Analysis of Global Electronics Manufacturing Services Market Opportunities in the Medical Industry

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Analysis of Global Electronics Manufacturing Services Market Opportunities in the Medical Industry

  1. 1. Analysis of Global Electronics Manufacturing ServicesMarket Opportunities in the Medical IndustryIncreasing Electronic Content in Medical Devices Spurs GrowthNBDE-28May 2013
  2. 2. 2NBDE-28Research TeamLavanya RammohanSenior Research AnalystMeasurement and Instrumentation001.703.349.5185Lavanya.rammohan@frost.comLead AnalystResearch DirectorKiran UnniResearch DirectorMeasurement and Instrumentation001.210.247.2495kiranunni@frost.comFor more informationJeannette GarciaCorporate Communications AssociateMeasurement and Instrumentation001.210.477.8427jeannette.garcia@frost.com
  3. 3. 3NBDE-28ContentsSection Slide NumbersExecutive Summary 5Market Overview 10Total EMS Medical Market -• External Challenges: Drivers and Restraints 17• Forecasts and Trends 30• Market Share and Competitive Analysis 45• Mega Trends and Industry Convergence Implications 51Cardiovascular Segment Breakdown 56Imaging Segment Breakdown 60Patient Monitoring Segment Breakdown 64Endoscopes Segment Breakdown 68Respiratory and Anesthetics Segment Breakdown 72Audiology and Hearing Segment Breakdown 76Others Segment Breakdown 80
  4. 4. 4NBDE-28Contents (continued)Section Slide NumbersNorth America Breakdown 84Europe Breakdown 88Asia-Pacific Breakdown 92Rest of World Breakdown 96The Last Word (Conclusions and Implications) 100Appendix 103
  5. 5. 5NBDE-28Executive Summary
  6. 6. 6NBDE-28Market Overview—Definitions• The scope of the study is medical device outsourcing to EMS providers.• The study includes revenue forecasts based on product and geographic segmentation.• Geographic regions include:o North Americao Europeo Asia-Pacifico Rest of World• Vertical market segmentation includes:o Cardiovascularo Patient monitoringo Imagingo Endoscopyo Audiology and hearingo Respiratory and anesthesiao Others (includes urology, infusion systems, orthopedics, therapeutic, ophthalmology, generalsurgery, minimally invasive surgery, and hemodialysis)• The study covers revenue and trends from a manufacturing perspective.• All revenue and prices in the study are in US dollars, unless otherwise specified.Source: Frost & Sullivan analysis.
  7. 7. 7NBDE-28Market Overview—Definitions (continued)• Cardiovascular market—includes products in three main sectors: cardiac rhythm management andcongestive heart failure, interventional cardiology, and cardiac surgery; products include pacemakers,implantable cardioverter defibrillators, cardiac resynchronization therapy, stents, and cardiac catheters• Patient monitoring market—includes multiparameter monitoring equipment, fetal and neonatalmonitoring systems, cardiovascular monitoring products, sleep apnea monitoring equipment,diabetes/glucose self-monitoring products, blood pressure monitoring products, temperature monitoringproducts, and anesthesia equipment• Imaging market—includes MRI systems, ultrasound, computer tomography, X-ray machines, andnuclear medical imaging products• Endoscopy market—includes gastrointestinal endoscopes, enteroscopes, choledochoscopes, urologyendoscopes, arthroscopes, sigmoidoscopes, and capsule endoscopes• Audiology and hearing market—includes auditory brainstem response (ABR) and otoacousticemission (OAE) analyzers, analog and digital hearing instruments, and ENT endoscopes such assinoscopes and octoscopes• Respiratory and anesthesia market—includes oxygen therapy products, concentrators, liquid oxygenproducts, compressed gas cylinders, nebulizers, and anesthesia delivery systems• Others— includes urology, infusion systems, orthopedics, therapeutic, ophthalmology, generalsurgery, minimally invasive surgery, and hemodialysis Source: Frost & Sullivan analysis.
  8. 8. 8NBDE-28Market Overview—Definitions (continued)The US Food and Drug Administration (FDA) categorizes a medical devices into one of three classes basedon its application, associated risks, and required levels of approvals.Class I devicesThese represent minimal potential harm; therefore, they are subjected to less regulatory control. Class Idevices are not associated with high risks or used for sustaining life. Examples of Class I devices includebedpans, hand-held surgical instruments, bandages, and gloves.Class II devicesClass II devices are governed by general and special (tests and validation processes) controls. Due to thegreater risk and some life-sustaining qualities of Class II devices, general controls alone are insufficient tojudge and assure safety and effectiveness. The devices are held to more stringent regulations than Class Idevices to ensure they do not cause issues for a patient. Examples of Class II devices include X-raymachines, infusion pumps, surgical and acupuncture needles, and patient monitors.Class III devicesClass III devices face the most stringent regulatory control because they aid in ensuring a patient’s wellbeing and sustaining life. In addition to general and special controls, all Class III devices require pre-marketapproval to ensure safety and effectiveness. Examples of Class III devices include heart valves, surgicalimplants, pacemakers, and external defibrillators.Source: Frost & Sullivan analysis.
