Markets and various business sectors can prove to be uncertain, and at times, volatile. Similarly, the medical device industry has a tendency to fluctuate due to a variety of causes and concerns. If you’re looking for a medical device sales job, you must always be aware of the climate of the industry and how it can directly relate to your current or future employment. Finding overall stability in the medical device industry can be difficult and here are some reasons why it can be quite challenging as well as a future outlook.
As recently as 2015, the U.S. medical device industry was the global leader with sales of around $136 billion, representing approximately 45% of the global market, according to the US Government Accountability Office (Market Realist).
In terms of revenue, the top five players in the U.S. medical devices industry are Johnson & Johnson, General Electric, Medtronic, Baxter International, and Cardinal Health, all of which are names that anyone in the medical space should be familiar with and are companies that MedReps posts jobs for.
The medical device industry makes up a huge percentage of the medical and healthcare sector not just in the US but the world as well. These international markets tend to operate similarly and their strengths and weaknesses can sometimes be mirrored in other nations across the globe.
According to a 2015 report by Medical Device and Diagnostic Industry (MDDI), an aging population and increased availability of healthcare as a result of the Affordable Care Act should continue to keep the United States well-positioned in the medical device space. Additionally, Bloomberg reports that US medical device exports grew at a compound annual growth rate of 4.5% from 2008 to 2013 and are expected to increase at similar rates in the future.
Other factors that have the medical device industry trending in the right direction include increased efforts in research and development as well as the number of medical-based U.S. academic institutions that are flourishing.
After declining in 2009 for only the second time since the 1950s, R&D spending across all U.S. medical industries has rebounded, according to the National Science Board.
The latest projections indicate that between 2013 and 2020, large corporations within the medical device industry with a projected spend of $1 billion or more are expected to grow their R&D budgets by approximately 3%, while the rest of the industry is expected to increase R&D spending by more than 5% (MDDI).
The United States is home to 141 accredited medical schools and approximately 400 major teaching hospitals and health systems, many of which consistently rank among the best in the world, according to the Association of American Medical Colleges. Many of these academic institutions partner with medical device companies to collaborate on research and development of new technologies, paving the way for continual innovation and growth.
One major reason for slowing growth in the medical device industry has been a gradual shift from risky blue-sky research to more evolutionary research. “Many large, established corporations, have turned to more predictable research with a more easily measured return on investment. Unfortunately, low-risk or incremental improvements in medical device products do not justify price increases in the eyes of payers” (MDDI).
Another contributor of the slowing medical device industry has been the negative impact of a 2.3% excise tax on sales of medical devices in the US that was implemented in 2013. In a February 2014 status report from AdvaMed, as many as 165,000 U.S. jobs were lost due to the tax, and nearly one-third of respondents to a survey by the trade group said they had reduced R&D investment because of the tax.
The device tax places U.S. companies at a disadvantage against foreign competitors by raising the U.S. companies’ effective tax rate. Furthermore, it often forces U.S. companies to lower the price of their products in order to remain competitive in the global marketplace (MDDI). Ultimately, the higher tax rate reduces companies’ resources for capital investments, R&D, clinical trials, manufacturing improvements, and investments in startups.
Medical Device and Diagnostic Industry also claims that “Increased regulatory scrutiny by FDA has also led to increased costs for development of new products. For example, U.S. regulations such as unique device identification, which went into effect in September 2013, add to the growing cost of compliance for companies looking to do business in the United States.”
U.S. medical device manufacturers need to be concerned about foreign regulations, particularly in China, which is pursuing policies that favor domestic manufacturers. This may force U.S. medical device manufacturers that want to sell in China to manufacture there. This creates a predicament because companies will need to rely on China’s intellectual property laws and enforcement, which have been major concerns to date.
While the United States currently holds the largest share of worldwide medical device sales, it cannot afford to rest on its laurels. The coming years will be critical in determining if our medical device industry can take stave off competition from foreign and consumer technology players while taking advantage of existing strengths.
Success will depend in part on how proactive U.S. firms are in embracing a value-added services model combining first-class products with complementary services and software to improve healthcare. This will be the major differentiator between high-end products and commodity items, and companies that thrive and those that become extinct (MDDI).
Despite its weaknesses and possible threats to continued growth, large corporations, as well as investors, right down to its sales force are optimistic that the U.S. medical device market will be able to thrive. Availability of medical device sales jobs remains high and the outlook is positive that it will continue that way.
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