The Promising Advantages of Reduced Costs & Faster Time-to-Market Drive the Popularity of Medical Device Outsourcing Among OEMs

The global market for Medical Device Outsourcing is projected to reach US$101.7 billion by 2024, driven by the growing pressure on medical device OEMs to reduce production costs and reduce time-to-market of new products.

Medical device outsourcing, an approach where a third party assumes responsibility of managing device development and manufacturing operations either in part or in entirety, continues to grow in significance led by the increasing need for medical device companies to recalibrate their strategies to reduce costs, accelerate time-to-market and focus on their core competencies. As companies modernize business practices in order to remain competitive and retain critical survival capabilities such as agility and flexibility in a rapidly changing marketplace, contract manufacturing market participants are positioned favorably to tap the emerging opportunities. Several advantages are stacked in favor of medical device outsourcing including dedicated product design teams, manufacturing cost reductions, minimizing number of process steps involved, cost-effective customized products, and improved time-to-market, among others.

With healthcare budgets on a decline, medical device companies have come under intense pressure to reduce production expenditure and slash operational costs. As manufacturing of medical devices entails high engineering and labor costs, outsourcing strategy will help OEMs to cut down on product development costs and reduce the need for companies to hire required employees. Growth in the global medical device outsourcing market is being fostered by the escalating demand for a wide range of medical devices and supplies, particularly to meet the growing medical needs of the world's expanding geriatric population. Rising incidence of diseases specifically such as diabetes, cardiovascular disease, cancer and joint diseases are driving demand for a variety of medical devices, thus stimulating growth in the medical device outsourcing market. With medical device OEMs facing difficulties in keeping up with the rising demand for medical devices, players are opting to subcontract various operations such as manufacturing, assembling and packaging among others.

Rising acceptance of outsourcing among OEMs of ophthalmic, cardiovascular, oncology, neurology and dental devices, and also among providers of medical device design engineering, testing & simulation tools will foster growth in the medical device outsourcing market. The market is also being impacted by the intensifying competition among OEMs, which is compelling them to develop and manufacture products at a significantly lower cost. The demand for outsourcing is also gaining ground due to the increasing complexities in product engineering and the growing need to comply with stringent quality requirement of various regulatory bodies. Long-term growth will be fueled by the constantly declining time duration for commercialization of products, as companies look to gain an edge over rivals.



The United States represents the largest market worldwide. Rising demand for high-end, complex and reliable medical devices is fueling market growth in the country coupled with increasing healthcare spending levels, growing medical needs of the aging population and continuous increase in surgery volumes. Asia-Pacific is forecast to register the fastest CAGR of 14.6% over the analysis period. Growth in the region is primarily attributed to the growing prominence of Asian economies as lucrative destinations for outsourced activity. The presence of manufacturing facilities for high-end, reliable and complex medical devices positions Asia-Pacific as a promising destination for outsourced medical devices operations.

Major players in the market include Benchmark Electronics Inc., Cadence Inc., Creganna Medical, Celestica Inc., CoorsTek Medical LLC, Flextronics International, ICON plc, Integer Holdings Corporation, Laserage Technology Corporation, MedPlast Inc., Minnetronix Inc., Nortech Systems Inc., Phillips-Medisize Corporation, Plexus Corporation, Providien LLC, Sparton Corporation, Tecomet Inc., Thermo Fisher Scientific Inc., West Pharmaceutical Services Inc., and WuXi AppTec Co. Ltd., among others.

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