First Research US Industry Profile

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Medical Equipment & Supplies Manufacturing
SIC Codes: 2599, 3821, 3841, 3842, 3843
NAICS Codes: 3391
Last Quarterly Update: 7/22/2019
Companies in this industry manufacture medical equipment and supplies, including surgical and medical instruments, dental equipment, and surgical appliances. Major companies include Baxter International, Boston Scientific, Johnson & Johnson, and Stryker (all based in the US), as well as B Braun (Germany), EssilorLuxottica (France), Smith & Nephew (UK), and Terumo (Japan).
Global revenue for makers of medical equipment and supplies is about $350 billion. Major markets include the US, Japan, Germany, France, the UK, Italy, and China.
The US medical equipment and supplies manufacturing industry includes about 10,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $92 billion.
The industry does not include manufacturing of x-ray or electromedical equipment and devices, such as ultrasound equipment, pacemakers, and electrocardiographs, which is covered in a separate industry profile.
Competitive Landscape
As pressure to lower health care costs grows, companies are challenged to create more effective medical equipment while controlling price increases. Consolidation is widespread as larger companies look for economies of scale in manufacturing and R&D. Small companies can compete successfully by specializing in a particular market segment, or through technical innovation. The US industry is concentrated: the 50 largest companies account for about 60% of revenue.
Imports of medical equipment and supplies account for about 39% of the US market; exports represent about 36% of US production. Leading sources of imports include Mexico, China, and Ireland. The largest export markets for medical equipment and supplies are the Netherlands, Canada, and Japan.
Competitive Advantages:
Automation - Medical equipment manufacturers increasingly are investing in automation to increase operational efficiencies. The trend will reduce hiring needs but will require workers with greater skillsets.
R&D - Companies must develop new technologies to stay relevant against competitor offerings and avoid losses from patent expirations. Innovations aim to keep up with consumer trends, such as demand for smaller, more portable products and for devices that address ailments related to aging populations.
Global Distribution - Medical device manufacturers depend on strong relationships with wholesalers to get products to end users efficiently. As the provision of health care improves in developing nations, companies have vast opportunities to grow sales to customers in new territories.
Companies to Watch:
Baxter International is a leading maker of intravenous supplies. The company sells indispensable IV fluid systems, injectable supplies, infusion pumps, and other equipment in more than 100 countries, with a majority of sales coming from outside the US. Baxter is repositioning its operations to focus on high-margin growth offerings.
Johnson & Johnson is continuously rearranging its vast portfolio of global operations to maximize value, innovation, and international reach. The company's medical devices division includes Ethicon (surgical supplies), DePuy (orthopedics), and Vision Care (contact lenses).
Stryker offers a wide range of products for orthopedic surgeries and other medical procedures. The company's joint and spinal implant systems and related devices are sold worldwide; the US makes up about three-fourths of sales. Stryker has seen steady growth through R&D, partnership, and acquisition activities.
Products, Operations & Technology
Major products include surgical and medical instruments such as syringes, surgical clamps, and stethoscopes (about 45% of industry revenue) and surgical ... plus:
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