The Brainstorm: Medical Device Market
In the Product Design & Development Brainstorm we talk with industry leaders to get their perspective on issues critical to the design engineering marketplace. In this issue, we ask:
Is the medical device market recession-proof?
Dr. Ronald L. Hollis, President & CEO, Quickparts.com, Inc
In my honest opinion, the medical device market is not recession proof; however, it is a very unique and resilient industry that is well insulated from the short-term impact of many economic factors.
While I’m not an economist, one could surmise that the industry is affected like most other industries, though the magnitude or force of a recession along with the duration of a recession must be significant before it could penetrate the barriers of protection of a medical device market and have a real impact.
As for the barriers of protection, they are dependent on the market of consumers. For a developed market like the United States, the barriers that insulate the industry include the disconnect of healthcare demand and discretionary spending. As one needs medical support, there is a much higher likelihood that a spending decision on health will occur regardless of the normal behavior a consumer may have with other spending decisions. Also, with a market that has enough affluence (consumers with spending power), then there is always enough money in the system to support the development of the industry.
As for the development process, it is already a very long and inefficient process. With significant bureaucracy and regulations, the inefficiencies of the process provide such a delay to the process, that many products can just outlive a recession before they are ever birthed into the market. This delay can make them impervious to the impact of the recession on their performance. Of course, it takes courage on the part of the development companies to maintain their investments and have faith that sunshine is ahead.
At Quickparts.com, we have not seen much reduction in activity from the medical device market, so we would assume that confidence abounds and new products will continue to roll out to the market for the sick and the needy.
Since most folks want to go to heaven, but no one is ready to go now, they are going to make choices with their money to buy whatever they need to extend life for another day. It’s a unique advantage of the medical device market.
Aaron Lahann, Customer Engineering Manager, Airtronics Metal Products
No industry is completely recession-proof, but the medical device sector comes close. In the past year, the medical device market has fared better than many other industries impacted by the economic downturn.
The med-tech industry has several things going for it that make it more immune to recessionary woes.
1.People will get sick whether we’re in a recession or not. During tough economic times, most people will forgo buying a big screen TV before they will forgo healthcare. When people cut back on spending, health is the last thing they want to sacrifice.
2.The population is growing, the population is aging and people are staying active much later into life.
3.Medical device companies tend to be well funded, for a variety of reasons, but namely because all of the above factors create a constant demand for new medical devices. Even in a recession, medical device manufacturers will continue to come out with new products every day.
4.As more and more Third World countries develop, healthcare is becoming a greater priority and healthcare systems are becoming more sophisticated.
At Airtronics, we haven’t experienced any slowdowns from our medical customers; their production orders have either stayed flat or gone up. I should note, however, that our customers make devices used in the treatment of life-threatening conditions. Makers of life-saving devices are weathering the recession better than makers of equipment used in cosmetic surgery or other elective procedures.
Many people are postponing or canceling elective surgery, which in turn has put hospitals in financial straits, causing them to delay purchases of high-cost capital equipment.
The medical device market is not recession-proof, but it is recession-resistant.