MPO: Top 5 Medical Device Manufacturers Face Market Uncertainties in the US and Europe

Every year our friends at Medical Product Outsourcing put out a list of the 30 largest medical device companies worldwide. MPO has been tracking this information since 2006 and you can see their list here.  

As with many industries, a few players dominate the medical device world. J&J remains the largest company with more than US$27.4 billion in sales in 2012, which represents about 8% of the global medical device market of US$331 billion. GE Healthcare comes in second at roughly $18.3 billion, with Siemens and Medtronic nipping at their heels. Baxter takes position five.

Over the last three years, the market share held by the five largest companies has remained fairly steady at around 28-29%. Will that continue? Tough to say. The European economy remains anemic, with major markets such as Germany and the UK expecting GDP growth of less than two percent in 2014. Spain and Italy will probably hold national celebrations if they manage a meager one-percent growth in 2014. That doesn't bode well for domestic European device companies, nor for manufacturers exporting to the EU.

The US is no shining star, either, but does expect around 2.5% GDP growth in 2013. Adding to market uncertainty is the fact that over the past few years there has been more focus placed on cost reduction in the US. Device companies are feeling the heat, partially due to skinny spending increases from Medicare, Medicaid and states.This may slow top line growth and profitability for many large device companies.

Another (potentially positive) wildcard is the impact of the US Affordable Care Act, which will bring millions of additional insured customers into the US healthcare market.  Nobody yet knows the impact of these macro changes--good or bad--on the "big five" or the rest of the industry. As always, we'll keep on eye on industry developments and occasionally share our insights.  It will be interesting to see what 2014 holds for all of us.

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