A Medical Electronics Manufacturing Spring 1998 Feature

SUPPLIERS SURVEY

Medical Electronics: Lucrative Market for New and Old Suppliers

Sherrie Steward

A survey of suppliers provides a statistical snapshot of the medical electronics market.

The medical electronics industry is a significant and growing business segment for many electronics suppliers. To provide medical device manufacturers with some statistical information on the medical electronics marketplace, we surveyed the suppliers in this year's buyers guide. The results of the survey should provide perspective on the increasing importance of electronics in medical device design and manufacturing. Of the more than 1100 companies listed in the buyers guide, between 750 and 900 participated in the survey depending on the question, for a response rate of 68—81%. (Some companies indicated that information relating to sales and projected growth was proprietary.)

Geographically, the greatest number of suppliers are located in the Pacific region (371), with most of these in California. The Midwest (178) and Mid-Atlantic (150) regions are also home to a large number of suppliers to the industry. The Southeast and Southwest regions have the fewest suppliers, 72 and 52, respectively, and non-U.S.-based companies make up only a small fraction of suppliers (see Figure 1).

Figure 1. Number (and percent of total) of listed suppliers by region.

The survey revealed that many suppliers are well entrenched in the industry, with about 42% having served the medical electronics industry for more than 16 years. However, almost equally represented—38%—are companies that have been involved in medical electronics for less than 10 years (see Figure 2).

Figure 2. Years serving the medical electronics industry.

Most of the suppliers listed are small- to medium-sized companies. Nearly 82% of the companies that responded to the survey have fewer than 250 employees; slightly more than 50% of the responding companies report fewer than 75 employees. Only about 10% of the suppliers employ more than 500 people (see Figure 3).

Figure 3. Number of employees.

Medical electronics accounts for a sizable amount of revenue for many of these companies. Potential revenues may account for the projected growth in medical electronics. More than 20% of the suppliers currently do $1 million to $5 million worth of business in the medical electronics industry annually. Adding those who have annual sales of $5 million to more than $10 million indicates that nearly 30% of the total report more than $1 million in sales to the industry (see Figure 4). Another 23% report annual sales of $500,000 to $1 million.

Figure 4. Annual sales to the medical electronics industry.

Although the majority of responding companies indicate that they supply electronics products and services to other industries besides medical device manufacturers, a significant number—nearly 60%—plan to increase their business to the medical electronics industry between 11 and 40%, and another 9% project growth between 31 and 50% (see Figures 5 and 6). This increase reflects a trend: many electronics suppliers are being forced to compensate for declining sales to industries such as aerospace and military, and are looking to medical as a growing market.

Figure 5. Percentage of business dedicated to medical electronics.

Figure 6. Projected growth in the medical electronics business.

Sherrie Steward is editor of Medical Electronics Manufacturing.