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Compliance In Focus
Posted by John Lehmann on Wed, Mar 6, 2013

Will the Medical Device Industry be Forced to Consolidate?

Will the Medical Device Industry be Forced to ConsolidateA headline recently caught our attention, “What Will the Device Industry Look Like in Two Years or Less?” The article was posted on MD+DI and sheds light on what the industry may look like in 2015 after taking into account historical patterns, analyst view points, and current trends across the device world.

There is a looming fear that the U.S. will lose its place on the leaderboard. What threatens this prized position? The article points out, that “historically, slower growth is one of the key drivers of consolidation in any industry. And that is exactly what the device industry finds itself cursed with these days.” Many market analysts fear the market is not growing at a steadfast rate.

Glenn Novarro, senior analyst at RBC Capital Markets speaks to this issue stating, “When I started doing this 14, 15 years ago, ICD, spine, stents, these were all double-digit growth markets and pricing would go up every year. Now pricing goes down every year and units are flat to low single digits and if you add it all up, these markets are flat to down.” The unfortunate truth- where growth is not abundant, cut-backs are. But, is consolidation such a bad thing?

According to an article on ehow.com, there are some benefits and considerations for industry consolidation:

  • “Industry consolidation provides for cost savings because larger companies have more buying power to purchase goods in bulk. Market research and strategy is also readily available to be shared across the larger entities.” 
  • “Industry consolidation may arise when multiple smaller firms merge together within an emerging market to grow financial resources. Consolidation may also signal limited growth opportunities related to mature markets. Historically, airlines have been forced to consolidate in order to survive.”

To bring another perspective into view, last summer a survey of 125 MedTech executives found that 91 percent of them expected an increase in the compound annual growth rate in the next three years. The survey responses represented 89 companies in 16 countries. Do you share the executives’ optimism?

If many of the big name players in the medical device industry merge, will that benefit patients? Share your thoughts on this topic. Do you think our industry will drastically change in the next two years?

Photo Credit: ahhyeah

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Topics: Consolidate, Glenn Novarro, Medical Device Industry, MD+DI

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