Company and Industry News

Disposable Medical Supplies industry forecasts to 2011 & 2016

US demand for disposable medical supplies will grow 4.9 percent annually to $70.4 billion in 2011. A rising volume of patient activity attributable to aging population trends and related epidemiological patterns will underlie overall growth.

PRLog (Press Release) – Mar 24, 2008 – Drug delivery, catheterization and related products will remain the largest and fastest growing group of disposable medical supplies. Gains will reflect an increasing number of chronic care patients who require surgery or continuous therapy. This trend, coupled with the introduction of higher value-added, safety-enhanced products, will boost growth opportunities for several types of drug delivery, catheterization and related supplies, including prefilled inhalers; prefilled syringes; cardiac and urinary catheters; infusion and dialysis tubing sets; transdermal patches; and oxygen delivery systems.

Home health care market to provide fastest growth based on the breadth and intensity of medical activities and extensive infection prevention requirements, hospitals will remain the largest and most diverse market for disposable medical supplies, accounting for more than 43 percent of 2011 demand. These facilities will continue to lead sales in most product segments. However, due to the impact of fixed reimbursement rates and group purchasing practices, hospitals will provide below-average growth opportunities for disposable medical supplies as a whole.

Home health care will continue to comprise the fastest growing market for disposable medical supplies. Demand will be boosted by the increasing availability of respiratory and other medication in high value-added delivery devices, the expansion of blood glucose monitoring activity among diabetic patients, widening third-party coverage for home therapy services, and the sustained popularity of short-term use contact lenses.

Outpatient facilities, nursing homes and physicians’ offices will present below- average growth opportunities for disposable medical supplies due to cost containment trends and the commodity, price-sensitive nature of most items used. By contrast, demand in dental practices, paramedic organizations and other markets will advance at a faster than average pace, reflecting less intensive pricing pressures and needs for higher value-added supplies and devices.

NAMSR 2009 Survey predicts steady growth of 9% for medical device industry for 2009-2010
Capital investment in medical device companies is expected to grow at a healthy 9% pace during 2009.

PRLog (Press Release) – Feb 24, 2009 – Capital investment in medical device companies is expected to grow at a healthy 9% pace during 2009 according to the NAMSR - National Assocation of Medical Sales Representatives.
Investor expectations of enormous growth in healthcare spending—and confidence that exit opportunities will satisfy internal rate-of-return requirements—are together continuing to attract venture capital dollars into the medical device market. Ultimately, the capital invested in medical device companies will contribute to reducing comprehensive healthcare costs and improving patient outcomes in the years to come.

Escalating Capital Demand

Remarkably, from 2004 through 2008 the total venture capital dollars invested in medical device ventures more than doubled to nearly $3.4 billion. While the number of transactions increased by approximately 40% during this period, the more impressive increases in average amount per raise across all stages of investment was an equal driver. From 2004 through the first three quarters of 2008, the average amount raised by round increased significantly. You can see the percentage of increase in average venture capital investment in medical device companies from 2004 through the first three quarters of 2008, by funding round:

Start-up/Speed companies saw a ~ 145% increase.

Early stage companies saw a~ 84% increase.

Expansion companies saw a ~ 15% increase.

Late Stage companies saw a ~ 19% increase.

From a demand perspective, these significant capital increases are a consequence of rising operating expenses for medical device companies. Beyond the initial research and development costs related to medical devices, innovative technologies typically require substantial investment in areas such as clinical trials, administrative infrastructure, and the creation of a distribution network. Further, the slowdown in the initial public offering (IPO) market as a funding alternative is compounding the circumstances with which late- stage medtech companies must contend.

The past five years have seen a minor shift in the mix of stages receiving funding and their respective portion of total funding. Expansion-stage companies—typically those with a commercially available product that have been in business for more than three years—have seen a 7% decline in their proportion of number of capital raises, and a 13% decline in their proportion of capital dollars.

Speculatively, such decreases represent the proportional shift of capital toward follow-on rounds of late-stage portfolio companies (necessary as time horizons to exit have lengthened), and new investments toward early-stage companies with greater home-run potential. The expansion stage is a critical phase when a company needs to prove that its technology and organization can reach revenue milestones and become cash-flow positive. With regulatory hurdles rising higher, achieving these goals is proving increasingly difficult—and therefore less attractive to investors. The relative decline in expansion-stage investing has resulted in increased investing spread evenly across virtually all the other stages.

Forecast for 2009

During 2009, medical device companies can expect a neutral to slight growth investing environment for receiving infusions of growth capital. While the broader credit crisis has affected overall liquidity, cash is widely available for growth-capital investment because of the large amounts of capital that have previously been raised. However, with the length of time to exit increasing for medical device companies, venture capital firms are likely to become even more selective and diligent about making investments, further lengthening the capital-raising process. Such cautious attitudes and expanded due diligence will result in tighter institutional fund¬ing for medical device companies with merely mediocre technology.

The NAMSR - National Association of Medical Sales Representative™, is the largest professional association in the world for Medical Sales Representatives. Through our numerous members, the NAMSR™ provides accredited training, continuing education, information about the industry, up-to-date news, programs to assist medical sales reps in their work, training programs to assist candidates who want to break into the industry and initiatives to improve communication with the medical sales field.