Medical device manufacturers are under pressure to reduce costs and improve margins and outsourcing at least some operations is increasingly a tactic for the top original equipment manufacturers (OEMs). There are hundreds of firms who specialize in device making operations and many more companies that do some medical device work.
Kalorama's Contract Manufacturing in Medical Devices (Materials, Processing, Electronics, Finished Products) is a complete study of the market and opportunity for outsourcing finished medical devices or a part of a medical device. It looks at the OEM contract manufacturing market revenues by therapeutic area (cardiology, respiratory, etc.), as well as by segment of device manufacturing (chemicals, implantable devices, semiconductors, metal molding, etc.) This allows those looking at this growing market to get a complete picture of the OEM market.
In this one volume, device companies will find Kalorama's estimate of outsourcing market sizes for Raw Materials & Material Processing, as well as for Finished Clinical Products for the following therapeutic areas:
A truly worldwide study, current revenues and forecasts in all therapeutic areas are provided for:
The report covers the following trends
Originally published February 2011, this report was revised April 2011 revised to reflect the recent industry expert opinion, the current economy, increased fuel costs, tax trends and new trends in offshoring to Asian and ROW, as well as published company revenues not available earlier in the year.
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HCR DEVICE ‘TAX’ - PRESSURE ON COSTS? In order to partially subsidize healthcare financing and reduce the cost of the recent federal healthcare reform legislation (PAPPA), tax was included in the core bill and the America’s Healthy Future Act.
The law includes new tax provisions intended to help fund healthcare reform, which require device manufacturers to pay a 2.3% excise tax on “taxable medical device” sales beginning January 1, 2013. The tax applies to medical devices intended for human use, but exempts eyeglasses, contact lenses, and hearing aids, as well as devices that are “generally purchased by the general public for retail or individual use,” as determined by the Secretary of the Treasury.
Because the excise tax does not include a blanket exemption for Class I devices, the large category of non-retail Class I products, including low-risk hospital and physician office supplies, will be subject to the new tax. Further, while the text of the new law states that as the excise tax is applicable to the “sale” of medical devices, device leases also will be considered taxable events.
The Medical Device Manufacturers Association (MDMA) and other groups successfully fought to reduce the target size of the tax as well as the rate. The group is currently working to repeal or change the provision in the Healthcare Reform bill.
Although the tax will not be a reality of device manufacturing until 2013, it is a consideration now and will be for the next few years for many in the industry as they await any further action on healthcare reform.
Kalorama Information feels that any pressure on profits will get manufacturers thinking about costs. This is particularly true in the case of a tax that goes on revenues of the device rather than profits. Long term, it is probable that this tax will drive outsourcing decisions at major companies who have not yet outsourced operations as early as late 2011 as they prepare to meet the challenge of earning profit with the tax placed on the device.
At least one CM is using the new tax in its own ad campaign. Lake Region Medical, says “The pressure on major MD companies from the new taxes introduced in healthcare reform presents a growing opportunity to further serve the industry.”