How COVID-19 is impacting the medical device and equipment industry.
Right now, industries of all kinds are still struggling to adapt to the ongoing coronavirus (COVID-19) pandemic. In many places, manufacturers are still under orders to keep their facilities shuttered, and in other places face strict limitations on their operations. In the US, that has translated into the largest drop in manufacturing activity since 1946.
Interestingly, the one industry that might be expected to be thriving under the present conditions – the medical device and equipment industry – is instead seeing an odd split into two camps. One, comprised of hospital and lab-grade equipment manufacturers and PPE suppliers, is booming. The other, comprised of IoT medical device developers and providers of non-emergency hospital equipment are seeing their bottom lines contract. Here’s a deeper look at what’s going on, and what it might do to the medical device and equipment industry.
Hospitals and Laboratories Driving Spending
Right now, even a casual observer could predict that hospitals and laboratories are ramping up spending to cope with the increase in the number of patients they’re servicing. What’s interesting about it is where that increased spending is going. According to an analysis by MarketsandMarkets, much of the increased spending is going toward the purchase of disinfectants and sanitizers, with multiple manufacturers repurposing production lines to increase supplies of those items.
There’s also evidence of a marked increase in laboratory equipment purchases as private and public facilities scale up to meet the testing and R&D needs created by the pandemic. It has been reported an increased interest and sales in high-end instruments such as the multi-mode microplate readers from BMGLabtech, no doubt because they’re a key part of both rapid COVID-19 testing as well as drug discovery operations. Put together, the equipment demands of laboratories and hospitals promise to drive double-digit sales growth in the sector for much of the rest of the year, and perhaps beyond.
MedTech Sales Slumping
At the same time, an industry that had been gaining traction before the coronavirus pandemic is now losing steam. The MedTech sector, which is made up of manufacturers of IoT wearables as well as suppliers of non-emergency medical equipment is undergoing a contraction. The pain is being felt by businesses both large and small in the space. Johnson & Johnson is already reporting an 8% quarterly drop in medical device sales, and Medtronic has lost roughly 60% of its US business due to the pandemic.
There’s also quite a bit of uncertainty in the MedTech startup space, as scores of new ventures have seen product trials halted and sales plummet. On top of that, there’s also been uncertainty about medical startups’ ability to secure financing through the thicket of government-backed relief measures aimed at small businesses. Together, these factors might lead to a mass-extinction event for medical startups, and it may take several years for the industry to recover.
What Comes Next
Despite the conventional wisdom holding that the medical sector stands to make a fortune as a result of the coronavirus pandemic, the truth is far more complex. As evidenced here, some businesses are seeing a sharp increase in sales due to the situation, while others are being pushed to the edge of insolvency. The trouble is that the way the crisis is playing out is having a disproportionately negative effect on many of the industry’s innovators while pumping money into decidedly low-tech products like disinfectants.
The lone bright spot is the boom in sales of high-end lab equipment, which is helping various tech-focused medical suppliers weather the storm. The bottom line, though, is that aside from the terrible human toll the coronavirus is taking, it’s also exacting a high price from the medical device industry. In the years to come, that’s likely to result in a pronounced slowdown in the development of technologies like healthcare-specific artificial intelligence and IoT medical sensor systems. In short – the next generation of technologies essential to delivering high-quality care in the 21st century.
In the end, that’s a consequence of the pandemic that may stay with us long after a vaccine is perfected and the outbreak is finally brought to a halt.