Six years hence, the medtech industry will look much like it does today. Barring large-scale M&A, the top five device makers last year will hold the same positions in 2024, according to consensus forecasts newly compiled by EvaluateMedTech.
Medtronic is forecast to grow its sales to just shy of $40bn in 2024, reinforcing its position as the largest group in the sector (see tables below). But its annual growth rate of 4% is behind the sector’s overall rate of 6%; it would not be a surprise to see Medtronic and its peers at the top of the table pull some significant bizdev moves to ensure they stay ahead of the pack.
|Top 15 companies in 2024|
|Global medtech sales ($bn)||Market share||Market rank|
|Johnson & Johnson||26.6||27.4||33.1||+3%||6.5%||6.2%||5.5%||2||2||2|
|B. Braun Melsungen*||7.7||8.8||12.0||+7%||1.9%||2.0%||2.0%||13||12||12|
|*2017 numbers are forecasts. **Medtech business has been spun out as Siemens Healthineers. Source: EvaluateMedTech.|
The top five companies are to maintain their respective positions in 2024, the new forecasts from EvaluateMedTech show, though Abbott is to outpace the rest of this cohort with a forecast growth rate of 7% per year. And, while Medtronic will stay at the top of the pile, in a sense the lens specialist Essilor International might be thought the winner, since it will climb from 14th place to 11th, with 2024 sales of $12bn.
While these forecasts give a good sense of companies’ organic growth, deal-making means that the top 15 in six years’ time might end up looking rather different. An illustration of this can be provided by a look back at forecasts made in 2012.
In 2012 EvaluateMedTech released its first ever World Preview report, which among other analyses compiled the sellside’s consensus forecasts of companies’ 2018 sales (J&J to dominate increasingly significant medtech market, 3 October 2012). A comparison of those figures with 2018 sales forecasts as compiled this week shows significant variance, thanks largely to the many huge mergers and acquisitions that have shaken this space up in the intervening period.
|How things change: the top 15 companies in 2018, as predicted in 2012|
|Company||Global medtech sales 2018e ($bn)||Company||Global medtech sales 2018e ($bn)|
|Medtronic||31.0||Johnson & Johnson||37.8|
|Johnson & Johnson||27.4||Medtronic||20.4|
|B. Braun Melsungen||8.8||B. Braun Melsungen||8.4|
|Zimmer Biomet||8.0||Boston Scientific||8.1|
|Baxter International||7.9||Becton Dickinson||8.0|
|Source: EvaluateMedTech, EvaluateMedTech World Preview 2018 (published Oct 2012).|
Having closed the acquisitions of Covidien and an astonishing 23 other companies since autumn 2012, Medtronic is now forecast to have sales of $31bn this year, compared with a 2012 forecast of $20bn. Johnson & Johnson has gone in the opposite direction, its forecast 2018 sales now a full $10bn lower than six years ago, owing to its strategy of selling off several disappointing device units, starting with the $4bn divestment of Ortho-Clinical Diagnostics in 2014.
Becton Dickinson, meanwhile, has roared up the rankings, its purchases of C. R. Bard and Carefusion, among others, allowing it to jump nine places. Its 2018 revenues are now forecast to reach $13.6bn.
Still, just because the past six years have seen a tumult of deals among the largest medtechs – no fewer than 61 mergers worth more than $1bn have been closed since October 2012 – does not mean a similar situation will prevail in future. Some M&A among the top 15 groups will surely occur between now and 2024, but the effect these deals might have on the league table is impossible to predict.
Set in stone
Much easier to call are the largest device therapy areas in 2024. Diagnostics remains the biggest market in medtech, growing its market share slightly to 13% in 2024, with sales of $79m. Indeed, the top nine segments are locked in, with only slight jockeying for position at the bottom of the table.
Even if a frenzy of deal-making does come to pass in the coming years this will have little effect on device area market share. If Medtronic were to buy Boston Scientific, for instance, the worldwide sales of cardiology products would not be significantly changed. Even if knock-on deals were required to satisfy antitrust requirements the only major alteration would be to the branding on the pacemakers.
|Top 15 device areas|
|Global sales ($bn)||Market share||Market rank|
|In vitro diagnostics||51.8||78.5||+6%||12.7%||13.0%||1||1|
|General & plastic surgery||20.7||30.5||+6%||5.1%||5.1%||6||6|
|Ear, nose & throat||9.0||14.0||+7%||2.2%||2.3%||15||15|
|Total medtech sales||406.6||604.3||+6%||100.0%||100.0%||-||-|