The Growing Importance of Medical Electronics

Any EMS company looking for fertile new ground ought to dig into TFI’s recently released Quarterly Forum Report on medical electronics. “Medical Electronics: At the Crossroads of Patient Care and Technology” is as thorough a look at the growth opportunities as any you will find.

The researchers, TFI senior consultant Charles W. Wade and his wife, Jo Wade, an assistant professor at the University of Tennessee, expect the medical electronics market to grow at an 8 percent CAGR between 2005 and 2010. They conclude that medical electronics outsourcing will increase from a current penetration rate of 11 percent to 14 percent by 2010. Cost reduction, flexibility and reduced cycle time are driving medical OEMs to find outsourcing partners.

The study’s findings show that many second and third tier EMS companies are doing well with medical electronics. This bolsters earlier TFI research that suggests medical electronics is an important area for medium sized and smaller EMS companies.

(See, “Where Did EMS Business Come from in 2005, and Where Might It Come from in 2006?,” a Quarterly Forum Report for second quarter 2006.)

That’s because medical OEMs have unique needs in areas that require the kind of TLC smaller EMS companies have proven capable of providing: high mix/low volume manufacturing, quality processes, understanding regulatory systems and agency approvals, sensitivity to IP protection, reporting and tracking systems.

To date, medical electronics is not rushing off as quickly to low cost geographies, since the major markets tend to be in North America, Western Europe and Japan. Medical OEMs seem to prefer closer-to-home manufacturing partners, but this is not expected to last forever. Hon Hai Precision Instruments recently announced it is thinking about getting into medical electronics.

American and European EMS executives would be wise to plant their stake, or drive it deeper in this fertile dirt sooner rather than later. Write and tell us your experience with medical electronics if you are already in that sector.

Posted by Bill Roberts, June 29th, 2007

Filed to Outsourcing