Michael Barbella, Managing Editor11.13.23
The question was intriguing, to say the least.
“Who’s going to be sitting here five years from now?”
“Here” was the MPO Summit, where roughly 350 medical device executives gathered last month to network and discover (potential) solutions to some of the industry’s most pressing challenges.
The inquisitor was Anthony S. Freeman, president of New York City-based A.S. Freeman Advisors, who opened the two-day event in San Diego with his assessment of the sector’s current health status.
Anthony Freeman speaks about the state of the medical device industry.
The short-term prognosis looks good: The global medical technology market is poised to reach $565 billion this year and grow 5.9% through 2026, according to Freeman. Similarly, R&D is forecast to rise to 8.1% from 7.25%, bolstered by continuing innovation and product launches.
“Most of OEMs’ [R&D] budget is going toward product development, and this has been going on regardless of COVID-19, regardless of inflation, regardless of geopolitical issues,” Freeman noted. “What we are seeing is they [OEMs] are continuing to invest in the future at greater and greater percentages even when times are tough.”
The industry’s long-term outlook, however, is not as rosy. Earth’s aging inhabitants will drain healthcare finances and resources by the mid-century mark, and value-based medicine won’t be much of a help, Freeman predicted, noting the 60-plus age group is slated to comprise 22% of the global population by 2050 (up from 12.8% of the population in 2020).
“There’s not a lot of slack in the system and not a lot of money saved up for it,” he warned Summit attendees. “There are not enough providers to deal with this wave of older people coming up. We have 27 years’ notice that this is going to happen but there is not a lot of elasticity to deal with this. OEMs are going to see implications to this.”
Those implications will likely involve digital technologies and wellness devices that detect disease sooner and treat conditions more effectively. Medtech OEMs have increasingly been embracing such solutions in recent years as they realize the technology’s potential to lower healthcare costs and improve patient outcomes.
“What we have to realize is it’s always cheaper to avoid chronic episodes or acute episodes than having to treat them,” Freeman said. “The math is indisputable. Payers have an economic incentive to push wellness devices towards patients.”
And payers are eventually going to push those devices OEMs’ way. That will require consumer-quantity manufacturing rather than medical device-quantity production, and changes in supply chain roles—”Who is going to create the digital content?” Freeman asked.
Probably the larger electronics manufacturers and software providers: “They may have limited experience in medtech but they will be drawn by the industry’s opportunities and will bring their preferred tangible products into the mix,” Freeman said. “Some will transition into contract manufacturing roles through either expansion, purchasing, or partnering.”
But can non-digital contract manufacturers survive in this increasingly digitized world? “Yes,” Freeman said, “if they stick to the tangible products and invest in electronics capabilities.”
If so, they, along with digital content experts, some OEM representatives, and prime contractors, will be attending the 2028 MPO Summit (again) in San Diego.
That event will likely feature a similar agenda to this year’s show. Topics at the 2023 Summit ran the gamut from plastics manufacturing, sterilization, and automation to reshoring, talent attraction/retention, and supply chain struggles.
The panel discussion on plastics manufacturing discussed sustainable materials and ways medtech companies can implement sustainability in their organizations.
Another expert panel debated whether the industry’s supply chain had yet recovered from the COVID-19 pandemic. The overwhelming consensus? No.
“Things have certainly relaxed a little bit,” Robert Schwenker, vice president of sales—Specialty Molding at Spectrum Plastics Group said, “but no, I don’t think we’re there yet. Certain materials still have long lead times.”
“No, we’re not there yet. I don’t think we’re ever going to be there,” stated Jim McCormack, senior global commodity manager for Hologic. “There’s always going to be disruptions. COVID-19 was a once-in-a-lifetime event but there will always be disruptions.”
“Are we back yet? Are we relaxed yet? Probably not,” mused Ryan Hazelton, senior global category manager for Dexcom. “There’s still a lot to be nervous about.”
An expert panel debated whether the industry’s supply chain had yet recovered from the COVID-19 pandemic at this year's MPO Summit.
Indeed there is: stubbornly high inflation, recession fears, the Russia-Ukraine war, the Israel-Gaza conflict, and extreme weather, to name a few.
“What’s there? What’s our goal? Is the supply chain recovering?” Providence Enterprise USA President Brett Freeman asked. “Yes, it is recovering. Is it recover-ed? No. I’m in the camp it will never fully recover. But things look like they have improved.”
Regardless of its chances for a full recovery, each of the panelists discussed the lessons they and their companies learned from the pandemic.
“One of the key benefits that came out of the COVID era was that hospitals are now much more transparent,” Freeman said. “You have to understand what the demand is.”
