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“Future State 2030,” a KPMG report, says that the number of people aged 65 and older will double to one billion globally by 2030. Today, this age group accounts for about 8% of the global population, but that will rise to 13% by 2030.
The emerging economies are home to over 80% of the world’s population—characterized by a rising middle-class population and a relatively young population compared to the developed economies. This means they drive global consumption of goods and services. The above numbers present opportunities for medical device manufacturing. New Venture Research predicted that the global medical product assembly value will reach US$85.3 billion in 2019 from $60.7 billion in 2014, a compounded annual growth rate (CAGR) of 7%. Medical diagnostics alone will reach $43 billion by 2019 from $27.7 million in 2014, a CAGR of 9.2%.
The total outsourced manufacturing value is expected at US$21.8 billion in 2019—99% or US$21.5 billion will be accounted for by electronics manufacturing service (EMS) providers. The medical EMS industry will likely be growing at 7.2% CAGR.
I would like to think these forecasts for the medical product assembly are quite conservative considering that the megatrends mentioned at the beginning of this article bode well for the medical industry.
Margin pressures, compliance costs and risks, supply chain instability, and new product introduction headaches are some challenges in medical device manufacturing that probably hinder a more aggressive prognosis, but with innovation, medical manufacturers can churn out more.
Serving the Baby Boomers
The “baby boomers,” consisting of people born from 1946 to 1964, have become part of the aging population and are creating a high demand for healthcare and medical products. Arguably, because of their excesses in the past, the baby boomers are not necessarily healthy. They are likely to be obese, afflicted with diabetes, or have high blood pressure.
Seemingly because of their adventurous spirit, they are early adopters of new medical gadgets or technology. However, they demand high-value low-cost solutions that promise improved health.
The baby boomers are requiring cost-effective, user-friendly, and less invasive medical devices that help them improve their health and live better. In response, medical device manufacturers innovate to bring solutions that are less expensive, easy to use, and effective in home settings.
According to Transparency Market Research, among the home healthcare device markets (therapeutic healthcare devices, diagnostics and monitoring healthcare devices, medical supplies, and mobility assist devices), the diagnostics and monitoring device sector registered the highest demand in the last couple of years due to the rising incidence of chronic diseases and increasing healthcare awareness. Market trends indicate that the therapeutic healthcare device sector will be the fastest growing segment between 2014 and 2020, with CAGR of over 10%.
The global home healthcare market, a US$176.1 billion market in 2013, is growing to $303.6 billion by 2020, an 8.1% CAGR until 2020.
Editor's Note: This article originally appeared in the January 2016 issue of SMT Magazine.