According to a paper published by First Research, there are approximately 11,000 medical equipment and supplies manufacturers in the US. Altogether, they have an annual revenue of $125 billion. This industry continues to grow primarily due to an aging US population and a desire for the latest medical technology.
Manufacturing is a complex business. Add to that the regulations that control the production of medical supplies and only those companies prepared can compete in this market. As the industry evolves, new challenges will be faced.
Protecting the Assets
Protecting a company's products and intellectual assets is becoming more important. Many medical device manufacturers have to maintain very active patent departments. One trend that makes this a more critical management issue is specialization. Companies are specializing in niche areas of medicine, perhaps focused on one condition or procedure. Since there is room for a smaller amount of competition in these specialty areas, the intellectual and technological efforts invested need to be protected.
Small Companies and Large Buyers
Large medical device manufacturers sell to purchasing groups that represent a number of hospitals and clinics. Purchasing agreements are negotiated which may include deep discounts for quantity purchases. As more health care centers become reliant on these purchasing groups, the small company will struggle to compete. The small specialty companies will also find this a challenge. The amount of design and R&D costs may limit their ability to come to a price-point acceptable to these purchasing groups.
Competing with Technology
Wireless technology is making its way into medical devices and manufacturers will need to meet the demand. Devices are being implanted with wireless capability, giving health care providers quick access to real-time data. Diagnostic equipment is fitted with wireless controls. Manufacturers will need to look at their line to see what products could benefit from a wireless technology retrofit.
Product Line Evolution
This also ties in with the need to continually refresh the product line to match the advances in technology. Product obsolescence is a challenge for small companies that specialize. R&D must be a constant activity for these companies to keep the next device design on the drawing board. Modular design of larger equipment to allow the upgrade or addition of features is one way manufacturers can keep up with new product needs.
Alternative Solutions Compete for Business
Biotechnology advances are creating alternative treatment solutions. Where implants were once the preferred treatment method, biotech approaches using natural tissue are being tested. An aging population, longer life spans, the desire for faster recovery and cutting medical costs are all reasons to look at alternative approaches. More approaches means more competition for the small medical device manufacturer.
The Best Defense is Being Aware of Change
Manufacturers can remain competitive in the medical device field by being aware of the changes in the health care industry. Changes are happening faster and companies positioned to respond will remain competitive. Those that don't will face a shrinking market with old technology and little chance for success.
