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(Health-NewsWire.Net, December 14, 2021 ) According to research report the medical device contract manufacturing market is projected to reach USD 91.3 billion in 2024 from an estimated USD 55.0 billion by 2024, at a CAGR of 10.6% during the forecast period.
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The key factors driving the growth of the medical device contract manufacturing market include the overall growth of the medical devices market, mainly due to rising disease prevalence, life expectancy, and the geriatric population. Technological advancement has prompted end users to overhaul or update their manufacturing systems. As this is a costly process, they look to contract manufacturing. In addition to this, the COVID-19 outbreak has accelerated the adoption of advanced diagnostics and patient care devices for better treatment management. However, market growth is impeded by the growing consolidation in the medical devices market. Larger players, to develop their manufacturing capabilities to save costs, focus on the acquisition of smaller players and CMOs themselves. This may affect the overall pace of market growth.
The prominent players in the medical device contract manufacturing industry are Flex, Ltd. (Singapore), Jabil, Inc. (US), TE Connectivity, Ltd. (Switzerland), Sanmina Corporation (US), Nipro Corporation (Japan), Celestica International (Canada), Plexus Corporation (US), Benchmark Electronics, Inc. (US), Integer Holdings Corporation (US), Gerresheimer Ag (Germany), West Pharmaceutical Services, Inc. (US), Nortech Systems, Inc. (US), Consort Medical PLC (UK), Kimball Electronics Inc. (US), and Teleflex Incorporated (US), Nordson Corporation (US), Tecomet, Inc. (US), SMC Ltd. (US), Nemera (France), and Tessy Plastics Corporation (US), among others. These players have adopted various growth strategies such as acquisition, product launches, and expansion to increase their presence and reach in the medical device contract manufacturing market.
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Jabil, Inc.: The company is a leading player in the market. The company offers a focused range of products and services in the healthcare domain as well as advanced manufacturing technologies. This factor, coupled with its robust presence of manufacturing facilities worldwide, further adds to its value. The company also serves some of the top companies in other domains, which strengthens its brand recognition. Jabil also focuses on collaborating with major pharma and medical device companies for contract manufacturing. In February 2020, it launched Jabil Healthcare in collaboration with Nypro to deliver advanced manufacturing solutions. Later in the same year, it launched substantial face mask manufacturing operations in the US to address the demand for face masks and other personal protective equipment (PPE) amid the coronavirus pandemic. Through its R&D efforts, the company offers its customers highly automated, continuous flow manufacturing process technologies for precise and aesthetic mechanical components and system assembly. It invested USD 38.5 million, USD 42.9 million, and USD 44.1 million in 2018, 2019, and 2020, respectively for research and development.
COVID-19 Impact: The COVID-19 global pandemic adversely affected the company’s employees, operations, supply chain, and distribution system. This resulted in increased expenses, primarily related to additional labor costs and the procurement of personal protection equipment for employees globally and caused a reduction in factory utilization due to travel disruptions and restrictions. Additionally, some of the company’s suppliers were similarly impacted by the COVID-19 pandemic, leading to supply chain constraints, including difficulties in sourcing materials necessary to fulfil customer production requirements and challenges in transporting completed products to end customers.
The company’s gross profit as a percentage of its net revenue decreased for the fiscal year ended August 31, 2020, compared to the fiscal year ended August 31, 2019, primarily due to an increase of USD 108.8 million in incremental and idle labor costs associated with travel disruptions and governmental restrictions, largely related to the COVID-19 outbreak.
Flex Ltd.: The company provides design, engineering, manufacturing, and supply chain services and solutions to original equipment manufacturers worldwide. The company is contracted by some of the major players in the electronics industry. Its expertise in the electronics segment has given the firm an advantage in the medical devices segment. The company has vast operations globally, with 40 manufacturing sites located across the globe. Although the medical devices segment is not its core business, expertise from the electronics market will surely help the company develop innovative products and solutions in the future.
The company focuses on agreements and partnerships to strengthen its service portfolio in the medical devices and other healthcare segments. In October 2018, Flex partnered with Novo Nordisk (Denmark) to develop digital health solutions for diabetes patients. Flex continues to make substantial investments in resources such as research & development, technology licensing, test and tooling equipment, facility expansions, and personnel requirements to create world-class components. Each year, it invests a considerable share of its revenue in the research & development of products to maintain its position in the market.
COVID-19 Impact: The spread of COVID-19 across the globe has resulted in the implementation of several infection control measures, including travel bans and restrictions, quarantines, shelter-in-place orders, and shutdowns. These measures materially impacted the workforce and operations of the company, resulting in disruptions at manufacturing facilities. Flex also experienced reduced capacity utilization levels, supply chain disruptions, and temporary shortages of skilled employees. This caused an increase in the operational expenses and other costs related to requirements implemented to mitigate the impact of the pandemic. Additionally, it caused delays and limitations on the ability of the customers to make timely payments. Flex also faced workforce shortages due to illnesses, quarantines, governmental actions, and other restrictions. The net sales for the fiscal year 2020 decreased by 8% (or USD 2 billion) to USD 24.2 billion from the previous year because of COVID-19.
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Asia Pacific is expected to witness the highest CAGR during the forecast period, owing to factors such as the increasing demand for medical devices in this region due to the improving healthcare infrastructure, adoption of technologically advanced products, low cost of manufacturing, and the less stringent regulatory scenario for manufacturing of medical devices which promotes higher usage of medical devices as compared to most developed countries.
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