Despite historic disruptions, analysts see 2022 smoothing out and the medical market settling back to roughly 5% yearly growth.
Global supply chain issues are impacting every industry – from medical device manufacturing to furniture from IKEA – and it’s going to continue being an issue for some time, as Lisa Anderson, president and founder of LMA Consulting Group covered in our A Look at the Supply Chain Entering 2022 webinar. lma-consultinggroup.com
Those sentiments are echoed in The Great Supply Chain Disruption: Why it Continues in 2022, where IHS Markit’s Daniel Yergen, vice chairman and editor of the report says what’s unfolding in supply chains globally isn’t only disruptive it’s also historic. The report goes on to note that while COVID-19 has been a significant factor in driving disruptions, it’s not the only factor as substantial capacity, logistical, and labor challenges exist beyond the pandemic. ihsmarkit.com
While 2020 saw a rise in demand for key medical devices such as personal protective equipment (PPE), ventilators, and COVID-19 diagnostics, global medical devices growth fell to less than 3%, according to Fitch Solutions’ Medical Devices Key Themes For 2022. In 2021, rebound in demand for dental products, orthopedics, and prosthetics saw growth go to double-digits. Seeing the market return to stability, Fitch Solutions’ analysts expect to observe mid-high-single digit growth in 2022, with some rebound growth from an increase in surgical procedures. They expect growth to peak in 2022, with consumables being the fastest growing product area, expanding by 9.6%, with all other product areas growing between 6.8% and 8.5%. thefitchgroup.com
Globally, the medical device market reached $456.2 billion in 2020, according to the Global Medical Device Market 2020-2030 report from ResearchandMarkets.com. Analysts predict the market will grow at a CAGR of 5% to stand at $745 billion by 2030, owing to an aging population, prevalence of infectious diseases, increasing prevalence of chronic diseases, technological innovation, and penetration of healthcare insurance. researchandmarkets.com
So, as we enter the third year in a global pandemic, the fast-spreading Omicron variant caused elective surgeries to once again be put on hold in many regions, so demand for medical equipment in those procedures decreased. However, with data showing that cases are now declining after this latest surge, elective procedures will resume and medical device manufacturers will have to ramp back up to meet returning demand for equipment. There will still be challenges remaining as manufacturers ramp-up, extending beyond the chain issues as companies of all sizes face labor shortages. Manufacturers have seen firsthand throughout the pandemic that more automation and updated equipment and processes are what they’ll need to address worker shortages and better prepare to quickly pivot in times of change.
While no crystal ball will be accurate when a pandemic upends things, some key takeaways seen in the past two years include the accelerated need for remote device management. Consumers are increasingly turning to wearables and mHealth apps to drive physical and mental wellness, while connected medical devices and advancements in software that capture and analyze device data are improving delivery of care and new product development. This adoption of emerging technologies is going to be essential to drive digital transformation in the medical device industry, and designers and manufacturers of medical equipment need to be ready to change with the industry
INDEX’s customers in the medical segment are expecting a strong 2022. During the past two years, many non-critical medical procedures have been delayed. We’ve already seen a rebound to near pre- pandemic levels in 2021 and this trend will become more pronounced. Of course, manufacturers looking to capitalize on this growth face challenges.
Across the country, the skilled labor shortage has reached new levels, driven in part by early retirements. According to the latest data from the Pew Research Center, the percentage of US adults age 55 and older who are retired has grown from 48.1% pre-pandemic to 50.3% today. That translates into approximately 1.5 million people leaving the workforce earlier than expected. This premature loss of expertise, experience, and leadership has profoundly impacted many organizations.
Additionally, medical manufacturers must deal with the supply chain issues affecting much of the economy.
Many will face significant hurdles to ramping up production to meet growing demand. Lead times have expanded for everything from raw materials to machine tools. Companies not already planning to accommodate growth will find themselves at a disadvantage to those who have been aggressively forecasting and ordering the resources needed to match those expectations.
At INDEX, we’ve seen an accelerating trend of medical manufacturers upgrading technology to enable more output per employee. For example, we recently worked with a spinal implant manufacturer that invested in three multi-spindle centers, machines that they expect to replace up to 15 traditional turning centers.
Not every shop can increase its output per labor hour by 500%, but the ones seeking those types of gains will be well rewarded in the coming year.
Lastly, all manufacturers looking to potentially invest in technology should be talking to suppliers as soon as they foresee a possible need. Lead times have grown significantly from 2019 levels. INDEX has been aggressively producing and importing machines and I’m sure that most machine tool builders are doing the same.
That said, manufacturers that wait for an urgent need to start a conversation with suppliers may well find themselves with limited options, while those that plan will maximize their growth.
