Boom in the Medical Devices Outsourcing Market

  • Published On : Jul 28, 2014


Medical devices outsourcing market is a specialized industry that focuses on contracting with a third-party for prototyping, product designing, manufacturing, and packaging medical devices in sterile and controlled environments for supply chain management. Organizations that are operative in outsourcing medical devices are often well versed in all medical applicable laws, standards, and regulations. Such functions are usually carried out by medical companies on internal basis. However, by permitting and offering third-party businesses to outsource their medical products only helps the medical device manufacturers to focus more on their core competencies and venture into medical, clinical, and technical innovations.

The global medical devices outsourcing market is mainly steered by rising demand for quality medical products and healthcare services. As many manufacturers are seeking the choice to outsource their device manufacturing processes to third-party medical contract manufacturers, the medical devices outsourcing market is experiencing an upward trend on a global level. 

Outsourcing is no longer a new and unique phenomenon. The global medical device industry which is roughly worth $300 billion is rapidly growing on the outsourcing trend as its newfound appeal. In fact, the global medical devices outsourcing market, amid the ongoing medical technology development is expected to rise from a value USD 21.1 billion in 2012 to USD 40.8 billion in 2018, registering a CAGR of 11.6% in the forecast of 2012 to 2018. 

Medical Devices Outsourcing Market – Segment Dynamics

The global medical devices outsourcing market is broadly categorized into the applications and services sub-markets. The medical product outsourcing market covers Class I, II, and III types of medical devices all carrying FDA approvals, while the medical services outsourcing market encompasses designing, validation, prototyping, verification, and other regulatory consulting activities. The medical device industry also consists of three key participants that have pioneered pivotal improvements in the product lifecycle management. These include, medical device manufacturers, product outsourcing companies, and medical devices service outsourcing companies. All these three sectors together have reduced costs and increased product efficiency in the global medical device manufacturing industry.

Factors Impacting Outsourcing in Medical Devices

As new entrants are occupying the medical devices market periodically, these players lack experience in the field. In addition, the companies that support and manufacture these devices may find it difficult to bring together sufficient staff or technology to design and develop new competitive products. Therefore, the demand for medical devices outsourcing is rising exponentially in the present times. The medical devices outsourcing market is also growing due to the ongoing developments in the field of medical technology and parallel operational needs to reduce the costs for long term sustainability. 

In recent years, manufacturing process advancements, new technologies, and an ever-expanding and aging population – have all contributed to the tremendous growth within the medical device market. Rising demand in the post market and R&D engineering sector for medical devices is expected to profit the market too. Outsourcing has facilitated the medical device manufacturers with around 10% to 30% cost-cutting on product development. This has increased not only the industry’s competitiveness, but has also attracted new players due to high profit margins of the industry. 

Owing to all these reasons, a growing number of medical device manufacturers are reckoning the methods of outsourcing. They seek this technique as a pathway to increase agility, boost the product return on investment, reduce time-to-market, and help lower costs of devices. Nevertheless, some of the market restraints include an intensely growing competitive marketplace and increasingly complex regulatory environment.  

Global Medical Device Outsourcing across Various Regions 

As stated in the study reports on medical devices outsourcing market, led by leading market firms, the U.S. remains as the biggest leader in the market worldwide. The U.S. has faced grave competition from other medical device companies based in Japan, Bermuda, Germany, The Netherlands, as well as from countries such as India, Taiwan, Korea, Brazil, and China where competition is heating up and becoming more formidable amongst global competitors. The growing richness of the medical devices outsourcing market in countries like Asia, Africa, and South America is a proof that these regions have typically been underserved for years and need a redefining to ensure user safety and product performance in the future. 
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