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Medical Devices

~$350 billion worldwide market driven by focus on healthcare outcomes and costs

The ~$350 billion global medical device industry is forecasted to grow 4-5% p.a. through 2018, reaching global sales of ~$450 billion. Growth in this sector is typically derived from innovations that improve patient care and new product iterations. Over the next five years, in vitro diagnostics and cardiology are anticipated to represent the largest segments of the market, and neurology the fastest-growing.

A key influence on the medical device market is the focus on health outcomes and costs. Private and public sector payers are more closely measuring device performance and related costs, creating opportunities for low cost, disruptive solutions with better performance characteristics to take share. This trend will be accelerated by the shift from “fee for service” payment to “risk-based” forms of reimbursement.

The convergence of information technology with medical devices is also altering the landscape. Medical devices are combining with mobile technology to create new applications that reduce costs and improve healthcare performance. Evaluating a patient’s most important health measures is no longer tied to an office visit. This immediacy of information, in a wide range of diseases, is transforming the practice of medicine and lies at the center of lowering healthcare spending and improving patient outcomes.

The medical devices industry within the emerging markets is expected to exhibit attractive growth rates over the next five years. For example, China is currently the third largest medical device market in the world, behind the United States and Japan. Due to the sheer number of citizens, low therapeutic penetration rates, and strong economic growth, China represents the largest opportunity for device companies. With an increased attention on improving access to care and building infrastructure, the Chinese medical device market is expected to surpass Japan’s in the next five years and possibly the United States within ten years.

We believe there are attractive investment opportunities in the medical device space, both in developed and emerging markets, that play into these themes.

Additional Info

  • Attractive ~$350 billion global medical device industry, growing at 4-5% p.a. overall, with faster growth in emerging markets
  • Developments in new therapy areas will need to meet critical medical needs while considering cost-benefit ratio
  • Opportunity to enter emerging markets with proven products and business models
  • Large medtech companies acquiring differentiated products with revenue growth