Testing Times For Medtech In 2022

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Includes: JNJ, MDT, SIRO, SSMXY, XRAY
by: EP Vantage

In vitro diagnostics are the place to be for the next six years. Total sales of IVDs will reach $71.4bn in 2022, new forecast data from EvaluateMedTech show, making up 14% of a $518bn industry.

And IVD sales growth will outstrip that of the industry as a whole, thanks to sales of molecular tests for cancer – mainly companion diagnostics used to guide the use of oncology drugs – more than doubling between 2015 and 2022. That said, the largest company in 2022 has no diagnostic products at all. Medtronic (NYSE:MDT) will retain its number one spot, with sales of $38bn coming largely from cardiologic, surgical and neurological devices.

Altered imaging

The second-biggest sector is also growing faster than the wider market. Cardiology devices will make up 12% of the medtech industry’s global sales in 2022, up from 11% last year. Over $60bn-worth of devices to treat cardiovascular disorders will be sold six years hence, thanks mainly to an annual 11% upswing in prosthetic valve sales.

With an enormous amount of interest in transcatheter mitral valves over the past year and some companies starting to look into tricuspid valves this is a very hot area (Edwards looks to tricuspid valves and beyond, October 8, 2015).

The drag on the sector is bare metal stents, the only cardiology technology whose sales are forecast to fall. Superseded by the much more effective drug-coated devices, global sales will decline 7% per year to $134m in 2022, EvaluateMedTech data show.

Top 10 medtech sectors in 2022
Sales ($m) Market share
Sector 2015 2022 Change CAGR 2015 2022
In vitro diagnostics 48,345 71,443 23,098 +5.7% 13.1% 13.8%
Cardiology 42,025 60,381 18,356 +5.3% 11.4% 11.6%
Orthopedics 34,343 45,541 11,198 +4.1% 9.3% 8.8%
Diagnostic imaging 36,300 45,230 8,930 +3.2% 9.9% 8.7%
Ophthalmics 24,972 36,977 12,004 +5.8% 6.8% 7.1%
General & plastic surgery 18,848 25,992 7,144 +4.7% 5.1% 5.0%
Drug delivery 17,973 25,082 7,109 +4.9% 4.9% 4.8%
Endoscopy 16,716 24,596 7,880 +5.7% 4.5% 4.7%
Dental 12,536 18,370 5,833 +5.6% 3.4% 3.5%
Wound management 12,499 16,841 4,342 +4.4% +3.4% +3.2%
Total industry sales 367,846 518,461 150,615 +5.0% 100.0% 100.0%
Click to enlarge
Click to enlarge

Diagnostic imaging, however, is to have a lean time if analyst forecasts are right. With a large installed base and little in the way of disruptive technologies, imaging sales will languish, slipping from the third largest segment in 2015 to fourth place in 2022.

Medtronic, having displaced Johnson & Johnson (NYSE:JNJ) as the world’s largest seller of medical devices when it completed its acquisition of Covidien last year, will not abandon its position at the top of the pile in 2022. In fact it will widen its lead over its nearest rival, outselling J&J by $6.7bn in 2020, compared with a sales difference of $3.7bn last year.

Jockeying for position

Still, Medtronic’s market share is forecast to shrink slightly as other groups expand more quickly. Of the top 50 companies by 2022 sales the Japanese diagnostics and analysis company Sysmex (OTCPK:SSMXY) is forecast to grow fastest, with an annual growth rate of 12%. It will rise from being the 43rd-largest medtech company worldwide to become the 27th, with 2022 sales of $4.4bn.

Dentsply International (NASDAQ:XRAY) is also set to grow at 12% per year to 2022, but in this case the expansion is not organic – the group will soon close its $5.6bn purchase of its fellow dental prosthesis maker Sirona (NASDAQ:SIRO).

The fastest growing of the top 50 medtech companies
Sales ($bn) Market rank
Company 2015 2022 CAGR 2015 2022
Medtronic 28,797 37,687 +4% 1 1
Johnson & Johnson 25,137 30,957 +3% 2 2
Siemens 14,850 17,051 +2% 3 3
Roche 11,237 14,968 +4% 4 4
Becton Dickinson 9,171 14,256 +7% 8 5
Stryker 9,946 13,899 +5% 5 6
Abbott Laboratories 9,581 12,300 +4% 6 7
General Electric 9,483 11,455 +3% 7 8
Philips 8,959 10,985 +3% 9 9
Boston Scientific 7,477 10,236 +5% 10 10
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Click to enlarge

The next six years ought to reward technological innovation as much as clever – and lucky – strategic corporate moves.