Dive Brief:
- The U.S. medtech contract development and manufacturing organization (CDMO) market will grow 12.9% this year, according to a report by healthcare advisory and clinical research firm Alira Health and the Massachusetts Medical Device Industry Council (MassMEDIC).
- Robust fundamentals, “a steady onshoring trend of critical manufacturing processes,” and the easing of the labor market as the economic recession deepens are forecast to offset a weak economic outlook and declining venture capital investments.
- The report identifies revised rules on the flammable gas ethylene oxide as a trend to watch in 2023, noting that new requirements for medical device sterilization could “[clear] the way for structural changes in the industry.”
Dive Insight:
With more onshoring and improved availability of manufacturing labor, the U.S. medtech CDMO market is forecast to grow to $26.3 billion this year, according to Alira and MassMEDIC.
The report’s authors predict growth will accelerate because “outsourcing services have demonstrated resilience to near-term market variability and will out-perform the OEMs by capturing a growing share of the medtech value chain.”
The findings were based on a review of more than 300 global CDMOs with a manufacturing footprint in the U.S. and an industry census “qualified by revenue, capabilities, technology focus, and geographic presence.”
Two trends could constrain growth. First, a prolonged recession could reduce access to healthcare and therefore dent demand for devices. Second, the authors expect falling investment in medtech startups to “impact development budgets and delay the launch of new products.”
On balance, the authors view the trends as favorable for U.S. medtech CDMOs. The growth forecast is above the 9.4% the industry achieved last year but down from the 15% increase seen in 2021. Alira forecast 15.8% growth last year but the market underperformed expectations, in part because of supply problems.
“Significant logistics bottlenecks persist across manufacturing sectors, impacting the supply of medical devices. Particularly, the shortage of electrical and optical components and a reduced throughput of sterilization services have hindered the procurement of medical device OEMs,” the report stated.
Disruption of the U.S. sterilization market has forced manufacturers to work with overseas service providers, according to the report, but that has resulted in freight and logistics costing more than sterilization itself.
