This article was updated in February 2023 to reflect changing conditions, prices and trends.
The medical device industry covers the manufacturing of medical, scientific, and surgical equipment. This includes devices such as syringes, thermometers, imaging devices, dental equipment, and more.
These products are made with the help of medical device manufacturing software, and sold directly to healthcare providers, or delivered to wholesalers and other customers.
Here we break down the key trends affecting the medical device manufacturing sector from 2020 to 2023, focusing on the United Kingdom, Australia and New Zealand.
The medical device industry in 2023 – overall trends and outlook
The Covid-19 pandemic dominated every aspect of the medical device industry in 2020, and there was a surge in demand for products such as ventilators and Personal Protective Equipment (PPE), buffering the financial impact of the pandemic.
The pandemic also accelerated technological advancements that allow the treatment of care with limited physical contact, and the use of wearables that enable users to better track their own healthcare indicators and needs.
Home-based treatments, supported by remote healthcare professionals, have also risen in popularity as patients look to decrease their exposure to the Covid-19, and seek alternative ways to access medical support. This new way of working – reflected by so many industries affected by the Covid-19 pandemic – will likely shift patients’ expectations and preferences, leading to new ‘norms’ in the healthcare sector, and in turn the provision of medical devices.
Covid-related products aside, the medical device industry experienced an overall dip in demand during 2020 – but by early 2021 the sector was recovering well. The emergence of the delta variant in 2021 had less impact on the sales of non-Covid medical devices than the initial outbreak in 2020.
With recovery well on its way, the global market for medical devices is estimated to be in excess of $335 billion in 2021 – which is higher than for pre-pandemic 2019. In 2022, however, this recovery may be slowed by the emergence of the omicron delta variant.
Covid-19 has dominated the medical device manufacturing industry in 2020 – but in 2021, the market has returned to pre-pandemic levels
Technology trends in the medical device industry
Technological advances accelerated by the pandemic have prompted a rapid shift toward digitised, personalised medical care. However, differences in global jurisdictions provide varying degrees of support for the advancement of such products.
In New Zealand, the medical industry is dominated by Fisher & Paykel Healthcare, with high and stable barriers to entry protecting the company’s position.
Despite this, there has been a rise in start-ups developing products such as wearables or apps that enable personal tracking for healthcare concerns, and remote access to medical professionals.
These devices are becoming increasingly sophisticated, and as people get more comfortable using them every day, are set to rise in popularity.
3D printing technology is also set to disrupt the industry. Simple medical devices such as syringes could eventually be printed within hospitals, challenging traditional medical supply chains and enabling greater autonomy of individual hospitals and healthcare centres.
In Australia, similar trends can be seen, with advances particularly in biotechnology, nanotechnology, and robotics. Automated and computer-aided design is also on the rise, improving efficiencies and the precision of medical care.
Australia’s technological progression, however, is constrained by the likes of governments and public hospitals, as they are incentivised to keep a lid on capital expenditure.
In Australia public hospitals are cutting expenditure on medical technology
United Kingdom medical technology trends
In the UK government incentives including tax breaks have supported the industry to become a world leader in medical device technology. In recent years, there have been notable advancements in 3D printing and prosthetics in particular. The UK government has flagged its intention to continue supporting innovation in the sector, pledging to pump tens of billions into the industry over the next few years.
Legislative trends & changes in the medical device industry
The medical devices industry is heavily controlled, with laws, regulations and government bodies ensuring high standards of quality and safety – from manufacturing right through to the end user.
- Read more: Medical Device Manufacturing: 3 Challenges
Legislation in New Zealand
In New Zealand, the industry is governed by the New Zealand Medicines and Medical Devices Safety Authority (known as MedSafe) and Standards New Zealand. Industry operators must comply with high standards across safety and quality. When products are exported, they need to reach the safety standards of that target market.
The regulatory reach extends to personal usage, with rules around how information is conveyed to the person who uses the product.
There are, however, changes in the wind for the New Zealand market. A Therapeutic Products Bill has been developed to replace the outdated Medicines Act of 1981, but its progress toward law has been slow.
The bill is designed as the backbone to a new regime which is expected to be more agile in its response to changing technology, and it is also designed to align New Zealand’s standards with those overseas. In doing so, it is hoped to ensure the safety of products used locally, while also ensuring New Zealand products are well received internationally.
Legislation in Australia’s medical device industry
In Australia, the industry is regulated under the Australian Code of Good Wholesaling Practice for Medicines, alongside the Therapeutic Goods Act and the Therapeutic Goods Administration (Medical Devices). Any medical devices released for public use are overseen by the Australian Regulatory Guidelines for Medical Devices.
Australia has delayed the overhaul of some medical device regulation as a result of the pandemic. This means the manufacturers of some devices, including implantable medical devices and inhalation devices, now have a longer timeframe in which to meet required standards.
Legislation in the United Kingdom
In the UK, Brexit has created significant uncertainty for the industry’s future. The UK has historically been governed by EU regulations, and benefitted from these structures both financially and scientifically.
Now the UK and the EU are officially separated, new regulations apply for medical devices. However, anything sold into the EU will still need to comply with standards of the bloc.
Many elective procedures in dentistry and orthopaedics have been delayed
Consumer trends in the medical device industry
The Covid-19 pandemic dominated the globe in 2020 – and to a large extent in 2021 as well – upending how we work, live, play, and care for one another. The medical devices industry has suffered from the economic slump, but its ability to provide specialist equipment such as ventilators has buffered the financial pressure.
