Future of Medtech: Who’s In, Who’s Out, Who’s Taking Over

The medical technology industry had its share of disappointments last year, with a slow pace of device approvals and meager action on the investment front. But a wave of megamergers and impressive IPO performances in 2014 are signs that the tide is turning.

Not only is the market picking up, but the entire landscape is changing. In fact, if the $43 billion merger of powerhouses Covidien and Medtronic goes through as anticipated, we may not even recognize the medtech sector by 2020.

Shedding light on the changes ahead, market intelligence firm Evaluate just released its annual state-of-the-industry report at the AdvaMed 2014 conference held in Chicago, Oct. 6-9.

The EvaluateMedTech World Preview report provides consensus forecasts for the medtech industry through 2020. Based on this year’s findings, we could be in for a wild ride.

Here’s a look at some highlights from the report:

M&A deal value in the medtech industry jumped to $30 billion in the first half of 2014, a 363 percent increase over the same time in 2013.
Worldwide, medtech sales are forecast to reach $513 billion by 2020.
Investments are picking up; Medtech companies raised $1.3 billion dollars in the first half of 2014, more than 44 percent higher than in all of 2013.
The proposed merger of Medtronic and Covidien could oust the currently forecasted market leader Johnson & Johnson by 2020.
In the cardiology arena, Medtronic holds steady as top player through 2020 with sales of $11.1 billion.
Zimmer, following its acquisition of Biomet, could leapfrog Stryker to become the No. 2 orthopedic company in 2020.

As the report notes, one big piece of the medtech story today is the U.S. regulatory environment, which many industry observers say would benefit from additional business-minded improvements. Device companies and associations such as AdvaMed (the Advanced Medical Technology Association) have spent the last year lobbying against the Medical Device Excise Tax, claiming it only serves to stifle innovation.

Fortunately, the regulatory side appears to be changing for the better this year. The FDA has approved 20 new premarket approvals (PMAs) through August 2014, a 43 percent increase over the same period last year, according to the Evaluate report. (PMA is the FDA review process of evaluating the safety and effectiveness of Class III medical devices.)

Still, there’s always room to do better. This year’s AdvaMed conference will focus on three key areas ripe for change: reimbursement, reform and innovation.

“The medical technology industry is an important engine for economic growth in the United States, employing more than 400,000 workers nationwide, generating approximately $25 billion in payroll, paying out salaries that are 40 percent more than the national average ($58,000 vs. $42,000) and investing nearly $10 billion in research and development annually,” AdvaMed notes.

Source: EvaluateMedTech