Medical Device Outsourcing Market Report

Medical Device Outsourcing Market Analysis, By Application (Class I, Class II, Class III),By Service (Regulatory Consulting Services, Product Design And Development Services, Product Testing Services, Product Implementation Services, Product Upgrade Services, Product Maintenance Services), By Therapeutics (Cardiology, Diagnostic Imaging, In-Vitro Diagnostic (IVD), Orthopedic, Dental, Drug Delivery, General And Plastic Surgery, Endoscopy, Ophthalmic, Diabetes Care) And Segment Forecasts To 2022

Published: January 2016  |  83 Pages  |  Format: PDF  |  Report ID: 978-1-68038-279-2

Industry Insights

The global medical device outsourcing market size was valued at USD 26.26 billion in 2014 and is expected to increase at the rate of 11.5% over the forecast period. Rising competition within manufacturers leading to the development of products at lower cost is one of the key factors attributing to the growth of this market over the forecast period. Furthermore, growing complexities in product engineering coupled with increasing number of entrant manufacturers are expected to propel the medical device outsourcing industry with lucrative growth opportunities.

Rising geriatric population is predicted to increase demand for medical devices and supplies forming a large customer base with limited health resources, thereby pushing manufacturers towards outsourcing of activities such as assembling, packaging, and others. For instance, new entrants of the industry are anticipated to outsource device designing in order to be technologically updated and meet the demands of the patients over the forecast period.

Furthermore, emphasis by regulatory bodies to maintain the quality of healthcare equipment provided to the public is rapidly becoming stringent and cumbersome to handle. In order to combat the situation, services such as regulatory consulting are being availed by industry players. For instance, the European Medical Device Regulation (EMDR) under take special unannounced scrutiny of outsourced products to check for quality and conformity with the standards.

North America medical device outsourcing market share, by service, 2012-2022 (USD Million)

North America medical device outsourcing market

Application Insights

On the basis of application, the market is segmented into Class I, Class II and Class III devices. The Class II segment dominated in 2014 with 48.4% and is expected to grow at the fastest rate during the forecast period owing to the complicated design and potential risk posed by them. Class II is further segmented into Class IIa and Class IIb. A maximum number of medical device fall into this category including infusion pumps, wheelchairs, surgical drapes, and X-ray machine.

Rising number of surgical procedures and complexity of device designing are high impact rendering driver for this growth. Class II are outsourced for designing, manufacturing, sales and marketing, clinical and advisory services, and after-sales services.

Advantages such as concentration on core competency cost efficiency and accelerated time to market are expected to be the vital impact rendering drivers, promoting higher outsourcing by manufacturers.

Service Insights

Key services offered by this industry include; regulatory consulting, product design and development, product testing, product implementation, product upgrade and product maintenance.

The product design and development segment is expected to witness lucrative growth over the forecast period. However, product implementation services are expected to be the fastest growing over the next seven years with a CAGR of over 10.0%.

Therapeutic Insights

Key therapeutic segments catered to include; cardiology, diagnostic imaging, In-Vitro Diagnostic (IVD), orthopedic, dental, drug delivery, general and plastic surgery, endoscopy, ophthalmic and diabetes care.

Orthopedic medical device outsourcing market segment is anticipated witness the most lucrative growth over the next seven years. Rising number of injuries to bones and joints, increasing cases of sports-related injuries and augmenting growth in accident rate across the globe are certain to impact rendering drivers anticipated to propel this growth.

Regional Insights

North America dominated the industry in 2014, which is attributed to the strong manufacturing hubs for reliable, complex, and high-end medical devices. Consequently, Original Equipment Manufacturers (OEMs) are increasingly moving towards electronics manufacturing service providers to efficiently handle increasing volume of electronic content in the current devices.

However, Asia-Pacific is expected to witness the fastest growth owing to increasing offshore outsourcing in countries such as Philippines, Indonesia, Thailand, India, and China. Cost effective availability of labor with specialized skill sets will drive demand over the forecast period.

Competitive Insights

Key players operating in this industry include Kinetics Climax Inc., Shandong Weigao Co. Ltd., Daiichi Jitsugyo Co. Ltd., CFI Medical, Infinity Plastics Group, ProMed Molded Products Inc., Sterigenics International Inc., GE Healthcare, Accellent Inc., Mitutoyo Corp., Omnica Corp., Cirtec Medical Systems LLC and Micro Systems Engineering GmbH.

Numerous companies are expected to enter this market over the forecast period owing to the rising demand for these devices across the globe. This is expected to raise the level of competition over the next seven years.

Furthermore, collaborations between existing players and niche service offerings to enhance quality and competency may also be predicted to occur over the forecast period. The established players of this industry are anticipated to widen their portfolio and provide one-stop shop options to combat the aggressive competition over the forecast period. For instance, in 2015, Cirtec Medical System announced its expansion by the opening of a new manufacturing facility in Enfield, Conn.

Analyst Perspective

The scope of study encompasses multiple therapeutic areas and medical devices, which are collectively studied to provide insights into the level of outsourcing and predictable revenue generation over the forecast period. Attributes are represented in platforms which would provide insights to manufacturers, distributors, investment bankers, new entrants, and other stakeholders. For an accurate industry profiling, QFD model analysis, individual market sizing, and commodity flow approaches are a few tools applied to all the segments of the market.

Market estimates are based on the movement of services from the manufacturer's end to the outsourced country. The study provides a unique perspective on the destination and vendor region.

The oligopolistic nature of most medical device markets coupled with growing awareness levels has forced manufacturers to adhere to business tactics involving rising R&D and innovations. The rising level of R&D and product innovation endeavors are expected to significantly amplify the production cost of device’s Original Equipment Manufacturers (OEMs). As a way out, an increase in outsourcing of services related to manufacturing may be anticipated over the forecast period. Hence, this topic has gained our attention and has promoted us to work on the project.

The current study can further be customized based on client needs for the therapeutic and sub-therapeutic areas, application, and services. For instance, a new entrant into the packaging industry may customize the study in order to understand which therapeutic area may provide the best opportunities and minimal entrance barrier.

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