Medical Device Outsourced Manufacturing Market: Impact of Industry 4.0 on the medical devices industry

Innovation in Class III medical devices is on the rise, consequent to the growing development and production of complex products such as pacemakers and implantable medical devices. Medical device companies face challenges in manufacturing Class III devices in high volumes, given the complexity of the assembly and test processes. Furthermore, both the devices and processes must meet regulatory compliance for component traceability and verification, storage, and access. 

Industry 4.0 technologies—including cloud computing, machine-to-machine communication, and cyber-physical systems—enable advanced automation that helps overcome these production challenges. The increased connectivity and data-gathering capabilities of these technologies make it possible to build high-volume, regulation-compliant manufacturing processes with efficient inventory and production management.

The Medical Device Outsourced Manufacturing Market is projected to reach USD 56.2 billion by 2026 from USD 29.3 billion in 2021 and is expected to grow at a CAGR of 13.9% during the forecast period.

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Key Driving Growth Factors: –

  1. Cost Efficiency: Medical device companies often outsource manufacturing to reduce production costs. CMOs can leverage economies of scale, lower labor costs in certain regions, and efficient production processes, leading to cost savings for their clients.
  2. Focus on Core Competencies: Outsourcing manufacturing allows medical device firms to concentrate on their core competencies, such as research and development, regulatory compliance, and marketing. This strategic focus can lead to innovation and competitive advantages.
  3. Scalability: Outsourced manufacturing offers scalability, enabling companies to quickly adapt to changes in market demand. CMOs can accommodate fluctuations in production volume without significant capital investment.
  4. Regulatory Expertise: Compliance with strict regulatory standards, including FDA requirements and international quality standards (e.g., ISO 13485), is essential in the medical device industry. CMOs often have specialized knowledge and experience in navigating complex regulatory landscapes, helping their clients ensure compliance.
  5. Technological Advancements: CMOs invest in advanced manufacturing technologies, such as automation, robotics, and additive manufacturing, to enhance production efficiency and product quality. This attracts medical device companies looking to leverage these technologies.

Market Segmentation: –

Based on device type, the Asia Pacific market is broadly segmented into IVD devices, diagnostic imaging devices, cardiovascular devices, drug delivery devices, orthopedic devices, respiratory care devices, ophthalmology devices, surgical devices, diabetes care devices, dental devices, endoscopy devices, gynecology/urology devices, personal care devices, neurology devices, and other devices. In 2020, the IVD devices segment accounted for the largest share of the Asia Pacific market.

Based on the class of device, the medical device outsourced manufacturing market is segmented into Class I, Class II, and Class III medical devices. In 2020, the Class II medical devices segment accounted for the largest share of the Asia Pacific market.

Based on service, the Asia Pacific medical device outsourced manufacturing market is segmented into device development and manufacturing services, quality management services, packaging and assembly services and other services.

Based on process, the Asia Pacific market is broadly segmented into production, prototyping, pilot production, design for manufacturing, process evaluation, validation, project management, packaging, and assembly.

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Regional Analysis:

The Asia Pacific medical device outsourced manufacturing market, by country, has been segmented into China, Japan, Malaysia & Singapore, India, Australia & New Zealand, South Korea, and the Rest of APAC. China is expected to witness fastest growth during the forecast period of 2021–2026. China’s fastest growth is mainly due to the lower cost of raw materials and labor in the country than in developed countries.

1. North America:

  • Market Size: North America, particularly the United States, is a major hub for medical device outsourcing due to a mature healthcare industry.
  • Drivers: Cost-effectiveness, regulatory expertise, access to advanced technologies, and a large domestic market.

2. Europe:

  • Market Size: Europe is a significant player in the global market, with a strong focus on quality and regulatory compliance.
  • Drivers: Access to skilled labor, regulatory expertise, proximity to major markets, and the presence of established CMOs.

3. Asia-Pacific:

  • Market Size: The Asia-Pacific region is experiencing rapid growth in medical device outsourcing.
  • Drivers: Cost advantages, a skilled workforce, emerging markets, and increasing demand for medical devices.

4. Middle East and Africa:

  • Market Size: A smaller but emerging market with potential growth opportunities.
  • Drivers: Increasing healthcare investments, government initiatives, and a need for localized manufacturing.

Recent Developments:

  • In November 2020, Nipro Corporation (Japan) acquired Venari Medical’s (Ireland)  exclusive sales rights for a vascular treatment device developed by Venari Medical in Japan and overseas
  • In October 2020, Nemera (France) acquired Copernicus (Poland) to become a leading patient-centric drug device combination solutions company. This acquisition will bolster the company’s production capabilities and expand its product portfolio
  • In September 2020, Nipro Corporation established its sales offices in Xi’an, Wuhan, Hefei, and Xiamen. The new offices will further strengthen the company’s sales and service network in China to provide more community-based, meticulous services and respond to the needs of the medical scene, thereby enhancing the presence of the “Nipro brand”
  • In January 2020, Nipro Asia Pte Ltd. (Singapore) acquired JMI Marketing (Bangladesh) to secure a large market share in Bangladesh’s rapidly growing economy for disposable medical devices, including infusion sets, syringes, and IV catheters

Top Key Players: –

The prominent players in this medical device outsourced manufacturing market 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 driving growth factors are expected to continue shaping the Medical Device Outsourced Manufacturing Market as the medical device industry evolves, demands cost-effective solutions, and seeks to maintain compliance with regulatory standards while fostering innovation and agility.