Healthcare Products Industry Report December 2021
Industry Overview (Manufacturing)
Medical Device Manufacturing industry products are essential for healthcare. Therefore, industry operators are generally protected from significant revenue volatility. However, these products are also relatively expensive, which makes the Medical Device Manufacturing industry slightly more vulnerable to fluctuations in economic conditions. Technological advances, increased healthcare spending and an improving economy stimulated demand for medical devices recently. The aging US population has further contributed to industry revenue, given the high incidence of health issues requiring medical devices among elderly people. Overall, these factors have contributed to increased industry revenue over the past five years.
Key Trends
It is expected that demand for medical devices will quickly bounce back following the pandemic. Despite the disruptions caused by the pandemic, the industry’s largest companies have been able to increase profit.
The healthcare system is adjusting to meet the needs of this growing population, as US healthcare reform has been aimed at expanding coverage to a broader range of patients.
Historically industry has maintained a low level of outsourcing activity, however, tightening global regulations, increased global competition and new market opportunities have prompted manufacturers to outsource a range of critical operations. Changes in the economic and regulatory environments will make it increasingly attractive to do business abroad.
Industry Overview (Wholesale)
The Medical Supplies Wholesaling industry distributes dental and medical supplies and equipment intended to improve or maintain health. Demand for wholesale activities associated with these products is highly correlated with demand for the products themselves. Over the past five years, the median age of the population rose, which pushed up the number of age-related, nonelective procedures performed in the United States. Rising product prices have also supported industry growth.
Key Trends
It is expected that the demand for healthcare products is likely to surge as restrictions on nonessential services are lifted. Moreover, demographics in the US population will have a favorable effect on the industry.
Despite industry wholesalers working with government agencies to better coordinate where and how to distribute supplies, budgetary and political pressures on government programs will possibly limit revenue and profit growth. An example of this is the eliminated PPACA medical device tax.
Largely due to decreasing profit, medical supplies-related industries will likely continue to consolidate. These consolidation trends in the healthcare sector have led to the creation of larger and more sophisticated healthcare providers.
