Medtech in 2024: six years of stability, or as wild as the past?

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
Company 2017 2018e 2024e CAGR 2017-24 2017 2018e 2024e 2017 2018e 2024e
Medtronic* 29.8 31.0 39.8 +4% 7.3% 7.0% 6.6% 1 1 1
Johnson & Johnson 26.6 27.4 33.1 +3% 6.5% 6.2% 5.5% 2 2 2
Abbott Laboratories* 16.0 18.8 26.2 +7% 3.9% 4.3% 4.3% 3 3 3
Siemens** 15.3 17.0 21.2 +5% 3.8% 3.8% 3.5% 4 4 4
Philips 13.6 15.6 20.1 +6% 3.3% 3.5% 3.3% 5 5 5
Becton Dickinson 11.0 13.6 19.1 +8% 2.7% 3.1% 3.2% 8 6 6
Stryker 12.4 13.2 17.9 +5% 3.1% 3.0% 3.0% 6 8 7
Roche 12.3 13.6 17.6 +5% 3.0% 3.1% 2.9% 7 7 8
Boston Scientific 9.0 9.7 13.7 +6% 2.2% 2.2% 2.3% 10 10 9
General Electric 10.2 10.6 12.7 +3% 2.5% 2.4% 2.1% 9 9 10
Essilor International* 7.3 8.5 12.0 +7% 1.8% 1.9% 2.0% 14 13 11
B. Braun Melsungen* 7.7 8.8 12.0 +7% 1.9% 2.0% 2.0% 13 12 12
Danaher 8.7 9.1 11.2 +4% 2.1% 2.1% 1.9% 11 11 13
Baxter International* 7.3 7.9 10.4 +5% 1.8% 1.8% 1.7% 15 15 14
Zimmer Biomet 7.8 8.0 9.4 +3% 1.9% 1.8% 1.5% 12 14 15
    Total market 406.6 440.8 604.3 +6% 100% 100% 100% - - -
*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.

Musical chairs

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
Now From 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
Abbott Laboratories 18.8 Siemens 20.1
Siemens 17.0 General Electric 13.5
Philips 15.6 Roche 13.3
Becton Dickinson 13.6 Covidien 12.8
Roche 13.6 Abbott Laboratories 12.3
Stryker 13.2 Philips 11.6
General Electric 10.6 Stryker 11.4
Boston Scientific 9.7 Novartis 9.7
Danaher 9.1 Essilor International 9.0
B. Braun Melsungen 8.8 B. Braun Melsungen 8.4
Essilor International 8.5 Danaher 8.3
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
Device area 2017 2024e CAGR 2017 2024e 2017 2024e
In vitro diagnostics 51.8 78.5 +6% 12.7% 13.0% 1 1
Cardiology 46.7 71.6 +6% 11.5% 11.8% 2 2
Diagnostic imaging 39.8 54.4 +5% 9.8% 9.0% 3 3
Orthopedics 36.2 47.8 +4% 8.9% 7.9% 4 4
Ophthalmics 27.7 43.1 +6% 6.8% 7.1% 5 5
General & plastic surgery 20.7 30.5 +6% 5.1% 5.1% 6 6
Endoscopy 19.1 30.3 +7% 4.7% 5.0% 7 7
Drug delivery 18.5 25.9 +5% 4.5% 4.3% 8 8
Dental 14.0 21.8 +7% 3.4% 3.6% 9 9
Diabetic care 11.8 19.2 +7% 2.9% 3.2% 12 10
Wound management 13.5 18.9 +5% 3.3% 3.1% 10 11
Healthcare IT 11.8 18.6 +7% 2.9% 3.1% 11 12
Nephrology 11.6 16.1 +5% 2.9% 2.7% 13 13
Neurology 8.6 15.4 +9% 2.1% 2.5% 16 14
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% - -
Source: EvaluateMedTech.

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizVantage on Twitter

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