In a time of sustained medical emergency, the medtech industry did…pretty well.
Revenue for 20 of the world’s largest medtech companies totaled $208.8 billion in 2020, a mild 0.3% decrease compared to 2019. Among the 15 companies whose reports include the figure, research and development (R&D) spending showed a slight bump, from $12.2 billion in 2019 to $12.3 billion in 2020.
As pressures to innovate continue increasing, medical device companies (especially, smaller ones) are increasingly looking to outsource their product design, development, and manufacturing. In fact, according to recent research, the medical device outsourcing market will more than double in size by 2028 and is expected to grow from $99.9B in 2020 to $227.1B over the next 8 years.
So, which medtech companies stayed the strongest during the pandemic?
Some, like Edwards Lifesciences, which makes structural heart devices, saw a 0.9% increase in revenue year-over-year. Others, like Stryker Orthopedics, saw sales decrease by 8.1% in 2020.
The biggest determining factor in how a company performed: How reliant the company is on elective procedures. With COVID-19 packing hospitals with patients in need of emergency care, the Centers for Medicare and Medicaid Services (CMS) recommended postponing elective procedures.
In short, if you didn’t absolutely need a procedure, it was best to make room for people who did.
But elective vs. emergency wasn’t all. A handful of other factors drove medtech performance results during the pandemic — some of which are here to stay.
The companies that did the best through COVID:
1. Those that make products reducing the need for in-person visits
Align Technologies produces teeth-alignment products that compete with regular braces. Teeth alignment technologies and braces come in at similar price points. So, in a year when people were discouraged — if not federally prohibited — from gathering in public spaces, at-home orthodontics became the preferred choice.
Is it permanent? Somewhat. While remote care saw a sharp spike immediately after the dawn of the pandemic, it quickly leveled off, and has steadily declined — at a moderate pace. Like many services affected by COVID-19, remote care will likely hold onto a chunk of what used to happen in-person, but not nearly as much as its early-pandemic heights.
2. Those that produce devices for lifesaving procedures or acute emergency cases
Baxter, an Illinois-based company which was heavily relied on for COVID-19 treatment devices, reported a 2.4% increase in annual sales, from $11.4 billion to $11.6 billion. Baxter also reduced their R&D spending in 2020, signaling an organization-wide shift to handling the pressures of the moment.
In a slightly different vein, 3M Healthcare, which produces N95 masks, saw a considerable 12.3% increase in revenue in 2020. While masks don’t fall into the same category as treatment devices like ventilators (whose producers, Royal Philips, saw a 2.1% boost in revenue), they certainly qualify as emergency devices, in that they address the constant ambient threat of COVID-19 infection.
Is it permanent? Probably not. While 2020 saw a rise in pent-up demand for elective care procedures, much of it was relieved when vaccines began circulating, and the volume of emergency cases became more manageable. If and when COVID-19 becomes endemic, elective cases should reclaim their former volume.
3. Diagnostic testing & imaging companies
Danaher, whose imaging devices helped hospitals triage COVID-19 patients, saw a major revenue jump, from $17.91 billion in 2019 to $22.28 billion in 2020 (nearly 25%). Likewise, Abbott Laboratories, a key producer of COVID-19 tests, saw a an 8.5% increase in revenue, from $31.9 billion in 2019 to $34.6 billion in 2020.
Is it permanent? Probably — but not because of COVID-19. Endemic COVID-19 would mean more flulike cases. Of its 1-4 million cases per year, the flu has a 1.5% hospitalization rate, and a 0.13% death rate. But more broadly, diagnostic imaging care is on the rise, as it increasingly helps patients avoid costly invasive procedures.