“One of the lessons learned for us was you have to focus on market intelligence,” McCormack said. “What is the market? What is the real demand?”
“Who’s going to be sitting here five years from now?”
“Here” was the MPO Summit, where roughly 350 medical device executives gathered last month to network and discover (potential) solutions to some of the industry’s most pressing challenges.
The inquisitor was Anthony S. Freeman, president of New York City-based A.S. Freeman Advisors, who opened the two-day event in San Diego with his assessment of the sector’s current health status.
Anthony Freeman speaks about the state of the medical device industry.
“Most of OEMs’ [R&D] budget is going toward product development, and this has been going on regardless of COVID-19, regardless of inflation, regardless of geopolitical issues,” Freeman noted. “What we are seeing is they [OEMs] are continuing to invest in the future at greater and greater percentages even when times are tough.”
The industry’s long-term outlook, however, is not as rosy. Earth’s aging inhabitants will drain healthcare finances and resources by the mid-century mark, and value-based medicine won’t be much of a help, Freeman predicted, noting the 60-plus age group is slated to comprise 22% of the global population by 2050 (up from 12.8% of the population in 2020).
“There’s not a lot of slack in the system and not a lot of money saved up for it,” he warned Summit attendees. “There are not enough providers to deal with this wave of older people coming up. We have 27 years’ notice that this is going to happen but there is not a lot of elasticity to deal with this. OEMs are going to see implications to this.”
Those implications will likely involve digital technologies and wellness devices that detect disease sooner and treat conditions more effectively. Medtech OEMs have increasingly been embracing such solutions in recent years as they realize the technology’s potential to lower healthcare costs and improve patient outcomes.
“What we have to realize is it’s always cheaper to avoid chronic episodes or acute episodes than having to treat them,” Freeman said. “The math is indisputable. Payers have an economic incentive to push wellness devices towards patients.”
And payers are eventually going to push those devices OEMs’ way. That will require consumer-quantity manufacturing rather than medical device-quantity production, and changes in supply chain roles—”Who is going to create the digital content?” Freeman asked.
Probably the larger electronics manufacturers and software providers: “They may have limited experience in medtech but they will be drawn by the industry’s opportunities and will bring their preferred tangible products into the mix,” Freeman said. “Some will transition into contract manufacturing roles through either expansion, purchasing, or partnering.”
But can non-digital contract manufacturers survive in this increasingly digitized world? “Yes,” Freeman said, “if they stick to the tangible products and invest in electronics capabilities.”
If so, they, along with digital content experts, some OEM representatives, and prime contractors, will be attending the 2028 MPO Summit (again) in San Diego.
That event will likely feature a similar agenda to this year’s show. Topics at the 2023 Summit ran the gamut from plastics manufacturing, sterilization, and automation to reshoring, talent attraction/retention, and supply chain struggles.
The panel discussion on plastics manufacturing discussed sustainable materials and ways medtech companies can implement sustainability in their organizations.
Another expert panel debated whether the industry’s supply chain had yet recovered from the COVID-19 pandemic. The overwhelming consensus? No.
“Things have certainly relaxed a little bit,” Robert Schwenker, vice president of sales—Specialty Molding at Spectrum Plastics Group said, “but no, I don’t think we’re there yet. Certain materials still have long lead times.”
“No, we’re not there yet. I don’t think we’re ever going to be there,” stated Jim McCormack, senior global commodity manager for Hologic. “There’s always going to be disruptions. COVID-19 was a once-in-a-lifetime event but there will always be disruptions.”
“Are we back yet? Are we relaxed yet? Probably not,” mused Ryan Hazelton, senior global category manager for Dexcom. “There’s still a lot to be nervous about.”
An expert panel debated whether the industry’s supply chain had yet recovered from the COVID-19 pandemic at this year's MPO Summit.
Indeed there is: stubbornly high inflation, recession fears, the Russia-Ukraine war, the Israel-Gaza conflict, and extreme weather, to name a few.
“What’s there? What’s our goal? Is the supply chain recovering?” Providence Enterprise USA President Brett Freeman asked. “Yes, it is recovering. Is it recover-ed? No. I’m in the camp it will never fully recover. But things look like they have improved.”
Regardless of its chances for a full recovery, each of the panelists discussed the lessons they and their companies learned from the pandemic.
“One of the key benefits that came out of the COVID era was that hospitals are now much more transparent,” Freeman said. “You have to understand what the demand is.”
“One of the lessons learned for us was you have to focus on market intelligence,” McCormack said. “What is the market? What is the real demand?”