CNC machining for the medical industry demands solutions that have high precision and are increasingly customizable to the patient. ISCAR produces an array of tooling options that are modular and highly repeatable, both essential in the production of medical components. Specifically, ISCAR tooling addresses the advanced CNC lathe with live tooling options to allow complex parts to be produced in one setup. This machining system requires tools that are simple to deploy and maintain. As an example, ISCAR offers indexable drilling down to 4mm diameter (Sumocham) that provides the advantage of a solid carbide drill that’s easy to index and ensures a new cutting edge.
Having a solution and being effective to implement is where many companies struggled the last two years. The pandemic forced a reduction in human contact which has traditionally been the way companies table challenges and solutions. While we believe that human-to-human contact will always be the best way to solve complex problems, ISCAR enhanced its digital suite of information tools to allow users to define their CNC machine and process. The system immediately returns the tooling items required with parameters for the users’ specific machining environment. Our belief is that digital tools like this 1) supplement what was lost in person-to-person contact and 2) supports eventual Industry 4.0 digital collaboration between companies.
Supply chain shortages have affected all industries and the medical manufacturing industry is no exception. Shortages of raw materials and computer chips are hampering globally the ability to supply. This new reality is bringing new attention to manufacturing locally to ensure certainty of supply. We can’t lose control of essential care for our population. Difficult times force the innovation and rethinking that’ll create solutions to ensure better times ahead.
AS Mazak’s medical manufacturing customers have remained busy throughout the pandemic, the industry continues to face challenges with a lack of skilled workers and supply chain issues. Additional pressure is put on medical device manufacturers as they face production of small, complex parts from tough materials, increasing materials costs, and the need to produce less scrap, while increasing manufacturing efficiency.
These challenges are addressed with Mazak’s INTEGREX machine series, offering Done In One solutions with full multi-tasking and 5-axis machining, INTEGREX machines can produce the contours and shapes required with superior part surface finishes. A few additional aspects that appeal to those in the medical industry is the series offers the largest envelopes possible in the smallest footprint and the milling spindle – having a relatively small spindle that’s robust enough to machine today’s hard materials.
The INTEGREX series combines the capabilities of a high-powered turning center with a full-functioning 5-axis machining center to produce parts in single setups, reducing lead-time and improving part accuracy. In addition to multiple functions in a small footprint, some customers report they’re achieving a return on investment (ROI) in as little as 90 days.
Mazak, through its Technology Centers across North America, works closely with medical companies to find their pain points and reshape or redesign machine characteristics to address those needs. Today, the range of medical devices we’re seeing run on INTEGREX machines runs the gamut of everything that’s inside the surgical center – from sterilization equipment to motors for beds. And, as the pandemic took hold, the pause of non-essential surgeries hit some markets, but once resumed there was a significant uptick as well as some new areas.
One such area is with tattoo guns, which are very feature rich with a lot of intersecting holes, consistent datums – areas where Done In One operations excel. These medical tattoo guns are used in some catastrophic cases of burn, dog bites, anything facial or skin-related where this device is used to restore skin back to its normal color, texture, and tone.
Additional areas of growth for machining medical devices and implants come as manufacturers transition from cobalt chrome to titanium. With grinding no longer an option for titanium implants, more machining processes are being done on implants, and INTEGREX machines reliably deliver the required surface finishes with a specific milling spindle designed to handle the task – the shiny surface of the implant that surgeons expect.
On the heels of the pandemic, the need for speed in healthcare innovation has risen to the highest levels. Recognizing “business-as-usual” won’t keep them competitive, medical device, implant, and equipment companies are looking to virtual twin technologies to give them the edge they need. Virtual twins of medical devices help companies design new iterations faster and test designs virtually in realistic use environments allowing them to move from minimum viable product to optimum design in shorter cycles at lower costs. 3D, physiologically accurate twins of patient populations are now becoming available, providing unprecedented access to virtual testing of devices and insights unavailable any other way. Animal testing can be reduced over time, consistent with the “Advancing Alternative Methodologies” report issued by the U.S. FDA in January 2021. Most importantly, adopting the virtual twin methodology enables the digital thread underpinnings throughout the design and testing process, providing the robustness and traceability needed for regulatory compliance.
The virtual twin smooths the transition to clinical testing as in silico trial populations can guide the most efficient patient selection and analytical data analysis. Virtualized trials eliminate the need to merge data sources and allow real-time analytics to be available to all stakeholders. Additionally, synthetic control arms can provide tremendous cost efficiencies while meeting the growing ethical pressures.
