05 Jan 2022
Posted in Medical Devices
Medical device contract manufacturing market rebounds in 2021 with M&A deals reaching record-high $1.6 billion, says GlobalData
Medical device contract manufacturing has made a comeback in 2021, according to GlobalData, which notes that merger & acquisition (M&A) deal volume in the sector has reached record highs of $1.6 billion. The leading data and analytics company notes that contract manufacturing, which offers medical equipment manufacturers essential cost reductions and increased return on investment (ROI), was heavily impacted by the abrupt disruption of non-essential surgeries in 2020. The recovery in 2021 will be welcomed by OEMs, but GlobalData notes that the heat will be on, as the ever-present backlog will create high demand moving forward.
Tina Deng, MSc, Principal Medical Devices Analyst at GlobalData, comments: “Despite facing challenges such as a lack of predictability in demand, supply chain disruption, labor constraints and regional variability in the recovery of elective procedures, underlying demand has remained strong. Outsourced manufacturing capacity is expected to be saturated with orders due to a backlog of demand. This leads to more active transactions that consolidate resources and further expand production capacities.”
The contract manufacturing market is now recovering with strong organic growth, and consolidation in the market will continue at a fast pace. In June 2021, Tecan Group signed a definitive agreement to acquire medical devices manufacturer Paramit for $1 billion to extend its presence in the US and Asia. Paramit is a CDMO that focuses on medical devices and life sciences instruments. This deal is expected to create a combined global platform with design, development and manufacturing capabilities in the fast-growing medical devices market.
Deng continues: “In particular, GlobalData notes that contract manufacturing organizations that focus on pre-clinical research and development (R&D) will enjoy revenue growth with the restart of early-stage device programs. These programs hold enormous promise, particularly for novel medical devices that make many procedures less invasive, with an attendant reduction in recovery time and associated cost.
“Looking forward, contract manufacturing will continue to experience strong growth, with the normalization of the device market in line with long-term goals that provide cost-effective solutions to both patients and healthcare providers in the fastest growing segments of healthcare.”