Frost: U.S. Medical Devices Industry Poised for Healthy Growth
June 26, 2008 // Published as a news service by IHS
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The U.S. medical devices industry continues to witness solid growth, due largely to an aging baby boomer population.
According to Frost & Sullivan, medical device companies will continue to drive technological advancements, such as minimally invasive surgery, as they devote 7.9% of sales to R&D.
Recent analysis from Frost & Sullivan found that the U.S. medical devices industry generated $75.6 billion in revenues in 2007, with estimates to grow at a compound annual growth rate (CAGR) of 9% for the period 2006-2013.
A positive indicator for the demand of medical devices is the aging population. Analysts said that 12.4% of the total U.S. population (36.7 million people) was above age 65 in 2005. This should increase to 20.7% of the total U.S. population (86.7 million people) by 2050.
"Neurology, cosmetics and esthetics and orthopedic devices are the fastest growing segments in the U.S. medical devices industry," said Frost & Sullivan financial analyst Sheetal Rajani.
"A high unmet clinical need, the desire to maintain a healthy and youthful appearance, and the active lifestyle demands from an aging population are driving growth in the neurology, cosmetics and esthetics and orthopedics segments, respectively."
The neurostimulation devices segment, in particular, holds tremendous investment potential for venture capital investors. Analysts said there is a huge unmet clinical need for the treatment of chronic pain and nervous system disorders such as epilepsy, depression and Parkinson's disease.
While there are no cures for these conditions, neurostimulation offers relief by blocking pain signals from traveling to the brain. Analysts said a minimally invasive surgical approach, fewer side effects and cost-effectiveness are some of the advantages offered by neurostimulation devices over other forms of therapy.
"However, medical device recalls and an increase in device-related deaths have shaken the confidence of patients and compromised the growth in this industry," said Rajani. "There has been a spike in the reports of device-associated injuries, deaths and malfunctions to 325,742, thereby representing an increase of 77% over the year 2005."
Analysts said there is significant investment potential for venture capitalists in companies that are developing minimally invasive surgical approaches and/or developing new clinical applications for the treatment of unmet clinical needs.
Source: Frost & Sullivan.