07.29.15
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By now, the medical device industry has had ample time to adjust to its “new normal.” Healthcare firms have had years, really, to revamp their business models to jumpstart growth, but progress has been tortoise-like—hampered by lingering Affordable Care Act uncertainty, new federal regulations, hospital consolidations, purchasing decision instability, fickle reimbursement rates and demands for values-based solutions. Nevertheless, medtech manufacturers realize that future profits depend on their ability to evolve with the market, and many have begun their metamorphoses, whether it be through acquisition (Medtronic-Covidien, Zimmer-Biomet, Smith & Nephew-ArthroCare, Danaher-Nobel Biocare), partnerships (Novartis-Google[x]), restructuring (Philips N.V., Baxter International and Abbott Laboratories) or redefining innovation. As St. Jude Medical Inc. CEO Daniel J. Starks noted, “Innovation is broader than delivering the next breakthrough product. It is about partnering with physicians, hospitals, payers, patients and our communities to challenge conventional thinking and create medical solutions that save and improve millions of lives worldwide—while reducing healthcare costs for all.”
The key to success, of course, lies in the industry’s ability to buck tradition—which historically, has been a virtual sacrilege among device companies. But disruptive change is underway. Companies no longer will be able to earn premium margins by simply selling clinical features and new devices into established market spaces. Rather, they will need to look at new segments and, particularly, new end-to-end solutions to secure additional revenue and maintain margins, contends an A.T. Kearney report on forces currently shaping the medical device industry.
“While the future contours of the medical device industry remain to be defined, radical change is inevitable, and the companies who embrace it will both shape the industry and profit from it,” said Dave Powell, A.T. Kearney partner and study co-author. “Executives should urgently be evaluating the impact of disruptors and using this information to determine what capabilities and resources they will need to build a distinctive business model that will enable them to compete in the future.”
Time is wasting.
Editors’ note: As you read our report, please take note that while the companies are ranked according to sales reported for FY 2014 (though we do provide some 2015 figures to date where possible), some may include non-device sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies explicitly break out the device portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates. Also note that foreign currency conversions were done based on the exchange rate at the end of the fiscal reporting period being discussed. In addition, we did not include fact boxes for recently acquired companies (Biomet, CareFusion, Covidien), as they now are part of their larger partners.
TOP MEDICAL DEVICE MANUFACTURERS
Contributors
Editorial Director, Medical Devices: Christopher Delporte
Managing Editor: Michael Barbella
Associate Editor: Ranica Arrowsmith
By now, the medical device industry has had ample time to adjust to its “new normal.” Healthcare firms have had years, really, to revamp their business models to jumpstart growth, but progress has been tortoise-like—hampered by lingering Affordable Care Act uncertainty, new federal regulations, hospital consolidations, purchasing decision instability, fickle reimbursement rates and demands for values-based solutions. Nevertheless, medtech manufacturers realize that future profits depend on their ability to evolve with the market, and many have begun their metamorphoses, whether it be through acquisition (Medtronic-Covidien, Zimmer-Biomet, Smith & Nephew-ArthroCare, Danaher-Nobel Biocare), partnerships (Novartis-Google[x]), restructuring (Philips N.V., Baxter International and Abbott Laboratories) or redefining innovation. As St. Jude Medical Inc. CEO Daniel J. Starks noted, “Innovation is broader than delivering the next breakthrough product. It is about partnering with physicians, hospitals, payers, patients and our communities to challenge conventional thinking and create medical solutions that save and improve millions of lives worldwide—while reducing healthcare costs for all.”
The key to success, of course, lies in the industry’s ability to buck tradition—which historically, has been a virtual sacrilege among device companies. But disruptive change is underway. Companies no longer will be able to earn premium margins by simply selling clinical features and new devices into established market spaces. Rather, they will need to look at new segments and, particularly, new end-to-end solutions to secure additional revenue and maintain margins, contends an A.T. Kearney report on forces currently shaping the medical device industry.
“While the future contours of the medical device industry remain to be defined, radical change is inevitable, and the companies who embrace it will both shape the industry and profit from it,” said Dave Powell, A.T. Kearney partner and study co-author. “Executives should urgently be evaluating the impact of disruptors and using this information to determine what capabilities and resources they will need to build a distinctive business model that will enable them to compete in the future.”
Time is wasting.
Editors’ note: As you read our report, please take note that while the companies are ranked according to sales reported for FY 2014 (though we do provide some 2015 figures to date where possible), some may include non-device sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies explicitly break out the device portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates. Also note that foreign currency conversions were done based on the exchange rate at the end of the fiscal reporting period being discussed. In addition, we did not include fact boxes for recently acquired companies (Biomet, CareFusion, Covidien), as they now are part of their larger partners.
TOP MEDICAL DEVICE MANUFACTURERS
| 1. | Johnson & Johnson | $27.50B |
| 2. | GE Healthcare | $18.29B |
| 3. | Medtronic | $17.00B |
| 4. | Baxter International | $16.67B |
| 5. | Siemens Healthcare | $15.77B |
| 6. | Philips Healthcare | $11.17B |
| 7. | Cardinal Health | $11.00B |
| 8. | Covidien | $10.66B |
| 9. | Abbott Labs | $10.11B |
| 10. | Stryker | $9.66B |
| 11. | Danaher | $9.38B |
| 12. | Becton Dickinson | $8.45B |
| 13. | Boston Scientific | $7.38B |
| 14. | Essilor | $6.89B |
| 15. | Alcon | $6.62B |
| 16. | B. Braun | $6.59B |
| 17. | Fresenius | $5.95B |
| 18. | St. Jude Medical | $5.62B |
| 19. | 3M Healthcare | $5.57B |
| 20. | Olympus Medical | $4.79B |
| 21. | Zimmer | $4.67B |
| 22. | Smith & Nephew | $4.62B |
| 23. | Hospira | $4.50B |
| 24. | Terumo | $4.09B |
| 25. | CareFusion | $3.84B |
| 26. | Getinge Group | $3.42B |
| 27. | C.R. Bard | $3.32B |
| 28. | Biomet | $3.20B |
| 29. | Varian Medical | $3.00B |
| 30. | Bayer | $2.87B |
Contributors
Editorial Director, Medical Devices: Christopher Delporte
Managing Editor: Michael Barbella
Associate Editor: Ranica Arrowsmith
