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According to a recent study from San Francisco, Calif.-based Grand View Research, increased pricing pressure on medical device OEMs and the consequent rise in demand for medical device outsourcing is the highest impact rendering driver of the medical device outsourcing market.
Analysts with Grand View predict that spending cutbacks by major healthcare establishments are the primary reasons for the rise in pricing pressure. In addition, a more complicated reimbursement framework and payers and patients focusing on the value of money, medical device manufacturers are expected to adopt outsourcing as a viable sustainability tool.
“Implementation of stringent government initiatives such as the imposition of an additional excise duty of 2.3 percent on medical devices is also expected to drive market growth by encouraging manufacturers to curb costs through outsourcing,” analysts wrote. “The global medical device outsourcing market was valued at $23.56 billion and is expected to grow at a CAGR (compound annual growth rate) of 11.5 percent during the forecast period.”
The forecast period is until the year 2020.
Changing dynamics of the healthcare industry has heightened the importance of practitioners and patients in buying decisions. Oligopolistic nature of most medical device markets coupled with increasing buyer awareness levels has forced manufacturers to adhere to business strategies involving constant research and development investments and new product innovations, according to the report. Such endeavors significantly increase expenditure levels and medical device OEMs are, therefore, rapidly adhering to outsourcing as an effective cost-curbing tool, according to analysts from Grand View. Statistics suggest that medical device outsourcing help OEMs reduce cost of production by approximately 15 percent.
Regulatory consulting, product design and development, product testing, product implementation, product upgrade and product maintenance services are the major service segments analyzed in the study. Product design and development was the largest segment in 2013. Product design and development is the most capital-extensive manufacturing phase and therefore, witness the highest rates of medical device outsourcing. Product implementation emerged as the fastest growing services segment and is expected to grow at a CAGR of more than 13 percent during the forecast period. Growing adoption of process overlapping as a profitable option and the simultaneous execution of product design and implementation processes are some factors accounting for its rapid growth.
Class II medical devices was the leading application segment of the medical device outsourcing market in 2013. These devices entail lower potential risk of injury or threat to the life of patients and include powered wheelchairs, infusion pumps, surgical drapes and other moderate risk medical devices. Class II devices encompass relatively simpler technologies (as compared to Class III medical devices) and therefore, are the most outsourced ones. Class I medical devices include low-risk devices and are generally procured from external vendors. Class III medical devices were the second most revenue-generating segment in 2013. Growing number of initiatives aimed at minimizing product recall instances and the need of external expertise is expected to positively reinforce the growth of the Class III medical device outsourcing market. According to Medscape, during 2005 to 2009, the number of voluntary product recalls amounted to approximately 700 per year.
North America emerged as the largest revenue contributor in 2013. Rapidly growing medical device production aimed at catering to an ever-increasing demand is one of the most significant growth drivers of this market. North America spent more than 15 percent of its gross domestic product on healthcare in 2013 and increasing number of government initiatives working toward reducing healthcare expenditure levels also is expected to boost regional growth during the forecast period, analysts predicted. Asia-Pacific is the fastest growing region of the medical device outsourcing market. Emergence of this region as a manufacturing hub owing to the presence of relatively lower labor and infrastructure costs attributes to its attractive growth. Growing demand for therapeutic and diagnostic devices in the region, on account of improving healthcare infrastructure, patient awareness and expenditure levels is also expected to present market participants with lucrative future growth opportunities.
Analysts with Grand View predict that spending cutbacks by major healthcare establishments are the primary reasons for the rise in pricing pressure. In addition, a more complicated reimbursement framework and payers and patients focusing on the value of money, medical device manufacturers are expected to adopt outsourcing as a viable sustainability tool.
“Implementation of stringent government initiatives such as the imposition of an additional excise duty of 2.3 percent on medical devices is also expected to drive market growth by encouraging manufacturers to curb costs through outsourcing,” analysts wrote. “The global medical device outsourcing market was valued at $23.56 billion and is expected to grow at a CAGR (compound annual growth rate) of 11.5 percent during the forecast period.”
The forecast period is until the year 2020.
Changing dynamics of the healthcare industry has heightened the importance of practitioners and patients in buying decisions. Oligopolistic nature of most medical device markets coupled with increasing buyer awareness levels has forced manufacturers to adhere to business strategies involving constant research and development investments and new product innovations, according to the report. Such endeavors significantly increase expenditure levels and medical device OEMs are, therefore, rapidly adhering to outsourcing as an effective cost-curbing tool, according to analysts from Grand View. Statistics suggest that medical device outsourcing help OEMs reduce cost of production by approximately 15 percent.
Regulatory consulting, product design and development, product testing, product implementation, product upgrade and product maintenance services are the major service segments analyzed in the study. Product design and development was the largest segment in 2013. Product design and development is the most capital-extensive manufacturing phase and therefore, witness the highest rates of medical device outsourcing. Product implementation emerged as the fastest growing services segment and is expected to grow at a CAGR of more than 13 percent during the forecast period. Growing adoption of process overlapping as a profitable option and the simultaneous execution of product design and implementation processes are some factors accounting for its rapid growth.
Class II medical devices was the leading application segment of the medical device outsourcing market in 2013. These devices entail lower potential risk of injury or threat to the life of patients and include powered wheelchairs, infusion pumps, surgical drapes and other moderate risk medical devices. Class II devices encompass relatively simpler technologies (as compared to Class III medical devices) and therefore, are the most outsourced ones. Class I medical devices include low-risk devices and are generally procured from external vendors. Class III medical devices were the second most revenue-generating segment in 2013. Growing number of initiatives aimed at minimizing product recall instances and the need of external expertise is expected to positively reinforce the growth of the Class III medical device outsourcing market. According to Medscape, during 2005 to 2009, the number of voluntary product recalls amounted to approximately 700 per year.
North America emerged as the largest revenue contributor in 2013. Rapidly growing medical device production aimed at catering to an ever-increasing demand is one of the most significant growth drivers of this market. North America spent more than 15 percent of its gross domestic product on healthcare in 2013 and increasing number of government initiatives working toward reducing healthcare expenditure levels also is expected to boost regional growth during the forecast period, analysts predicted. Asia-Pacific is the fastest growing region of the medical device outsourcing market. Emergence of this region as a manufacturing hub owing to the presence of relatively lower labor and infrastructure costs attributes to its attractive growth. Growing demand for therapeutic and diagnostic devices in the region, on account of improving healthcare infrastructure, patient awareness and expenditure levels is also expected to present market participants with lucrative future growth opportunities.