MRG Forecasts Growth for Reprocessed Medical Devices

Major medtech market intelligence provider Millennium Research Group (MRG) finds that the U.S. market for reprocessed medical devices will continue to show strong growth, averaging almost 9 percent per year through 2017. According to MRG, this growth will be driven by budget-conscious hospitals seeking cost savings. Already large, this market will become increasingly significant in the coming years.

In 2012, U.S. healthcare facilities saved approximately $290 million in supply costs as a result of reprocessing cardiovascular, laparoscopic, orthopedic/arthroscopic, and gastrointestinal devices. Approximately 25 percent of hospitals reprocess at least one category of these devices, with larger hospitals significantly more inclined to reprocess, since greatest savings are found when reprocessing is done in bulk. Approximately 45 percent of hospitals larger than 250 beds reprocess at least one category of medical devices, while only 15 percent of hospitals smaller than 50 beds do. Smaller facilities are subject to more bargaining pressure from original equipment manufacturers (OEMs) and are more fearful of litigation should a reprocessed device fail.

MRG reports that the prevalence of reprocessing is only going to increase. Purchasing and materials managers throughout a wide range of facility types and sizes are indicating their intention to increase use of reprocessed devices, driven by cost savings opportunities as well as improved regulatory standards. OEMs are also realizing that the trend cannot be restrained. Johnson & Johnson’s Ethicon Endo-Surgery division, which has opposed reprocessing in the past, recently acquired the second-largest reprocessor in the United States, SterilMed. Another large OEM, Stryker, acquired the largest U.S. reprocessor, Ascent Healthcare Solutions, the resulting entity being renamed Stryker Sustainability Solutions. These companies now are advocating integrated supply chain solutions that incorporate both reprocessed and OEM products, and hope to pursue growth opportunities in both OEM and reprocessed device markets.

Many medical device companies, however, remain opposed to reprocessing, claiming that in some cases, it could jeopardize patient safetly.

“The biggest opportunity for reprocessed devices is exactly where OEM markets show the greatest growth,” said MRG Analyst Sohaib Perwaiz. “For example, the OEM markets for electrophysiology (EP) diagnostic catheters and direct energy devices will exhibit strong growth through 2017. Since these devices also tend to be expensive and bought in bulk, the high price difference between OEM and reprocessed devices has resulted in a strong demand for the latter.”

MRG’s report includes unit, average selling price and revenue information, along with market drivers and limiters and competitive landscape for reprocessed EP catheters, compression sleeves, disposable laparoscopic direct energy devices, disposable laparoscopic access devices, disposable laparoscopic internal closure devices, external fixation devices, arthroscopic powered shaver disposables, arthroscopic radio frequency probes and gastrointestinal biopsy forceps sold in the United States.

Picture courtesy of www.acphospitalist.org