An Analysis of Contract Manufacturing in Orthopedics
• It is still the increase in the aging population that has contributed to the growth in the orthopedic billing, though a clever mix of products also takes some of the credit, as they have been on the rise of late. • These two factors will continue to dominate and drive the orthopedic product markets in the future as well. • However, the dampening effect on orthopedic products that manufacturers find hard to digest include stiff increase in reimbursement along with pressures caused because of the prices, which keep eroding, as they have for the past couple of decades.
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Falling Prices – Who are the Winner • There is no foreseeable change in this trend in prices, and it can affect certain countries which will suffer more because of fall in prices. • However, as far as manufacturers in the orthopedic products market are concerned, they have developed their own strategy for outsourcing when compared to other insignificant players in the field. • Most of the large original equipment manufacturers (OEM) go for inhouse production, while the newbies and startups, along with other small and medium manufacturers outsource most of their products to contract manufacturers.
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Global Market Forecast • The market forecasts for orthopedic products contract manufacturing indicate that revenues are set to increase by close to 7% in the 5-year period from 2012 to 2017. • In this sector, implant contract manufacturing seems to be growing at a much faster pace, and accounts for an 8% increase, followed by instruments manufacturing that accounts for 5.5 to 6%, and lastly cases and trays that account for close to 5%. The focus in the future is going to be on implant manufacturing for the contract manufacturing sector, along with OEM. •
As far as casting is concerned, the activities show indications of continuing to be handled in-house, though a small percentage is likely to be outsourced to countries that have plenty of low-cost labor.
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• Spine and trauma machining products are likely to be outsourced to lowcost contract manufacturing hubs for the lower-end range, while the higher-end range will be confined to the United States and Europe. • In all probabilities, contract manufacturing is set to out-do the in-house manufacturing companies in the orthopedic sector by the end of 2017. •
This can be attributed to the rapid growth of this sector and the cost advantage that the large manufacturers are already enjoying.
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