The 2014 Medical Device Industry Survey was conducted in January 2014, with a total of 3,878 respondents. Only one response per person was allowed. Survey questions were emailed to an in-house list maintained by Emergo Group. A publicly available online link to the survey also solicited responses from industry via social media channels.
Due to the nature of our business, QA/RA professionals make up a much higher percentage of respondents than they would otherwise represent in the industry. Some results should be interpreted bearing this in mind.
Sustained Optimism for 2014
Positive expectations for the industry as a whole have increased slightly from January 2013. Nearly 75% of respondents reported "somewhat positive" or "very positive" outlooks for 2014 compared to 71% in our 2013 survey.
As in last year’s results, firms based in the Asia-Pacific region expressed the most optimism for the 2014 business climate, although percentages of "very positive" outlooks from EMEA and Americas-based participants also increased slightly from 2013—suggesting perhaps that more internationally focused growth plans are starting to pay off.
(Based on 3,567 responses. Question posed to all survey respondents.)
(Based on 3,541 responses. Question posed to all survey respondents.)
Bullish Sales Expectations
Nearly 85% of respondents are optimistic about their own company prospects in 2014 compared to about 75% of firms expecting a good year for the industry as a whole. A similar 10-percentage-point gap occurred in our 2013 survey results.
"Very positive" responses came mostly from firms with fewer than 50 employees, while more mid-sized and large firms took "somewhat positive" outlooks. This could be due to increasing pricing pressures being placed on larger firms (as evidenced in a later question).
Regionally, North and South American firms were more bullish about 2014 than their EMEA and Asia-Pacific colleagues. Overall, this seems like positive news for the industry in 2014.
(Based on 3,541 responses.)
Deeper Into Black
More than half of firms increased their sales in 2013, a very similar percentage to respondents reporting sales increases for 2012. Firms reporting sales decreases dropped more than a full percentage point from our 2012 survey—from 8.5% in 2012 to 7.2% in 2014. Still, results suggest slow and steady rather than dramatic changes in performance.
Respondents based in the Asia-Pacific region boasted both:
(Based on 2,547 responses.)
(Based on 2,527 responses)
Larger Firms Hold Steady
Medical device firms of all sizes reported increased sales for 2013, but large and medium-sized firms showed steadier sales performance compared to firms with fewer than 10 employees.
Compared to small- and medium-sized firms, the larger firms were much less likely to report "sales increased of more than 20%," but that is not surprising.
Compared to 2013 survey responses, small firms’ sales increases in the "less than 10%" category fell from nearly 19% last year to 13% this year. In the 10-20% sales increase range, small firms’ performance also fell, from 16% in our 2013 survey to almost 12% this year.
(Based on 2,510 responses.)
Mixed bag of challenges
As in previous years, regulatory challenges topped the list for senior managers—but just barely. Financing and new product development trended slightly higher among respondents than last year’s survey, but overall medical device firms face the same challenges as in previous years.
"Increased competition" also ticked up slightly among respondents, which may explain the slight growth in financing and development concerns.
In 2013, 44% of respondents cited "changing regulatory environment" as a key challenge, followed by "new product development (42%)" and "access to credit/capital/financing (41%)."
(Based on 358 responses.)
Size Determines Concerns
Filtered according to company size, respondents’ replies to this question differ substantially, as was the case in our 2013 survey results.
The larger the firm, the more likely "changing regulatory environment" and "pricing pressure" will be key challenges. Larger companies have broader product lines sold in multiple markets, and are more likely to feel the impact of regulatory changes in countries where their devices are sold.
Conversely – but not surprisingly - financing challenges are on the forefront for small companies, many of whom may be start-ups with limited market exposure.
(Based on 1,195 responses.)
Respondents in all regions identified "changing regulatory environment" as their top challenge—a change from our 2013 results, where firms in the Americas and Asia cited regulatory challenges while EMEA firms reported "new product development" as their biggest concern.
This shift partly reflects shifts toward more formalized regulatory schemes in many emerging markets, as well as pending changes to CE Marking requirements in Europe.
