Michael Barbella, Managing Editor03.14.22
The worldwide medical device contract manufacturing market rebounded with a vengance last year.
Globaldata statistics indicate M&A deal volume reached a record high of $1.6 billion after being negatively impacted by the cancellation/postponement of elective surgeries in 2020. Although the recovery is welcomed by OEMs, the backlog of surgeries will create high demand moving forward, GlobalData notes.
“Despite facing challenges such as a lack of predictability in demand, supply chain disruption, labor constraints and regional variability in the recovery of elective procedures, underlying demand has remained strong," said Tina Deng, MSc, a principal medical devices analyst at GlobalData. "Outsourced manufacturing capacity is expected to be saturated with orders due to a backlog of demand. This leads to more active transactions that consolidate resources and further expand production capacities.”
The contract manufacturing market is recovering with strong organic growth, and consolidation in the market will continue at a fast pace. In June 2021, Tecan Group signed a definitive agreement to acquire medical devices manufacturer Paramit for $1 billion to extend its presence in the United States and Asia. Paramit is a CDMO that focuses on medical devices and life sciences instruments. This deal is expected to create a combined global platform with design, development and manufacturing capabilities in the fast-growing medical devices market.
“In particular, GlobalData notes that contract manufacturing organizations that focus on pre-clinical research and development (R&D) will enjoy revenue growth with the restart of early-stage device programs. These programs hold enormous promise, particularly for novel medical devices that make many procedures less invasive, with an attendant reduction in recovery time and associated cost," Deng said. “Looking forward, contract manufacturing will continue to experience strong growth, with the normalization of the device market in line with long-term goals that provide cost-effective solutions to both patients and healthcare providers in the fastest growing segments of healthcare.”
Globaldata statistics indicate M&A deal volume reached a record high of $1.6 billion after being negatively impacted by the cancellation/postponement of elective surgeries in 2020. Although the recovery is welcomed by OEMs, the backlog of surgeries will create high demand moving forward, GlobalData notes.
“Despite facing challenges such as a lack of predictability in demand, supply chain disruption, labor constraints and regional variability in the recovery of elective procedures, underlying demand has remained strong," said Tina Deng, MSc, a principal medical devices analyst at GlobalData. "Outsourced manufacturing capacity is expected to be saturated with orders due to a backlog of demand. This leads to more active transactions that consolidate resources and further expand production capacities.”
The contract manufacturing market is recovering with strong organic growth, and consolidation in the market will continue at a fast pace. In June 2021, Tecan Group signed a definitive agreement to acquire medical devices manufacturer Paramit for $1 billion to extend its presence in the United States and Asia. Paramit is a CDMO that focuses on medical devices and life sciences instruments. This deal is expected to create a combined global platform with design, development and manufacturing capabilities in the fast-growing medical devices market.
“In particular, GlobalData notes that contract manufacturing organizations that focus on pre-clinical research and development (R&D) will enjoy revenue growth with the restart of early-stage device programs. These programs hold enormous promise, particularly for novel medical devices that make many procedures less invasive, with an attendant reduction in recovery time and associated cost," Deng said. “Looking forward, contract manufacturing will continue to experience strong growth, with the normalization of the device market in line with long-term goals that provide cost-effective solutions to both patients and healthcare providers in the fastest growing segments of healthcare.”