian Z. | Delivered June 30, 2020
Medical Device Industry Trends
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To identify 10 of the fastest-growing trends in the medical device industry over the last 5-10 years and five of the trends most likely to continue over the next 5-10 years, including the amount of capital that has been allocated to each trend.
Some of the fastest growing trends in the medical device industry in 2016 include aging demographics, third-party coverage and reimbursement, and competitive factors and regulatory regime.
The dominance of
demographically oriented technologies
is listed as one of the trends in the medical device industry by the
Food and Drug Administration
The aging population in the United States is driven by
increasing life expectancy
declining fertility rates
, representing one of the major demand drivers for medical devices.
In 2016, the elderly population (persons aged 65+) in the U.S. was
in 2016 (
of the population) and estimated to double to
of the total population) by 2060.
The elderly account for about
one-third of total healthcare consumption
in the country with a personal healthcare spending of
per person in 2014, which was five times the spending per child (
) and about three times the spending per working-class individual (
The increase in the
demand for medical devices
for this age group will result in increased investment and output in medical device technologies.
Examples of companies involved in this trend are
Apple and Google
Third-Party Coverage and Reimbursement
The presence of
third-party coverage and reimbursement
organizations is seen as one of the trends in the medical device industry by Mercer Capital.
The source opined that third-party coverage takes away the possibility of medical device manufacturers to liaise the
of the products with the final consumers (patients). Instead, they are forced to do business with
physicians and the product approval committees
Since device manufacturers
receive payments from insurers
, which in turn, reimburse healthcare providers for routine procedures rather than for specific components like the devices used. This tends to disconnect the decisions regarding the price of medical devices from its actual use.
lower reimbursement rates
and reduced procedure volume will likely limit pricing gains for medical devices and equipment."
An example of this scenario was
, which partially canceled bundled payment programs for a particular joint replacement and cardiac rehabilitation procedures in
Competitive Factors and Regulatory Regime
Competitive factors and regulatory regime is listed as one of the major trends in the medical device industry by
Medical Design & Outsourcing
According to Mercer Capital,
growth in medical technology
has led to the continual production of innovative devices that help doctors improve health outcomes. The successful development of these products requires significant R&D planning and can lead to elevated market prices, followed by market penetration.
tend to limit competition in two ways to help such firms recover their R&D investments. The methods employed by the government include the provision of
patents and intellectual property protection
to inventing organization, thereby, giving them a competitive advantage for a finite period and the regulations governing "medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotions, sales and distribution, export and import, and post-market surveillance."
Medical device approval takes about
for completion and results in delays in bringing in the products into the market.
Also, the Medical Devices User Fee Act (
) authorizes the FDA to collect almost
in user fees (
over $320 million increase
from MDUFA III).