The global health technology industry is thriving, and it’s projected to continue accelerating over the next few years.
In this blog, we discuss the future of the health technology industry, explore impacting forces, and present the affect these forces have on industry participants.
- The industry is accelerating
The health technology market is growing. It’s projected to reach a compound annual growth rate (CAGR) of 5.6% in medical device sales, 6.4% in pharmaceutical sales and 9.5% for smart health care products between now and 2024. Globally, medical technology sales are forecasted to reach nearly $600B by 2024 with research and development spending increasing 4.5% annually. Due to the driving forces in these growing industries, there is a growing need for talent.
- Medical Device Excise Tax
Suspension of the Medical Device Excise Tax has been deeply unpopular. The tax disproportionately harms startup companies that are building medical technologies of the future. The U.S. House of Representatives has voted to repeal the tax, but the Senate has yet to vote on this issue.
- U.S. Health Tech Investments
U.S. health technology investments rose substantially in 2018. Venture-backed investment in U.S. medical device, biopharma, and diagnostic tools exceeded 2017 by over 60%. According to Silicone Valley Bank’s Trends in Healthcare Investments and Exits 2019 report, they observed a slowing in the fourth quarter of 2018 and anticipate venture financing to decelerate slightly in 2019 as the U.S. moderates Chinese investments.
- Trade policy
Under the direction of President Trump’s foreign trade policy, the U.S. and China have been exchanging tariffs on imported goods from each other’s country. If this isn’t resolved quickly, tariffs will increase up to 25% on all goods currently subject to the ~10% tariffs. Additionally, U.S., Mexico, and Canada have signed a trade agreement, anticipating approval in 2019, which will increase the protection of biologic drug sales. Since pricing on imports and exports impact the industry, companies will be investing in supply chain and marketing talent to protect gross margin erosion.
- Device connectivity
The health IT sector is expected to increase at an unprecedented CAGR of 9.5% between now and 2024. According to a recent Deloitte survey, “many companies also find it a challenge to address the critical funding and skill gaps, as software constitutes an increasing proportion of product innovation.” In light of this, health technology companies should focus on developing digital competencies and skills in research and development and beyond.
- Cybersecurity regulations
The FDA has established a Software Precertification Pilot Program to provide guidance on the development of a regulatory model. The pilot is expected to launch in 2019 with the objective to streamline regulatory oversight of software related medical devices. With this trend in mind, medical device companies should prepare for securing their connected medical devices throughout their life cycle and reduce risk to patients and data security.
- Regulatory landscape
Two significant impacts on the regulatory landscape are the European Medical Device Regulations (MDR) and In Vitro Diagnostic Regulations (IVDR) which went into effect in May 2017 with an implementation deadline of May 2020 for the MDR and May 2022 for the IVDR. Considering the constantly shifting landscape, health tech companies must prioritize achieving ongoing regulatory compliance.
There are significant opportunities for growth in health technology. Understanding market forces and mitigating the risks of related talent shortages is crucial to realizing your objectives.
To learn more about the driving forces and key challenges of the Health Technology industry, read our report: 2019 Health Technology Driving Forces.
If you are a health-technology company looking to hire new talent and you want to partner with an organization that specializes exclusively in the health-technology industry, Talencio can help. Talencio is comprised of a diverse team of health technology professionals with extensive industry experience. Our unique partnership approach enables us to be your safety net whenever anticipated or unanticipated staffing needs arise. Talencio has been the preferred provider of vetted, accomplished professionals to the Health Technology Community for over 11 years. To learn how other companies have partnered with Talencio, tap into our skilled professional talent pool, or learn about career opportunities, contact us at 612.703.4236 or by email.
Written by: Ben Kvale, Talencio Marketing Intern and student at North Central University in Minneapolis, MN.