Against this backdrop, ageing populations around the world have created a natural and increasing demand for medical devices and support.
Consumer trends in New Zealand’s medical device industry
In New Zealand, the rising numbers of over-50s has driven demand for medical equipment, and this trend is expected to accelerate as the country’s population continues to become older.
Public health expenditure has increased as a result of the pandemic and the needs of an ageing population, but the effects of the former will likely tail off in the near future.
Consumer trends in Australia
In Australia, an ageing population is also prompting increased expenditure on healthcare, and increased demand for medical products that support old age.
Australia’s mining industry, which contributes more than 10% of the country’s economy, also influences the medical device industry. At present, demand for measuring and exploration equipment – which is also supplied by makers of medical tech products – has been mixed from the mining sector, pulling the medical industry’s revenues down.
Consumer trends in the UK
The United Kingdom’s population is also ageing and this trend, alongside its high rates of obesity, is a significant driver for medical devices and products.
The NHS (National Health Service) dominates the sector, and has had a significant injection of funds as a result of the pandemic, which created a trickle-down effect for revenue in the industry.
Global medical device industry performance and outlook – a snapshot
Globally, the medical devices industry has faced severe headwinds, with an intense focus on producing equipment such as ventilators and PPE, and a fall in the production of other equipment. Major production lines have been disrupted by the pandemic, and a mass deferral of elective surgeries has upended expected demands and associated supply chains. Some specific areas that are non-essential and elective – such as orthopaedics, for example – have seen a significant drop-off in demand.
But as we noted above, recovery in this sector is already occurring – but may be hampered to some extent by the spread of the omicron Covid variant in 2022.
Global medical device industry profit margins and financial performance
In 2019, the market reached nearly US$460 billion, but that is expected to shrink by more than 3% through 2020 as a direct result of the pandemic, and the lockdowns imposed by governments around the globe. The market is tipped to recover from 2021 at a rate of more than 6%, pushing past US$600 billion by 2023. Private expenditure is expected to help boost financials, along with public injections of cash.
Medical device industry profit margins in New Zealand
New Zealand’s industry revenue is expected to rise by just over 3% over the next five years, to $1.3 billion. This follows a fall of more than 6% through 2020, as a result of the pandemic, weak economic conditions and the reduction of private expenditure. Profits have sat around 20%, although that is likely to be impacted by the pandemic.
Australian medical device profit margins
In Australia, injections of cash from the government and increased demand for healthcare has buffered against the worst of the COVID-19 drag. Industry revenue is expected to increase by nearly 4% over the next five years to AUS$5.5 billion, despite the pandemic and weak demand from the country’s mining sector. Profit margins in Australia are far lower than in New Zealand, sitting at just over 5%.
UK medical device industry financial performance
In the UK, industry revenue is expected to drag at less than 2% over the next five years, ultimately reaching £5.5 billion.
However, the UK government’s emergency measures in response to the pandemic appears to have buffered the industry, protecting it from the worst of the economic downturn.
The world is also expected to face a new era of increased infectious diseases and chronic illnesses, which will help fuel growth in the industry. North America is expected to dominate the global medical devices market over the next few years.
A new global focus on infectious disease control is likely to alter the medical manufacturing industry
Dominant medical industry sub-sectors by country
Medical and surgical equipment dominates industry revenue across different jurisdictions, with dental equipment, eye care products and measuring devices also strong drivers of revenue in the sector.
Globally, the production of equipment includes basic medical requirements such as syringes and dressings, alongside specialised equipment such as hearing aids, prosthetics, and ultrasound equipment.
Dental equipment consists of products such as drills and lasers, and demand can fluctuate as some of the work is discretionary. Eye care can also be discretionary, with big ticket items including contact lenses, frames, and protective eyewear.
Beyond these major sectors, there is crossover in demand for equipment across industries such as agriculture, construction and manufacturing, which require high-grade products to measure and survey projects.
The dominance of each sub-sector reflects the economic activity of individual jurisdictions.
In New Zealand, medical and surgical equipment is by far the most dominant contributor to the industry’s revenue. This is largely due to New Zealand’s progress in developing new products and technology, particularly through the country’s leading player, Fisher & Paykel Healthcare.
Dental equipment and scientific equipment are also major drivers of the industry’s revenue.
In Australia, medical and surgical equipment accounts for more than half of the industry’s revenue. This sub-sector includes ventilators and is therefore expected to grow in the coming months.
Another major sub-sector is measuring equipment, which makes up more than 16% of revenue and reflects Australia’s heavy economic reliance on the mining industry.
In the United Kingdom, the medical and surgical equipment sub-sector accounts for nearly a quarter of revenue, but like other countries, this share has expanded as demand for Covid-related products increased.
Eye-related products are the next largest sub-sector in the UK, making up just over 22% of industry revenue. However its share of revenue is expected to decline, as many procedures are discretionary and the economic downturn is putting financial pressure on households across the country.
Sources used in this article
- Medical and Surgical Equipment Manufacturing in Australia – Ibis World
- Medical, Surgical and Scientific Equipment Manufacturing in New Zealand– Ibis World
- Medical and Scientific Equipment Wholesaling in Australia – Ibis World
- Medical & Dental Instrument Manufacturing in the UK – Ibis World
- MedSafe NZ
- Standards New Zealand
- Australian Government Ministry of Health
- European Commission 2020 lists of harmonised standards for medical devices