Global Medtech Market to Reach $514B by 2020

Growing pains, indeed.

Despite the glut of regulatory, financial and societal snags, the global medical technology market is expected to grow at a 5 percent compound annual growth rate (CAGR) through 2020, with total sales exceeding half a trillion dollars, a new report concludes.

Released at the start of AdvaMed 2014: The Medtech Conference in Chicago, Ill. (held Oct. 6-8), the analysis projects in-vitro diagnostics to remain the industry’s leading sector, generating $71.6 billion in sales (a 6.1 percent CAGR), and Roche capturing 17 percent of the market. The overall pecking order will stand, with the cardiology sector generating the second-highest sales total ($57.3 billion), diagnostic imaging placing third ($47 billion in sales) and orthopedics coming in fourth at $46 billion. Neurology, the smallest of the 15 markets ranked in the report, will post the best growth (7.1 percent CAGR) through 2020, while general hospital and healthcare—the 13^th-largest market—will experience the lowest growth (4 percent CAGR).

Individual market rulers will retain their crowns, too: Medtronic Inc. is expected to dominate the 2020 cardiology sector with $11.1 billion in 2020 sales and 19.4 percent of the market, thanks largely to its $43 billion acquisition of Covidien plc. Similarly, J&J’s 2011 purchase of Synthes Inc. ensures its command of the orthopedics sector, reaching an estimated $11.3 billion in sales and 24.7 percent of the future market. The megadeal mania of the past few years also will benefit Zimmer Holdings Inc., as its pending $13.4 billion acquisition of Biomet Inc. will vault it past Stryker Corp. for the orthopedics first runner-up crown. The report predicts Zimmer to capture a 20.8 percent total market share in 2020.

The overall medtech hierarchy shouldn’t change much, either. J&J is forecast to be the clear medical technology leader in 2020 with $32.8 billion in sales, but the Medtronic-Covidien marriage may topple the New Brunswick, N.J.-based multinational from its perch, the report predicts. “The company’s [J&J] market share is expected to fall from 7.8 percent to 6.4 percent between 2013 and 2020 following the sale of its Ortho-Clinical Diagnostics unit to private equity,” the report states. “Moreover, current forecasts do not take into account the proposed megamerger of Medtronic and Covidien. With estimated combined sales of $35.9 billion in 2020, representing a 7 percent market share, when predictions are made next year it is likely that this new behemoth of medtech will take the top spot from Johnson & Johnson.”

Boston Scientific Corp. and Novartis will slip most in the ranks, each falling four places among world’s the top 20 medtech companies. By 2020, Boston Scientific will become the 14^th-largest medtech firm, while Novartis will become the 16^th-largest company; analysts attribute the downward slides to Boston Scientific’s failure to find new revenue sources and Novartis’ 2014 sale of its blood diagnostic business to Grifols.

Global medtech research and development spending will grow 4.2 percent annually to $30.5 billion by 2020, with both Johnson & Johnson and Siemens investing $2.1 billion (each) in new programs, the 23-page report from United Kingdom-based market intelligence firm Evaluate Ltd. concludes.

Other findings from the report, “Evaluate MedTech World Preview 2014, Outlook to 2020”:

• M&A deal value skyrocketed 363 percent to $30 billion in the first half of 2014, though deal count fell 10 percent compared with the same period last year.
• Total deal value of medtech venture financing slid 16 percent to $2.2 billion in the first half of 2014 and the number of venture financing deals plummeted 24 percent to 199.
• There was a significant increase in medtech initial public offerings (IPOs) this year. In the first half of 2014, $1.3 billion was raised in IPOs, a 44 percent increase compared with the $900 million raised throughout 2013.
• The U.S. Food and Drug Administration granted 20 new pre-market approvals (PMAs) through Aug. 31, a 43 percent jump compared to the same period last year. First-time PMAs dropped 44 percent in 2013 from the 41 issued in 2012. The agency’s 510(k) clearances were down too, falling 3 percent to 3,085.