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With a market prospect of 800 billion dollars, the medical device industry has emerged three good opportunities for layout

Date: 2018-07-23
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The growth of the medical device industry is stable, and the global market sales are expected to reach 800 billion dollars in 2030; The boom inflection point is upward, and the institutions are optimistic about the leaders of subdivided industries.

KPMG's recent research on the prospects of the medical device industry shows that the industry is expected to maintain steady growth. The global annual sales are forecast to grow at an annual rate of more than 5%, and the sales will reach nearly 800 billion dollars by 2030. This reflects the growing demand for innovative new devices (such as wearable devices) and services (such as health data), as well as the huge potential released by the economic development of emerging markets (especially China and India), as people's modern habits become increasingly common.

However, KPMG pointed out that the days of 'just manufacturing equipment and then selling it to medical service providers through distributors' no longer existed. Value is a new synonym for success, prevention is the best result of diagnosis and treatment, and intelligence is a new competitive advantage. The medical device industry is faced with the reconstruction of business and operation mode, the reconstruction of value chain and the repositioning of the industry.

Rebuild business and operation mode

Jeroen Tas, director of Philips Innovation and Strategy Department, said that we are in one of the most challenging times in the history of health care. The challenges we face include: population growth and aging, increasing chronic diseases, global resource shortage, and the transformation to value based treatment. To solve these challenges, we need to use networked medical IT solutions to integrate, collect, merge and send high-quality data, generate actionable recommendations, help improve treatment effects, reduce costs and improve access to quality medical care.

The industry leaders in 2030 will be those medical device enterprises that establish contacts with customers, patients and consumers (end-users) and actively provide value. Enterprises need to combine 'smart' services and solutions that help reduce medical costs and improve outcomes, and move from treatment and cure to prevention. Technology will have a significant impact and can help achieve prevention. If still needed, it can also provide efficient minimally invasive treatment options to reduce the time patients stay in the hospital.

In order to provide value beyond devices by 2030, medical device enterprises need to carefully evaluate their own business and business model, and pay attention to the following trends: establishing contact with customers, patients and consumers; The focus shifts from cost to value.

According to KPMG report, Medtronic has taken bold steps in recent years to consolidate its position as the world's largest medical device enterprise. The enterprise actively reshapes its business and business model, and continues to make fundamental reforms in the global business model. The vice president of solutions of Medtronic Hospital said that in order to meet the global challenges and help medical system managers achieve better economic benefits, Medtronic is making changes, expanding its business from simple equipment business to technologies, services and solutions covering the whole patient treatment process.


Due to new and non-traditional market entrants, disruptive technologies, and participants emerging in the fast-growing market and focusing on global layout, the competition pattern of the medical device industry in 2030 will be very different from today.

First, in terms of industry competition, Alibaba, a Chinese e-commerce giant, has entered the medical market with its strong logistics capabilities and huge customer base. American online retail enterprises are prepared to follow this practice. Some enterprises provide various medical supplies, such as infusion pumps, catheters, infusion bags, sutures, pliers, hospital beds, scalpels and other laboratory supplies. These enterprises can share up to 20% of the profits, putting pressure on existing medical supplies distributors and manufacturers.

Over time, these new entrants will overcome regulatory barriers, enter the high-end market and sell high-end products - this trend has emerged in the pharmaceutical industry. In addition, some enterprises have established partnerships with life science and gene companies, and also employed their own medical experts to show their willingness to create new value propositions for patients and consumers.

Secondly, in terms of technological innovation, with the exciting technological development emerging at an unprecedented speed, technology can either promote or subvert the medical device industry. Scientific and technological innovation is developing at an unprecedented pace in terms of sophisticated diagnostic and imaging technology, drug delivery and patient monitoring technology, auxiliary nursing and treatment technology.

Finally, in terms of medical device market, the United States will continue to dominate the medical device industry in 2030, with sales exceeding US $300 billion. However, the top five markets will also include China (ranking second, accounting for more than 25% of the global market share, with revenue exceeding US $200 billion) and India (ranking fifth, with revenue exceeding US $40 billion).

KPMG specifically pointed out the rise of China in the global medical device industry. Thanks to preferential policies and local incentives, Chinese medical device enterprises have expanded significantly in the past five years, with double-digit growth every year. Local enterprises accounted for about 70% of the market share (2016), with business scope spanning all categories, as well as wearables. Larger enterprises are turning their attention to the world stage, and there is a great possibility of mergers and acquisitions.

With the rapid transformation of the Chinese market from a 'low-cost manufacturer' to a 'melting pot of innovation', many enterprises are competing for share in the high growth medical device market.

Reconstruct the value chain

KPMG said that even the strongest and largest enterprises will be vulnerable to threats from new entrants, global competition and technological leaps that disrupt the market. Medical device manufacturers should always focus on the value they bring to the future medical system, and at the same time, they need to consider carrying out bold and necessary strength competition to rebuild the value chain.

On the one hand, establish a new B2C model. This model involves direct contact with patients and consumers, bypassing other value chain participants, and providing intelligent information that can promote self diagnosis and prevention and treatment. Digital health solutions (including wearable products, mobile applications and remote monitoring) enable the transfer to consumers. Intelligence and access convenience will become the main uniqueness, and the uniqueness will be further enhanced through non-traditional cooperation with health food enterprises, fitness and sports companies and gambling companies. Finally, as the device itself becomes a commodity, driven by interoperability and integration, intelligent data will become more important.

On the other hand, strengthen and consolidate B2B mode. These enterprises will expand their influence to other parts of the value chain by establishing strategic alliances or acquisitions with medical service providers, distributors, and even payers. With the improvement of industrial integration, trading activities and vertical integration activities will increase, because enterprises want to master more end-users in the treatment process.

Finally, make it bigger in the value chain. A few enterprises, including those that may not be in the medical device industry today, will use their financial advantages to develop into 'one-stop' medical suppliers. They will rebuild the value chain model, fully control the value chain, and provide comprehensive products, services and intelligent information. This construction may be complex (distributors may be eliminated), and the whole customer experience process will be improved by providing preventive and personalized treatment in hospitals and home environments.

Of course, these three models are unlikely to be the only ones in 2030. Senior executives in the global industry need to boldly redefine the future device enterprises and consider various possibilities, including deployment beyond the boundaries of today's value chain.

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