Healthcare outsourcing market is likely to witness increased growth in coming years. This is primarily because of mounting cost pressures, increased need to differentiate products and most important one, need for shortened lead time to market.
Amid convergence of these issues, medical device industry is is embracing outsourcing practices in full fledged manner, giving there core and non-core work to third party service providers like Accellent, Orchid, Teleflex and others.
The question that surfaces during this phase is, what chunk of outsourcing is taken by core activities.
According to recent report from Grand View Research Inc. US Medical device outsourcing services will reach record high USD 27.8 billion in the year 2022.This accounts for close to 45% of global medical device outsourcing market which stood at figure value of USD 62 billion. R&D services which primarily comprises product development/design otherwise called as Design services, & regulatory consulting which is otherwise called as clinical trial services, account for close to 52% of overall outsourcing services market.
Thereby answering, that more than 50% of outsourced services are the core activities.
This outsourcing of core services has seen an increased penetration on the grounds of, lack of in-house skilled labor and high infrastructure cost to maintain the facility set up at OEM’s in-house depots.
By partnering with end-to-end service providers , an OEMs can leverage their multi clientele exposure at one end, and stay competitive at other. This clearly goes to show the trust that OEMs have built over their outsourcing partners.
The outsourcing has helped OEMs shift their both tactical and strategic work to CMOs, while they channelize their money and resources in addressing M&A, product licensing strategies. For long the industry just outsourced tactical work to third party service providers, this is now moved to strategic work sub-contracting , the activity that CMO have embraced by scaling up their design and regulatory expertise. Accellent, the no 1 ranked CMO went and acquired Lake Region, a company that beholds many IPs under its medical device offerings. The similar acquisition were followed by other leading medtech CMOs, whose expansion and acquisition were focused at R&D capability scale up.
Medtech OEMs have built enormous trusted relationship with CMOs/third party service providers to address their core and non-core activities. Lion share of 52% is taken by core activities in medical device outsourcing market figures, indicating that CMOs are delivering on their promise of being strategic partner.
1.Medtech outsourcing services market to touch USD 62 billion in the year 2022.
2.Class II devices have taken the major chunk in the device types, this is primarily because of growth is self monitoring device, which is part of industries do it yourself revolution.
3.Leading medtech CMOs expansion plan hovers around R&D capability scale up.
4.CMO R&D capability scale-up will help OEMs tackle saturation issues associated with key product categories such as coronary stents, orthopaedic implants and others.
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