The Top 9 Takeaways from MD&M West 2024

Mar 11

To view our article on the Medical Product Outsourcing website, click here.

Every year, roughly 10,000 to 15,000 medtech professionals travel to Anaheim, Calif., to attend Medical Device Manufacturing West (MD&M West), a three-day networking event for those working in the automation, packaging, design/manufacturing, and plastics sectors. At least one MedWorld Advisors executive has attended this key event annually since 1997.

There are many key themes for C-Suite executives to consider in light of this year’s show: growth, reshoring/nearshoring, U.S. medtech manufacturing, artificial intelligence (AI), regulations (that one’s not surprising, is it?), specialized competencies, wearables, contract design manufacturing organizations (CDMOs), and the ownership struggle. Let’s explore each of these topics in more detail.

1. Growth

According to the Business Research Company’s Medical Component Manufacturing Global Market Report 2023, the worldwide medical component manufacturing market continues to expand at a significant pace. The report predicts a 6.4% annual growth for the industry over the next three years, reaching $17.03 billion in 2027. Fueling this expansion, the report states, is the escalating number of chronic diseases and National Institutes of Health (NIH) data affirm as much: A report from the agency shows a sharp rise through 2050 in the number of U.S. residents aged 50 and older with at least one chronic disease (defined as long-term medical conditions characterized by persistent and often slow-progressing symptoms). The NIH analysis forecasts the number of older chronic disease sufferers will mushroom 99.5% over the next 26 years, going from 71.52 million in 2020 to 142.66 million in 2050. Such prognostications bode well for the more than 1,600 exhibitors and 14,000 visitors that attended MD&M West.

2. Reshoring/Nearshoring

Don’t be led to believe otherwise—reshoring and nearshoring are real. Vendors from China have become regular participants of these industry events over the years, either as exhibitors or attendees. China, in fact, has been an important part of the medtech industry’s growth for the past 25 years. Interestingly, however, an increasing number of OEM suppliers are actively promoting their operations in the United States, Mexico, Dominican Republic, and/or Costa Rica. As we have previously discussed in previous MPO columns, the reshoring/nearshoring trend began with the Trump administration’s tariffs and accelerated during the pandemic, as both incidents highlighted the critical need for “in-region manufacturing.” The term refers to a supplier’s desire to keep manufacturing close—i.e., within a specific region—to their end OEM customer to minimize the risks of geopolitical tensions, market volatility, and supply chain disruptions.

3. U.S. Medtech Manufacturing Is Still Tops

The MD&M West event is relatively close to U.S. OEMs such as Medtronic plc, Stryker Corp., J&J, Edwards Lifesciences, Intuitive Surgical, Arthrex, ResMed, and Zimmer Biomet Holdings Inc., among others. Such close proximity makes it fairly easy for design and production engineers from these companies to meet with their suppliers in Anaheim to work on the next generation of medtech solutions. While there are other international industry conferences (i.e., Medica in Germany, CMEF in China), the MD&M West event attracts the majority of U.S. OEM customers, which in turn, drives the attendance of “in region” OEM suppliers.

4. AI Is Still a Buzzword with OEM Suppliers

Artificial intelligence is certainly a hot topic of conversation and the technology is being leveraged in small ways within industry, but it was clear from walking the MD&M West exhibit hall floor that some participants really don’t understand how machine learning or AI software works. Such naivete will change with time but for the moment, it’s more a marketing buzzword than a game-changing reality.

5. Regulations Are Still a Challenge

Is this a surprise to anyone in the medtech industry? Part of the blame for companies failing to understand AI’s full potential could perhaps be placed on the regulatory agencies in both the United States and Europe. There is a sense that bureaucrats on both continents have become so good at regulating AI, they are making it difficult to actually bring an artificial intelligence-enabled solution to market. In fact, one well-known industry consultant in Europe recently stated, “Congratulations Europe, you’ve done such a great job of regulating AI companies, Europe now doesn’t have any AI companies.” The new Medical Device Regulation (MDR) is just as bad, if not worse. Those looking for a true assessment of the MDR’s impact on the medtech industry need only ask someone involved in transitioning their products from the EU Medical Device Directive to the MDR. A lively discussion is likely to follow.

6. Specialized Competencies Are Increasingly Becoming More Critical

In attending various trade shows each year, one of the observations we make is the continuing need for specialized competencies within the medtech industry. As medical devices continue to shrink and get more advanced, OEM suppliers that can offer capabilities attractive to OEMs will retain a competitive advantage. Such capabilities include: miniaturized systems and components; medtech 3D printing; micro electromechanical systems; advanced materials (i.e., medical plastic, metal, glass, or silicone); functional and/or antibacterial coatings; sensor technology for wearables, monitoring, and e-health solutions; and smart medical production/processing technologies.

7. Wearables Are the Future

Make no mistake—the “wearables wave” is coming. While consumer-grade wearables with basic health information such as the Apple Watch and Fitbit have existed for quite a while, there is an exciting trend brewing for wearables that provide patients with medical data that can help them make healthy decisions in their daily lives. Current wearables are focused mostly on diabetes but expect these solutions to soon expand to the cardiology, neurology, and respiratory arenas.

8. The CDMOs Are Winning

Contract design manufacturing organizations are clearly taking market share from contract manufacturing organizations (CMOs). By adding the “D” in the middle of their capabilities, the CDMOs have been rapidly increasing their value proposition to their OEM customer base, thus forcing CMOs to acquire additional capability to survive in the market.

9. The Ownership Struggle Is Alive and Well

The MD&M West show 14 years ago had an interesting mix of owners—among them, small “mom and pop” shops, some regional legacy founder-owned firms, a larger mix of founder-owned companies, a few private equity-owned firms, and some larger strategics. Since then, a real battle has ensued for ownership between founders, private equity (PE) firms, and larger strategics. Due to all of the M&A activity in the medtech industry, it’s much more difficult to find a traditional family-owned business on the floor of any trade show now. And the few that do exist are likely being targeted for acquisition by either a large strategic or PE firm.

Final Thoughts

Medtech is a very exciting industry impacted by various dynamics. MD&M West is just one of numerous events where many of these dynamics converge in a manner that allows companies and professionals to keep moving forward and thrive within the sector’s ever-evolving markets.

Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.

Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at
davesheppard@medworldadvisors.com.