Medical Device Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,400 medical device manufacturers in the US produce a range of products designed to diagnose and treat patients. Medical devices range in nature and complexity from simple tongue depressors and bandages to complex programmable pacemakers and sophisticated imaging systems. The key products include surgical appliances and supplies, surgical and medical instruments, electro-medical equipment, in-vitro diagnostic substances, irradiation apparatuses, dental-related products, and ophthalmic goods.

Challenges of Complex Regulations

Medical devices are subject to extensive regulation in the US by the FDA, and by comparable government agencies in other countries.

Developing New Hybrid Technologies

New hybrid technologies that incorporate pharmaceutical products with traditional medical device products are becoming popular.

Industry size & Structure

A typical medical device manufacturer generates $11 million in annual revenue and has fewer than 10 employees.

    • The overall medical device manufacturing industry consists of about 8,400 companies with $95 billion in sales and 335,800 employees.
    • The two largest segments of the industry, surgical and medical instruments and surgical appliances and supplies, consist of about 2,800 companies with about $77 billion in sales and 249,500 employees. These segments are the primary focus of this profile.
    • The states with the highest number of medical device companies include California, Florida, New York, Texas, Illinois, Indiana, Pennsylvania, Ohio, North Carolina and Minnesota.
    • Major US medical device companies include Medtronic, GE Healthcare Technologies, Johnson & Johnson, Boston Scientific, Baxter, Becton Dickinson, Beckman Coulter, Abbott Labs, and Stryker Corporation.
                              Industry Forecast
                              Medical Device Manufacturers Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              May 1, 2023 - Biden Administration Sets Cybersecurity Strategy Implementation Target
                              • The White House plans to release its implementation plan for the new National Cybersecurity Strategy (NCS) in June. The NCS seeks to rebalance the responsibility to defend cyberspace by shifting the burden for cybersecurity away from individuals, small businesses, and local governments, and onto the organizations that are most capable and best positioned to reduce risks, according to a White House statement. Medical device manufacturers may be among the entities facing greater cybersecurity burdens. The initiative is intended to expand the use of minimum security standards for critical infrastructure and establish a common set of regulations to make it easier to comply with that baseline. It would also shift some liability for software and services to developers that ignore recommended cybersecurity practices or ship products with known vulnerabilities. A safe harbor provision would protect companies that make a sincere effort to develop secure products.
                              • The Fiscal Year 2023 Omnibus Appropriations Bill that was signed into law in late 2022 includes an expansion of the US Food and Drug Administration’s (FDA) authority over medical device security. The expanded authority and funding give the FDA the power to set cybersecurity requirements for medical devices and requires all device manufacturers to demonstrate that their products meet these requirements. Device manufacturers will be required to implement a product development framework that meets FDA security requirements. They must also monitor and address post-market cybersecurity vulnerabilities, develop processes to provide reasonable cybersecurity assurance, submit a software bill of materials, and comply with other requirements set by the FDA.
                              • Two new papers published in the Journal of the American Medical Association (JAMA) argue that The Food and Drug Administration’s (FDA) approach to evaluating some new medical devices might increase the risk that they will later be recalled. For some medical devices, the FDA requires data from studies in people to show that the device is safe and effective. But the FDA also approves devices using a process known as the 510(k) pathway, which simply lets manufacturers show that the new devices are “substantially equivalent” to products already on the market. The papers argue that there is no clear course of action if a new medical device is approved based on a device that has been recalled because of a safety problem.
                              • Supply chain issues are likely to have a more severe impact on medical device manufacturers, according to industry experts. Medical device manufacturers typically must comply with more regulatory standards, many of which have low tolerance for variance, than other electronic product manufacturers. This means that if a component is in short supply, they cannot just replace it with something similar. Medical device components must be approved with the initial design by the regulatory board for that jurisdiction. Experts note that there are ways to decrease the impact of supply chain disruptions. The manufacturer should try to be as vague as possible about device component specification during the design phase. This will make it easier to source spare components while still meeting the approved design requirements, meaning that the safety and efficiency of the final product will not be compromised. For manufacturers already past the design stage, the best way to combat the negative consequences of shortages is by keeping track of stock and increasing inventory whenever possible – if a popular component becomes available, buy as much as you can afford. Invest in Supply Chain Management (SCM) software can help track inventory, manage shipping, and keep updated on which stocks are decreasing fastest.
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