Global Development Increases American Medical Device Exports


SEATTLE — America’s domestic medical device market is the largest in the world, with a total value of $148 billion. In 2015, American medical device exports reached $44 billion. At present most of those exports go to developed countries, but economic and demographic trends are rapidly changing this state of affairs.

The first driver of increased demand in emerging markets is rising income levels. Throughout the world, countries where anything beyond basic medical care was once a luxury are now home to burgeoning middle classes. This is particularly true of China and Southeast Asia, but is also the case in much of Latin America. As people become richer, their wants and needs expand into the realm of quality medical treatment, which in turn drives higher demand for medical device exports from America.

America’s position as the world leader of the medical technology sector and pharmaceutical sector more broadly means that American medical device exports are seen as cutting edge and high quality compared to medical devices produced locally in developing countries. Beyond this advantage, America has a strong position in other key fields for the production of medical devices such as microelectronics, telecommunications and biotechnology.

The second trend leading to broader demand is the massive population aging that is currently occurring throughout much of the developing world. Plummeting birth rates and improved care for the elderly has led to a sharp rise in the median age in developed countries. Additionally, many countries with young populations have lower birthrates, meaning that they will become significantly older over the next several decades. Not only does an older population mean more demand for healthcare, but many of the countries have little experience in domestic production of devices targeted at the elderly as well.

At the same time, real obstacles to higher levels of medical device exports exist. Regulatory standards are inconsistent across countries, with many markets requiring additional trials for devices that have already been approved in America. Regulations governing the use and sale of devices can be quite complex and import tariffs are often high. Much of the prospected increased demand in these countries will be filled by domestic manufacturers rather than American exporters.

Still, in spite of these difficulties the potential reward is truly immense. In China, the medical device market is growing at a rate of 20 percent a year and in India it is growing at a rate of 16 percent a year. When compared to the 3-5 percent growth rates in most developed countries, it is easy to see why these will be such important markets for American medical device exports in the future. China is a particularly important market, with its population set to age rapidly as a result of the one child policy. As is the case for so many other sectors, America’s medical device sector is set to reap the rewards of global development.

Jonathan Hall-Eastman

Photo: Flickr


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