Market Report: Medical Devices Step Up to Regulatory Challenges
While vigorous in the United States, the medical device industry is preparing for regulatory changes.
Clare Goldsberry , Area Development Contributor,  (March 2011)

There's a lot of good news with respect to the medical device industry, including the fact that it's a growing market segment anticipated to top $312 billion globally, thanks in part to an aging U.S. baby-boomer population as well as growing demand from emerging markets, according to Kalorama Information's latest report, The Global Market for Medical Devices.

"There are many drivers on the upside for medical devices," says Kalorama's publisher, Bruce Carlson. "Demand for healthcare services in emerging nations, the need for reducing hospital stays, and the aging world population are the key ones."

A Vast Market
The market for medical devices is vast, with products as varied as MRI machines, laparoscopic surgical equipment, wheelchairs, and medical gloves.

"Some categories of medical devices are commoditized and competition will hold prices in check, while in other areas revenues will flourish," Carlson notes. Kalorama reports roughly 4-6 percent growth for the next few years in the global device market. "Patient monitoring and oxygen systems, home dialysis - anything that can reduce hospital stays and keep patients at home with their families - are seeing faster revenue growth," Carlson adds.

With the United States being the largest consumer of medical devices in the world, the U.S. medical technology (or med tech) industry ships approximately $123 billion in products annually, employs directly more than 357,000 individuals, and pays $21.5 billion in salaries. That makes the med tech market segment one of the biggest and best when it comes to job opportunities. However, while it may be a large industry sector, those in the med tech arena view current U.S. regulatory processes for making products available to patients as unpredictable and characterized by disruptions and delays.

Merger and acquisition activity has been quite strong among many of the major players in the medical device/equipment industry. Medtronic Inc.; Boston Scientific Corp.; St. Jude Medical, Inc.; Johnson & Johnson; and Abbott Laboratories - just to name a few of these large companies - are buying up smaller firms that have developed new products that the big companies want to add to their portfolios.

For example, in 2010 Boston Scientific spent $193.5 million up front to purchase Asthmatx, Inc., a California startup that developed a catheter-based procedure to treat severe asthma. The company agrees to additional payments of up to $250 million contingent upon achieving specific revenue-based criteria through 2019. And during the first week of the new year, Boston Scientific completed the purchase of another startup, Intelect Medical, for $60 million. This will give Boston Scientific a presence in the area of deep-brain stimulation to treat conditions such as Parkinson's disease, a market segment currently held largely by Medtronic Inc.

Medtronic Inc., which is headquartered in Minneapolis, Minnesota, is also expanding its reach through acquisitions. In January of this year, the company announced that it completed the acquisition of privately held Ardian, Inc., a developer of catheter-based therapies including its primary product - the Symplicity® Catheter System™ to treat hypertension and related conditions. The acquisition of Ardian, headquartered in Palo Alto, California, augments Medtronic's existing interventional therapies and complements the company's expertise in catheter design and ablation technologies.

Other Med Tech Moves
In addition to acquisitions, medical device companies are expanding geographically. Merit Medical Systems, Inc. recently announced that it would invest $1 million during 2011 at its plant in Chester, Virginia. The company plans additional equipment purchases, but as business grows, Merit may expand the plant's 100,000-square-foot footprint. The work force is expected to increase to approximately 180 employees over the next year. Merit Medical Systems is headquartered in the Salt Lake City suburb of South Jordan, Utah.

Florida is also noted for its med tech industry clusters, comprised of companies of all sizes and specializations. Global diversified healthcare company Baxter has several facilities in Florida, including manufacturing operations, a global training center, and global technical services.

Suppliers to the med tech industry are also doing well. While there's been some consolidation among this segment, many suppliers are expanding capabilities to help their OEM med tech customers mitigate risk and to provide more in-house services.

Suppliers Pitching In
Zeus, Inc., specializing in material science and high-performance polymer extrusions, recently announced that it has expanded its capabilities and is now able to process Aeos®ePTFE and Electrospun Polymers in a new 5,000-square-foot Class-7 manufacturing environment. This expansion allows for the processing of these advanced materials in a more controlled environment, resulting in compliance with stricter regulatory standards.

"Medical regulatory bodies are raising the bar on standards for devices in the industry and Zeus is committed to meeting this challenge," according to Bob Jennings, Zeus' vice president of Sales and Marketing. "The processing of these advanced materials in a tightly controlled environment ensures that customer products meet the strictest regulatory requirements in the medical device industry," he explains.

Zeus, with headquarters in Orangeburg, South Carolina, is also equipped with a Class-7 Certified, 5,000-square-foot biomaterials facility dedicated exclusively to the extrusion, analysis, and characterization of bioabsorbable polymers and other advanced materials, for a total of 10,000 square feet of controlled environment operating under ISO 13485 guidelines.

Mack Medical has also added capacity to its medical molding at its headquarters facility in Arlington, Vermont, with three new electric molding machines from Toshiba Machine Co., Ltd. All are 110-ton, 3.4-oz. high-precision machines from Toshiba's EC Servo Electric Series. The company also replaced one of its older presses in the Arlington facility with a new 1650-ton hydraulic from Engel.

"This new equipment purchase represents another investment in our medical manufacturing strategy, which we originally embarked upon 10 years ago and today represents a full third our business," says Jeff Somple, president of the company's Northern Operations. "These presses have been brought on line to support the rapidly growing orthopedic segment of that business," he says. The purchase takes Mack's Northern Operations, which consist of four plants in Vermont and Massachusetts, to a total of 82 presses ranging from 28 to 2,000 tons. Expect more upgrades as medical device suppliers step up to regulatory challenges.

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