Medical electronics is not a new field by any stretch of the imagination, it has long been an important niche sector for the semiconductor and electronics industry. In recent years, with the growth and adoption of smartphone and online telemedicine, we've seen emerging opportunities andgreater proliferation for both devices and remote solutions for promoting new medical solutions leveraging technology.
Medical electronics becoming commoditized
Presently, even the most conservative compound annual growth rates (CAGR) for medical devices taken as a single set is 6% for the 2011-2015 period (see this manufacturing trends review from SMT and Flex007 and this recent market review from GlobalPurchasing). Some positive contributors to devices' growth are the falling prices of many components (from MEMS to memory and the widening of COTS ICs and MCUs) and the increased pressure healthcare insurers to reduce the cost of patient care. The margin concerns by insurers means an increased pressure and more rapid adoption of at-home and remote patient monitoring through wearable medical electronic devices coupled with independent medical data transmission for remote medical review and even possible remote medical intervention. The commoditization of medical devices and medical electronics is only set to increase, which means that the growth of this once niche sector is one to watch as we move forward.
Independence from macroeconomic concerns
Importantly, forecasts for the medical electronics sector continue to brighten and do not appear to correlate with macroeconomic situations in the same way that consumer electronics and similar classes do, all good news for our much stressed industry. This is because regardless of economic conditions, health and medicine continue to increase in demand for improved diagnostic, treatment and monitoring for all economies and conditions. As populations age in the developed world, demand for these devices and solutions increases and as poverty spreads in highly rural and remote areas, improved field medical resources similarly surges. Furthermore, the increased commoditization of medical electronics is pushing this once niche sector into different growth trajectories leading to shorter time-to-market and more rapid development cycles, especially for those devices that are not surgical or implantables (see below for classification details).
Break-down of the medical electronics sector
Perhaps one of the most important and basic points to note, that is often glossed over in general medical electronics discussions, is that medical electronics are best understood and therefore best analyzed as a sector, when broken down into their inherent, and very different, categories based on electronics demands, requirements, and market factors. Medical electronics can be grossly subdivided into four major categories, ordered based on increased invasiveness which translates to increased time to market and regulatory issues:
- mHealth: This set of devices is most typically understood to facilitate "mobile Health" meaning that these are the pagers, tablets, smart wireless devices, and similar data entry devices geared for M2M communication (from software to hardware) with medical specific applications and tools via highly secured networks. This is a class of relatively low mix, high volume devices. These devices enable paperless medical record transmissions, prescription submissions, as well as consistent reception and recording of data from patient worn devices (regardless of location at hospital, extended care facility, or at home).
- Wearable Devices: These devices are those that are worn by patients for short or long periods to measure, monitor, and record a patient's medical status (e.g., from blood pressure monitors to externally worn heart monitors and sensors). These can be either disposable or reusable and have either a rechargeable battery or external power source. This is a class of moderate mix, high volume devices. The most important aspect of this class is that there is no implanted or transdermal aspect to them; while they may be affixed to the skin via an adhesive, much as a band-aid, there is no internal aspect. These devices are proliferating and becoming very important for both remote field medical care as well as in-home patient monitoring via wireless transmission to medical professionals.
- Surgical Devices: When we bridge over to surgical medical electronics, we enter a different realm of devices than the above two. Important in the difference for both the device engineering team and OEM as well as the market analysis and forecasting of these devices, is that we have crossed over into the class of devices that enters the human body. Obviously, this is a critical step and the level of requirements and medical trial periods are significantly increased, along with the time to market for the device. However, surgical devices can often still have a very grassroots type of start, initiating with an idea from a medical professional (e.g., surgeon or practitioner) and then incubated until the point where additional engineering and production (equating also to funding and leveraging of existing patents and technology) often leads to the point of the project or company being acquired by a larger medical electronics OEM who can then pursue the lengthy and complex series of regulatory trials and approval processes followed by the market introduction. These devices tend to be a high mix, moderate to lower volume, however their ASP can be significant, offsetting the financial risks of high cost, high mix and low(er) volume devices.
- Implantables: This last category is a larger one and refers, as the name highlights, to those medical devices that are implanted or inserted into the body on temporary to permanent bases. Unlike surgical devices, which are inserted, the intent of these devices is that they remain in the body for some period of time either in-patient or at home. Because these devices involve considerable biotechnological expertise requiring highly specialized materials and designs, expert medical electronics engineers and OEMs able to pursue the longest design, testing and approval processes which, of course, add to the costs associated with this important medical electronics device class. These devices are still moderately high mix with moderate volume, but this is due to the approval process, not the opportunities for demand. As regulatory approvals come to their end points for many devices in the pipeline, this class of devices is likely to increase to be a high(er) volume category.
Smith's upcoming MarketWatch Quarterly for 3Q12, due out later this month with a free subscription, will provide a drill-down discussion of the growing medical electronics device market from the perspective of the semiconductor and electronics industry.