Medical Devices Outsourcing Market to Reach US$40.8 bn by 2018, Increased Demand for Quality Healthcare Drives Growth

The global medical devices outsourcing market is highly fragmented due to the presence of a large number of local and international players, finds a new report by Transparency Market Research. The top four companies that predominantly outsource product manufacturing and services to small and specialized service providers held only 28% of the market in 2011. These are Johnson and Johnson, GE Healthcare, Medtronic, and Baxter International. 

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“Business alliances and partnerships are key strategies adopted by top companies for business growth,” says a TMR analyst.

Increased focused on research and development is one of the key growth models that companies receiving outsourced services in the global medical devices outsourcing market are employing for business growth. For instance, the research and development of Creganna-Tactx is focused on developing products with newer component and to develop technologies for minimally and less invasive medical delivery systems.

Need to Reduce Production Cost for Competitive Reasons Fuels Market Growth

A TMR analyst points out, “The ever-increasing demand for quality healthcare is one of the key factors driving the growth of the global medical devices outsourcing market.” At present, the increasing prevalence of chronic diseases is leading to a rising demand for early disease detection for improved disease management. The quality of healthcare delivered depends on the quality of diagnostic devices. This is forcing device manufacturers to outsource product development to specialized third-party product manufacturers to stay ahead in the competitive healthcare industry.

Product outsourcing helps reduce production cost by 10-15% thus allowing companies to survive competition, which is another major factor driving the global medical devices outsourcing market. Today, almost all medical devices are integrated with IT solutions for operational purposes. For example, software for patient monitoring devices that was initially developed in-house is now outsourced to domain experts such as HCL, Persistent Systems, Wipro, and Amdocs.

Outsourcing of product manufacture and services help maximize revenue by means of reducing time-to-market, which is another key factor driving the growth of the global medical devices outsourcing market. This is because a significant amount of time is spent receiving approvals from statutory bodies in the manufacture of medical devices. This time can be reduced by leveraging outsourcing service providers such as Oracle, SAP, Infosys, and Patni that offer process control services for acquiring approvals from statutory bodies. Moreover, the expertise of these providers in developing the relevant application software reduces overall time of production.

Demand for Quality Certifications of Leading Companies Presents Opportunities for Local Service Providers in Asia

“Increasing shift towards quality certifications among Asian service providers and medical device manufacturers is opening growth opportunities for top companies in the global medical devices outsourcing market,” says a TMR analyst. The growing demand for medical devices in the Asian region is attracting top-notch players such as Johnson &Johnson and Boston Scientific to this region. To leverage this, an increasing number of local device manufacturers and service providers are streamlining their processes as per the ISO and requirements of other standardization organizations to attract global players.

The global medical devices outsourcing market is expected to be worth US$40.8 bn by 2018, says TMR. On the basis of application, class II devices account for the largest market share due to moderate risks and minimal regulatory requirements.

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Outsourcing of Medical Devices Creates Room for a Higher Scope of Quality and Quantity

The global medical devices outsourcing market is a unique and fast-paced one in the currently vast field of outsourcing. Driven primarily by reduced time-to-market strategies, the global medical devices outsourcing market is one of the booming fields in the healthcare industry.

The global medical devices outsourcing market is exhibiting a CAGR of 11.6% from 2012 to 2018. This market was valued at US$21.1 bn in 2012 and is expected to reach US$40.8 before the end of 2018. Multiple parameters can be used to gauge this rate of progress, the most essential one being the competitive landscape. This is governed by the key players of the global medical devices outsourcing market: Avail Medical Products, Micro Systems Engineering GMBH, MDMI Technologies Inc., Active Implants Corporation, Accellent Inc., and CIRTEC Medical Systems LLC. With developing economies reaping the benefits that come with outsourcing, developed economies can consequently provide better services and products, and this applies especially to the healthcare industry.

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Developed Nations’ Healthcare Sectors Profit from Growth of Outsourcing

On paper, the process of outsourcing is simple; a company lets another company do a part of the work in order to reduce operational burden for a fraction of the cost. Companies can do without in-house teams with the backing of a strong outsourcing firm, thus creating massive savings in space, time, and costs. This two-way street adds value to both sides of the coin; it provides a much-needed rate of employment to the developing nations and a steady rate of work at a lower price for developed nations. As for the case of the global medical devices outsourcing market, there is a growing trend of the biggest international companies in the medical device manufacturing industry implementing outsourcing measures to ensure constancy in output.

Major Factors that Promote the Growth of Medical Devices Outsourcing 

The global medical devices outsourcing market is also driven by a string of pressures on the healthcare industry. These include the shortening lifespans of products, the increasingly smaller range of opportunities left for players to grab, the accelerated rate of improvements in technology that players have to keep up with, and the rising prevalence of diseases. The increasing number of patients suffering from neurological and cardiac diseases makes it extremely important for medical device makers to push themselves to keep up with the increasing population of the afflicted.

Organized Layouts and Watchful Eyes Aid the Medical Device Outsourcing Market

The universal rule of medical device manufacturing, as with other major aspects of the healthcare industry, is that quality and safety are paramount. Second position in the healthcare industry could change the life and death scenarios for the worse, and therefore, players are constantly focusing on implementing the best practices available.

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As for safety of medical devices, various measures are being taken to assure clients that the products are made in order to ensure the highest level of safety. For instance, the medical devices market of India has faced several problems, such as babies being injured or dying inside incubators, and prosthetics causing blood poisoning. To combat this, the health ministry of India had recently formed a materio vigilance program which can ensure the safety of materials being used in medical devices.