The medtech market is expected to grow over the next six year as several external factors impact markets around the world, according to a report from EvaluateMedTech.
The report was released at the AdvaMed 2014 conference.
"2014 marks a year of rapid change for the global medical device market, particularly with the cardiology and orthopedic spaces, which have been dominated by mega-mergers," said the report author and EvaluateMedTech Product Manager Ian Strickland. "If the deal between Covidien and Medtronic goes through, we could see a new market leader. In an industry forecast to be worth more than half-a-trillion dollars in 2020, that is no insignificant achievement."
Here are 10 things to know about the medtech sector:
1. Sales are expected to reach $514 billion by 2020, growing at a 5 percent compound annual growth rate from 2013 to 2020.
2. Mergers and acquisitions jumped 363 percent in the first half of 2014 when compared with 2013. The biggest acquisitions include Medtronic's $42.9 billion deal for Covidien and Zimmer's $13.4 billion merger with Biomet. Both are set to close next year and make a huge impact on the orthopedic segment.
3. Global research and development spending is expected to grow by 4.2 percent CAGR to $30.5 billion by 2020.
4. In 2013, the FDA granted 23 first-time premarket approvals for medical devices. This is down significantly from the 41 approvals granted in 2012 — a 44 percent increase. The change could be due to a tougher regulatory environment and high expense associated with clinical trials leading some companies to begin innovation elsewhere.
5. For the first six months of 2014, there was $1.3 billion raised in completed medtech IPOs — 44 percent more than all of 2013. K2M, Amedica, Biomet and Orthocell all filed IPOs this year.
6. Johnson & Johnson is set to lead total medtech sales, with total sales of $32.8 billion by 2020. However, if Medtronic's acquisition of Covidien is approved, they could challenge J&J for the top spot. Siemens is also in a position to challenge J&J in the future.
7. In vitro diagnostics is projected to top the device arena in 2020 with sales reaching $71.6 billion.
8. Boston Scientific and Novartis fell the most in the rankings from 2012 to 2013. Novartis' fall is primarily due to its disposal of the blood diagnostics business. Boston Scientific's fall reflects the company failing to replace sales from its mature cardiology business, according to the report.
9. The top 20 medtech companies are likely to invest 7.7 of their sales in research and development. This is slightly more than the medtech industry as a whole. Johnson & Johnson is expected to spend around $2.1 billion in R&D by 2020 with Medtronic projected to spend around $1.8 billion.
10. Medtronic is forecast to have the lowest growth rate over the next six years among the top 20 companies, growing at a CAGR of 1 percent between 2013 and 2020. The company's struggling bone morphogenetic protein business will continue to stymie growth in the future.
More articles on orthopedic devices:
OrthoWorx marks 5th anniversary
Zimmer purchases biologic therapeutics company ETEX
NuVasive grows globally, opens European Center of Excellence