(Based on 1,087 responses.)
Asia On Top (Again)
More than 67% of respondents view Asian markets as "high growth potential," roughly the same as last year. Given ongoing economic troubles in Europe and pressures to slow the rise in healthcare costs in the US, Asia’s top ranking comes as little surprise.
Asia ranked highest among firms across all regions; AIPAC firms see more growth potential in Africa and the Middle East, while firms based in the Americas rated the growth potential for South America as higher than AIPAC or EMEA firms.
Larger firms with more resources rated African and South American markets higher, while smaller firms ranked more established North American and European markets higher.
(Based on 2,515 responses.)
Slight Edge to Emerging Markets
Respondents’ interest in both developed and emerging markets for 2014 is about evenly split: about 77% of firms plan new product launches in BRIC markets (Brazil, Russia, India and China) and Mexico, while 73% of firms plan to enter the US, Europe and other developed markets this year.
Larger firms showed greater interest in emerging markets (and have more resources to launch products in those countries), while smaller firms expressed the most interest in Europe (65% of firms with less than 50 employees) and the US (61%).
In general, responses are about the same as in 2013. However, more firms expressed interest in the Russian market, even though that country’s regulatory system remains in flux.
(Based on 2552 responses.)
(Based on 2,550 responses.
(Based on 2,550 responses.)
Brazil, US, China and Japan rated most difficult markets among 1,400+ QA/RA respondents
Established markets were most familiar to firms, but firms of all sizes reported unfamiliarity with most developing markets’ registration processes.
China was perceived as the most difficult market, with 56% of firms characterizing the market as somewhat or very difficult. The US, Japan and Brazil were ranked by 45%, 44% and 43% of firms respectively as "somewhat difficult" or "very difficult."
While registration in markets such as Russia and China are indeed complex, the process is relatively straightforward in countries like Israel and Saudi Arabia—suggesting more attention from foreign manufacturers is warranted.
(Based on 1,482 responses.)
US, Chinese and Brazilian Registration Challenges Persist
Perceptions that registration in the US, China and Brazil have become more difficult continue—these three markets were also ranked highest in this category in 2013.
China led the pack, with 41% of firms indicating device registration had become more difficult there over the last year.
However, the percentage of firms rating the US market as more difficult fell significantly, from 42% last year to 35% this time around. Ongoing efforts to boost transparency at the US Food and Drug Administration may be working.
(Based on 2,527 responses.)
MDET impact not as severe as predicted.
One year ago, we asked Senior Management to predict what impact the MDET would have on their company in 2013. This year, we asked them what impact the tax DID have on their company in 2013.
In last year’s survey, 53% of firms predicted a "somewhat" or "very negative" impact from the MDET. Another 27% said it would have "no impact."
This year, 45% of those same Senior Managers indicated that MDET has a "very" or "somewhat negative" impact on their business in 2013, with 34% saying it had "no impact."
(Based on 1,203 responses. Asked of Senior Management only.)
50% of respondents in 2014 said they did not make any significant changes in response to the US MDET.
(Based on 1,203 responses. Asked of Senior Management only.)
Half or more of all small to mid-size firms made no changes in response to the tax. Larger companies find it more challenging to pass along costs, and the largest firms are more likely to have reduced staffing levels as a way to lower costs.
(Based on 1,203 responses.)
Based on 3,878 responses worldwide.
Based on 3,878 responses worldwide.
Based on 2,784 responses worldwide.
Based on 3,541 responses worldwide.
Emergo Group fully understands that this research was not conducted in a scientific manner and differences between some subsets of results may not be statistically valid due to a small sample size. Still, our intention in conducting this annual survey is to provide a high-level snapshot of the industry’s current condition and its prospects over the coming year. We hope you found this information interesting and useful. If you have any questions regarding these results, or would like to publish information contained in survey, please contact:
Emergo Group, Inc.
VP of Global Marketing
marketing [at] emergogroup [dot] com
Published January 2014.