As companies modernize their business practices, driven by the need to remain competitive and retain critical survival capabilities—such as agility and flexibility in a fast changing marketplace—t opportunities will grow for outsourcing, according to a new report recently released by Global Industry Analysts, Inc., based in San Jose, Calif.
The value of the market is expected to reach $44.7 billion by 2017.
Regulatory issues have been "a major barrier," according to the report. However, in recent years, the economic advantages of outsourcing have far outweighed the bottlenecks confronted and as a result outsourcing is currently a growing trend with major medical device OEMs.
"With the future characterized by volatility in commodity prices, and currency fluctuations, manufacturing processes, including that for medical devices, will come under direct pressure requiring OEMs to remain cost effective and flexible and to rapidly adjust to changing external market stimulants," said the study's authors. "Outsourcing against this backdrop will emerge even higher to be the sharpest competitive edge for medical device OEMs. The healthcare industry is resilient but not immune from the developments in macro-economic environment. Under such a scenario, growth in the medical-device outsourcing market decelerated to single digits in the year 2009 discouraged by reductions in contract manufacturing orders from OEMs burdened with softening demand, liquidity shortages and longer sales cycle of products."
However, the recession has pushed the concept of outsourcing medical device development and manufacturing, the report noted, adding that several medical device OEMs are continuing to re-evaluate supply chain dynamics in a bid to leverage cost efficiency under a scenario where increasing profitability is solely dependent upon reducing production/manufacturing costs.
"Most medical device outsourcing service providers are focusing on expanding their capability and expertise with end-to-end, full-service portfolio offerings," according to the report. "Full-length services typically range from product design, development and production including, value-added services such as R&D, engineering services, packaging and supply chain management. In the upcoming years, companies with dual prototyping and production abilities are poised to score the maximum gains as OEM preferences skew steeply towards service offerings that promise radical reductions in time to market."
As stated by the new market research report, the US accounts for a major share of the global medical device outsourcing market.
By device category, outsourcing services offered for Class II devices is the largest segment. OEMs leveraging the most of specialized outsourcing services are expected to be those operating in a business environment where cost-containment and product differentiation represents perennial needs. In the post-recession period, organizations will continue to retain their appetite for cost effective solutions, but will however demand more value-creating productivity, according to the study. Growing recognition of the economic and operational efficiencies and benefits of a device outsourcing model promises strong future growth. World outsourcing services in the field of radiology is expected "to surge" at a projected compound annual growth rate of 9.4 percent over the analysis period.
The research report is titled “Medical Device Outsourcing: A Global Strategic Business Report." For more information, visit: www.strategyr.com.