Beyond the design stage, the virtual twin moves easily downstream to the manufacturing process to synchronize supply chain demands, ensure resilience in the process, and manage the growing body of regulatory requirements. Scaling up and globalization become manageable as the virtual twin allows teams to capture and share practices, respond to local environmental constraints, and provide rapid implementation of cost reductions and continuous improvement programs. Real-time data visualization and rationalization provide a transparent shop floor with error-proof operations and full traceability.
Most importantly, digital continuity in healthcare will deliver the most immediate benefit in location-free patient monitoring, whether it be effective monitoring of postoperative compliance, delivering predictive health maintenance, or simply providing a continuous view of critical health metrics. Complications during or after treatment can hinder recovery or lead to costly readmissions. With real-time views into at-home recoveries, healthcare teams can identify issues in the early stages and produce better patient outcomes – all while using fewer hospital resources and providing valuable insight back to manufacturers, which is an essential ingredient in making virtual twins effective for all.
In short, virtual twins are key to the next generation of medical devices and equipment. We’re at a tipping point for precision medicine with high expectations for streamlined access to effective advice and care. Consumer-grade wearables and apps have led to the possibility of passive monitoring and will soon converge with medical-grade devices. Together they’ll power virtual twins that connect patients with care teams and open the door to endless possibilities.
Looking forward to 2022 and beyond, there’s much to be learned from the past two years from the challenges and opportunities brought on by a global pandemic. Manufacturing has stepped up by increasing the supply of PPE, adapting to surges in the demand for many products, and shortening supply lines to cope with the disruption. It hasn’t been a smooth transition and there’s a long way to go. With a widened view, we see opportunity.
Robots operating in factories around the world hit an all-time high of 3 million in 2020, according to World Robotics 2021. This number alone is impressive. When we look a little deeper into the numbers, the U.S. is 7th in respect to robot density at 255 per 10,000 workers. Now we see the way. Automation frees valuable skilled employees from repetitive low-value tasks. The numbers tell us we’re far from our potential – Japan and Germany, third and fourth, have approximately 50% more robots operating per 10,000 workers.
How do we get there? The answers are ever-changing. From robots as a service (RaaS) models eliminating capital investments to cost-efficient cobots lowering total costs of ownership to innovative end-of-arm tooling broadening the application space. At SCHUNK, we are keenly focused on these trends and further market movements in industries including medical. For manufacturers that considered automation in the past and decided not to proceed, it may be time to reconsider. Technologies that’ll make the outcome different, with respect to end-of-arm-tooling, are software to speed implementation, electric gripping to increase flexibility, and engineered material selection to assure compliance. Continual innovation will rapidly bring automation to more tasks.
The uncertainty thrust upon us during the past two years has merely accelerated us down the path we were already traveling. There are challenges ahead – but the technology and means are there. Automated, connected, efficient processes will free human capital and bring success to those who embrace change.
Growth in 2022 — Robots will continue to take over the world at a slower pace as J&J and Medtronic are looking to capitalize on their acquisition investments during the past few years.
In the emerging market, companies developing artificial intelligence/machine learning (AI/ML) software either as part of an integrated or standalone medical device (SaMD) will continue to grow at a rate quicker than the rest of the market.
One area that’s hard to categorize because of the number of different applications – but continues to grow faster than the market as a whole – are manufacturers using 3D printing (3DP) applications. Once mainly associated with orthopedic applications, 3DP is making its way into every facet of the medtech market including valves, stents, and bioresorbable materials. Some companies have made big bets on the future of 3D bioprinting, such as 3D Systems, with its recent acquisitions of Alevi and Volumetric.
CROs – Reportlinker.com predicts the contract research organization (CRO) services market will grow at a compound annual growth rate (CAGR) of 10.7% year over year, reaching $86.5 billion by 2026, from $53.2 billion in 2021. The driver will be in the way companies are funding innovations and research & development (R&D). For example, larger organizations will forego building their own products and will instead invest in emerging companies and smaller incubators.
Angel investors have taken over as the primary investment source for medical products. The need to get to market quickly and the smaller size of the team changes the regulatory and clinical journey. With emerging medtech companies made up of teams of one to five people, they require the skills and resources of outside expertise, such as CROs, especially for the management of regulatory meetings and clinical trials.
Challenges – The biggest challenges impacting the development of medical devices globally, in the near future, are component shortages and supply chain difficulties, especially in countries outside of the U.S. where logistics are not as sophisticated. In the U.S., we continue to experience difficulty opening clinical trials (although not as bad as one year ago), as well as getting marketed products into hospitals and other points of care.
About the author: Elizabeth Engler Modic is editor of TMD and can be reached at 216.393.0264 or emodic@gie.net