  9. 9. 9NBDE-28Market Overview—Key Questions This Study Will AnswerIs the EMS medical market growing, how long will it continue to grow, and at what rate?How will the role of EMS evolve over time? What is the percentage of revenue from services?Are the services currently offered meeting customer needs, or is additional development needed?Are EMS providers ready to tackle the challenges of operating in the medical industry? What do theyneed to cultivate in terms of best practices to take their businesses to the next level? How will thisaffect order fulfillment and distribution strategy?Source: Frost & Sullivan analysis.Which are the high-growth segments? How do demand and growth opportunities vary by geographicregions?
  10. 10. 10NBDE-28Executive Summary• The increase in electronic content within the medical industry has been a crucial driver for the growth inelectronics manufacturing services (EMS).• The EMS medical market generated revenue of $16,430.0 million in 2012. The market is expected tohave an 11.1 percent compound annual growth rate (CAGR) and $34,382.0 million in revenue in 2019.• The primary drivers for original equipment manufacturer (OEM) outsourcing include increasing costpressures and the need to generate profits in a low- to medium-volume manufacturing environment.• The US Affordable Care Act and the 2013 excise tax are expected to further exacerbate cost pressuresfor OEMs in North America and encourage more OEM outsourcing in the region.• In addition, EMS providers have the advantage of being able to leverage electronics expertise fromdifferent verticals. They are in a position to transfer best practices and elevate OEM competitivepositioning in the medical industry.• EMS providers will also benefit from burgeoning opportunities to get involved in the early design stage ofdevices.• OEMs will also continue to seek EMS support to streamline supply chain costs and leverage their globalfootprint.Source: Frost & Sullivan analysis.
  11. 11. 11NBDE-28Executive Summary (continued)• The EMS medical market will benefit from rapidly growing demand in remote diagnostics, patientmonitoring, cardiovascular, and neurological medical product segments, including consumer medicalproducts and single-use products.• The bulk of EMS revenue still derives from manufacturing services. Highly regulated conditions andliability concerns continue to encourage OEMs’ hesitancy to outsource strategic services.• On the direct fulfillment end, OEMs prefer to retain control over the final distribution to end customers(hospitals and physicians), and this is not expected to change much during the forecast period.• Opportunities for complete, high-level assembly in the medical industry will evolve gradually in theforecast period.Source: Frost & Sullivan analysis.
  12. 12. 12NBDE-28Executive Summary—Market Engineering MeasurementsMarket StageGrowthMarket Revenue$16,430.0M( 2012)Market Size forLast Year ofStudy Period$34,382.0M(2019)Base YearMarket GrowthRate9.3%CompoundAnnual GrowthRate11.1%(CAGR, 2012–2019)CustomerPriceSensitivity8(scale:1 [low] to 10 [High])MarketConcentration25.4Degree ofTechnicalChange7(scale:1 [low] to 10 [High])Total EMS Medical Market: Global, 2012Market OverviewFor a tabular version click here.Stable IncreasingDecreasing(% of market share held bytop 3 companies)Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.Number ofCompetitors200(active market competitorsin base year)
  13. 13. 13NBDE-28Market Overview—SegmentationCardiovascular21.0%Imaging14.8%Audiology andHearing11.0%Patient Monitoring16.0%Endoscopes9.1%Respiratory andAnesthetics5.4%Others*22.7%Percent Sales BreakdownTotal EMS Medical Market: Global, 2012*Others includes urology, infusion systems, orthopedics, therapeutic, ophthalmology, general surgery, minimally invasive surgery, and hemodialysis.Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
  14. 14. 14NBDE-28Executive Summary—CEO’s Perspective2New medical product companies will bevirtual, meaning most or allmanufacturing will be outsourced in thenext 10 years.3EMS providers’ role in improvingefficiency, time to market, cost, quality,production technology, and access toemerging regions will increase.4The top 25 medical product companieswill continue to outsource their olderproducts that require cost reductions toremain viable.1OEMs will increase outsourcing tocounter cost pressures, such as thenew excise tax.Source: Frost & Sullivan analysis.

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