With the European and U.S. healthcare markets working to reduce spending, the global medical device market reached $331 billion in 2012, a growth rate of 3 percent from 2011, according to Kalorama Information.
Growth was lower than what the healthcare market research firm had projected last year, the company said in a recent news release announcing its latest report on the industry, “The Global Market or Medical Devices, 4th Edition.”
The healthcare market in Europe was challenged by the broader economy, and spending increases for medical devices in the U.S. were slower, said Bruce Carlson, Kalorama Information publisher. “Those that did launched new products or acquired companies with novel products,” he said in the news release.
Federal programs, such as Medicare and Medicaid, as well as state governments, made “anemic” spending increases to hospitals, which are the key purchasers of medical devices, the report said. Spending cuts took the form of non-payment for patients for infections acquired at the hospital, or code recovery fees.
In Europe, the extreme economic downturn in Spain, Ireland, Greece and Portugal led to layoffs and proposed reforms to the healthcare systems. Even emerging markets have increased spending less quickly than had been expected. Hospitals continued to purchase through group organizations and insist on transparent prices.
In the U.S. in early 2013, the medical device industry began making payments to the Internal Revenue Service (IRS) for a new 2.3 percent excise tax on all classes of medical devices as part of the Affordable Care Act. Many companies attributed layoffs to the tax in widely-publicized announcements, or said that they would not build additional U.S. facilities, the news release noted.
Kalorama said it did not believe that the device tax factored into slow the growth rate in 2012, but the report does predict long-term effects on venture capital investment and research spending in the industry.
The medical device market includes everything from large imaging systems to disposable items that can be classified as a type of medical device. While the pharmaceutical market is represents a larger amount of dollars, the device market has more participants and is responsible for more orders and transactions, the report said. Certain areas such as infusion pumps, patient monitoring and catheters have shown promising growth.
With the device market growing more slowly, there was little incentive for new entrants, and giants dominated, with Johnson & Johnson, the world's largest medical device company, followed by imaging giants GE Healthcare and Siemens and cardiology and spinal device expert Medtronic, the news release said. Other leading companies were Stryker, Covidien and Philips.
Emerging markets provide a key strategy for leaders, and the report noted a new trend last year in the acquisition of Chinese local companies by device giants. Johnson & Johnson acquired local Chinese company Guangzhou Bioseal Biotechnology Co. Ltd, while Medtronic announced it would acquire China Kanghui Holdings, a developer and producer of trauma and spine orthopedic transplants.