Sales growth isn't expected to match unit growth in the medical-device industry in 2007. But, with sales projected to increase 9-11 percent and a number of segments expected to do much better than that, it's still a very healthy picture for companies that make plastic products for the health-care market.
``The medical-device market is one that is extremely dynamic,'' said Vaishnavi Ananthanarayanan, industry manager for health-care research in the Chennai, India, office of Frost & Sullivan Inc. ``There is a lot of room for growth and expansion.''
The research firm projects the market will reach $139.9 billion in 2011 - more than double what it was in 2004 at $63.8 billion.
The drivers: an aging population in the United States - which is the largest medical-device market globally, increased use of drug-delivery systems, more disposable and one-time-use products and the rising number of surgeries since 2001 because of more favorable reimbursement schedules.
Ananthanarayanan said slower sales growth after several years of 16-18 percent growth does not mean the market is slowing, but is more of a reflection of price pressures in the marketplace.
``One of the main reasons the market growth will be smaller is the pressure to reduce prices and costs. Unit volume will still be growing at 18 percent,'' she said. ``The demographics are favorable for growth. You can expect more and more ailments to hit an aging population. Health care is one of the booming fields in the world today. There are new diseases, new ailments every day.''
A number of contract manufacturers and medical component makers agree with her growth estimates.
``Most of the data I've seen suggest an 8 percent annual compounded growth on a worldwide basis'' for the next five years, said Thomas Taylor, vice president of marketing and business development for health care at components injection molder Nypro Inc. in Clinton, Mass. ``But we are targeting double-digit growth and have traditionally been in the 15-20 percent range the last 10 years.''
Similarly, Matt Langton, vice president of sales and marketing at injection molder United Plastics Group Inc., a contract manufacturer in Oakbrook, Ill., said that while he expects the medical-device market to grow ``in single digits, but closer to 10 percent,'' UPG anticipates ``healthy, double-digit growth in 2007.''
``We expect the medical-device industry to continue to grow both in the U.S. and abroad, especially in some of the emerging markets such as Asia, China and India,'' said Langton.
``From the U.S. perspective, growth is pretty consistent. With an aging population, you can expect people to need more medical attention. In emerging markets, there is a demand for higher-quality care and a greater need for medical growth.''
``We see the market continuing to expand with steady growth,'' said Gil Reich, vice president of sales and marketing for MedTech Group Inc. in Plainfield, N.J.
``More and more things in health care are becoming single-use disposal items, and we are all getting older and need more medical care.''
Frost & Sullivan, for example, estimates that in the U.S. alone, the number of people age 65 and older will increase from 35 million in 2000 to 54 million in 2020.
Companies most likely to profit from the continuing robust growth will be those that make drug-delivery, diagnostic, surgical and disease-control products, particularly as more health-care and diagnostic work moves from the laboratory to the home, said Steve Glorioso, Nypro corporate vice president for health care.
There's a strong market for surgical products because of the trend toward one-time-use kits.
``Everything that is being required for surgery is being packaged and put into a kit'' that is often disposable, said Ananthana- rayanan, noting that the use of custom procedure trays is growing at a 40 percent clip.
``It saves hospitals time and the cost of labor to gather things for surgery and reduces storage and logistics issues.''
There also will be strong growth for companies that offer ``tools for less-invasive surgical procedures and micro-surgical tools,'' said Len Czuba, president of product-development firm Czuba Enterprises Inc., based in Lombard, Ill.
Czuba said he also thinks the growing green movement means that ``companies that offer environmentally friendly products will get the nod'' in the marketplace, particularly in packaging.
``A lot of companies are trying to respond to the concerns we see in San Francisco,'' where product bans of expanded polystyrene and bisphenol-A have been passed, Czuba said.
Still, even as the market continues to grow, companies are going to have to manage both their raw material and manufacturing costs closely.
``Our customers are looking to reduce their costs,'' said Langton of UPG. ``So there is a lot of focus on lean manufacturing and looking for ways to continuously improve our manufacturing processes to reduce costs.
``We are working with some of the major [original equipment manufacturers] to take their products to low-cost manufacturing areas like China and Mexico,'' said Langton. ``Continued cost pressures play a big role in this. There are inflationary pressures from all points of the manufacturing area - whether it is labor, the cost of power or the cost of raw materials. That is what is driving people to low-cost areas they haven't looked at before.''
Ananthanarayanan concurred. ``A lot of disposables are now being manufactured in China, Latin America and Eastern Europe. It helps in reducing costs for parts manufacturing and for end products.''
Another issue is resin costs. ``Raw material costs on the component level have been rising and are an issue,'' said Reich. ``We are working with our customers on the design side to develop products that use less material.''