By Dennis M. Zogbi
This MarketEYE article covers the global market for medical “devices” as described by the United States Food and Drug Administration and the materials and electronic components that support them. Paumanok Publications, Inc. estimates the medical technology market, or “MedTech” market at $390 Billion USD worldwide and includes $160 billion in medical electronic devices and $230 billion in medical “materials.” The following chart illustrates the growth in the worldwide MedTech market between 2005 and 2016, when the market grew from $250 BB USD in value to $390 BB USD in value, which represents an average annual growth rate during that time period of approximately 4%. The dual engine that has growth in “MedTech” from 2005 to 2008 and steady state growth from 2012 to 2017, is the combination of an aging population in Western markets and to support emerging economies (Brazil, Russia, India and China). The forecast is for the global MedTech market to grow from $390 BB USD in 2016 to $515 BB USD by 2022 to continue to support aging populations and emerging economies, but also because of the interjection of electronic solutions where materials have traditionally been used.
Global MedTech Market Development: Materials Versus Electronics: 2005-2016; 2017-2022 Forecasts
The following table separates out the “electronics” segment of the global “MedTech” market for 2016 and illustrates how the market has changed over the past decade, with both market segments performing admirably, and which supports the case for the market to grow in a similar manner because the fundamental driver’s behind historical growth have not changed. We also believe that electronics may give the growth rate an added boost of 5% per year on an average annual rate in revenues over the next five years.
Global MedTech Market: Medical Electronic Devices Versus Materials
The reader should note that electronics account for 41% of the global “MedTech” market, and the application of electronics into medicine has only just begun to penetrate the industry. During our research we noted that the introduction of electronics into cardiovascular medicine began in the 1850s and took 100 years for doctors to attempt to defibrillate the human heart. The progression of application of electricity to the human heart and the long time it has taken for the implantable defibrillator is significant, and means that it takes the industry a long time to approve new products.
“MedTech” Electronics Markets by FDA Class Designation:
The United States Food and Drug Administration (FDA) breaks down “Medical Devices” into multiple granular sub-categories basketed into three sub-classes, with Class I having little or no electronic content, Class II having the most electronic content and Class III having the most advanced and mission critical content.
Class I Medical Electronics Markets:
The class I Medical electronic markets are based on our estimates, 99.9% materials based and there are no electronics present in the FDA description of these harmless devices such as Band-Aids and bandages. This segment of the materials markets is so enormous that it represents a significant market opportunity for electronics and is why companies like Johnson & Johnson, who traditionally had been a materials supplier, is now looking toward the consumables electronics markets because they have the channels of distribution to exploit such a change.
Class II Medical Electronics Markets:
This is where the majority of medical electronics are consumed in “Medtech – 72% of the value. It is in FDA Class II Electronics where we find the enormous medical test and scan equipment markets, which are all crammed into the FDA designated radiology segment but also into multiple other segments including chemical test and laboratory test equipment. It is such a wide category because it only includes products that are not placed inside the human body, which are Class III.
Class III Medical Electronics Markets:
Class III Medical devices are those that require added scrutiny by the FDA because they go inside the human body. It is such a narrow field of expertise, largely known now as cardiovascular electronics (because so many products are under its umbrella). But for electronics, especially batteries and capacitors, we see a significant market in value associated with cardio implantable defibrillators because of the application specific nature of pacing and defibrillation, and the exact capacitance and voltage requirements required to regulate and restart the human heart (700 Vdc).
Total Available Medtech Market for Electronics and Future Market Potential to 2022
The following chart illustrates the estimated market share in dollar value for “electronics” products by FDA sub-category in FDA approved “Medical Devices”. The chart supports that cardiovascular, radiology and general hospital categories are the major consumers of electronics (i.e. for implants, test and scan and pumps and compressors). The remaining categories, are largely materials based (medicines and bandages), but show the large categories of new markets for electronics, Johnson & Johnson estimates the “Consumerable” electronics markets are already at $10 billion in value worldwide at retail and they control 10% of that. The Megatrend of “Wearable Electronics” is dovetailing quite well into test and scan procedures and markets that “previously had required a visit to the doctor’s office.” J&J points squarely at Glucose Monitoring as the most interesting segment, as it already represents $8.5 BB in total market value that is filtering out first in a potential deluge of future product offerings that places “Future Health” in the hands of the patient.
Penetration of Electronics into Class I, II, and III Medical Devices: 2016 and Outlook to 2022
The market potential for the future of electronics in “MedTech” is substantial because of the aging populations in industrialized zones, growth potential in emerging economies AND the movement to put health in the hands of the patient (consumables) AND the opportunity to apply electronic devices to markets where electronics have not existed before in medicine, such as robotics and motors.
Dennis M. Zogbi is the author of more than 260 market research reports on the worldwide electronic components industry.
