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U.S. MEDICAL DEVICE SHIPMENTS TO GROW 8.1% IN 1993,

This article was originally published in The Gray Sheet

Executive Summary

U.S. MEDICAL DEVICE SHIPMENTS TO GROW 8.1% IN 1993, the Commerce Department estimates in its U.S. Industrial Outlook 1993. Commerce projects that U.S. medical product shipments will reach $38.6 bil. in 1993, compared to $35.7 bil. in 1992. [EDITOR'S NOTE: All dollar figures are in constant (1987) dollars.] The growth rate, which compares to 8.5% in 1992, 13% in 1991, and 11% in 1990, reflects "growing challenges that may dampen [the device industry's] historic growth," Commerce comments. These obstacles may include "the costs of meeting new regulatory requirements to ensure product safety and effectiveness, changes in Medicare reimbursement plans, and pressure from hospitals to contain costs," according to the report. Breaking down the device industry into components, Commerce expects shipments of surgical and medical instruments, defined as "primary non-electronic diagnostic and therapeutic devices," to reach $13.1 bil. in 1993, up 8.5% from 1992. Commerce predicts that "the outpatient market will become increasingly important" in the next year and expects the "fastest growing market" to be laparoscopic equipment. In 1992, the value of all surgical and medical equipment shipments totaled $12.1 bil., a 10.3% rise over the previous year. In the five-year period from 1992-1997, shipments of medical and surgical equipment are expected to increase at an annual rate of 6%, Commerce projects. Shipments of electromedical equipment, which includes pacemakers, patient monitoring systems and radiology products, are expected to total $7.3 bil., an increase of 7.8% over 1992. Demand for capital-intensive items like magnetic resonance imagers, Commerce notes, "should grow only moderately because hospitals made significant investments in this technology over the last three years," while ultrasound "should remain the fastest growing imaging modality." Shipments for electromedical equipment as a whole are anticipated to increase at an annual rate of 7% from 1992 to 1997. In the area of surgical appliances and supplies -- such as wheelchairs, prostheses and other orthopedic supplies -- 1993 shipments are anticipated to rise to $13.5 bil., up 8.5% from 1992's $12.4 bil. in shipments. Over the next five years, Commerce expects shipments of surgical appliances and supplies to increase at an average annual rate of 7%, with outpatient procedures and services stimulating "further demand" for the products. Regarding dental equipment and supplies, the value of shipments is expected to rise 5.3% in 1993 to $1.5 bil. as "the number of consolidations in the dental equipment and suppliers industry decreases," Commerce says. The shakeup is the result "of a significant drop in tooth decay over the last two years," the report continues, and "consequently, demand for hand-held instruments, dental cements, amalgam alloys and other traditional items is declining." From 1992 to 1997, the dental equipment and supplies market is projected to grow an average of 3% annually. X-ray apparatus and tubes will account for $3.3 bil. in shipments in 1993, an increase of 5.6%, Commerce forecasts. "Capital-intensive new medical technologies" will "continue to be purchased," the department explains, "despite the prospective payment system introduced in 1983" that regulates Medicare reimbursement. During the five-year period ending in 1997, x-ray apparatus and tubes manufacturers are expected to increase shipments at an average annual rate of 5%. Due to their positive past performances and projected futures, Commerce ranks four of the device sectors in its top 10 "fastest growing export-oriented U.S. manufacturing industries" from 1988 to 1993. X-ray appliances and tubes is ranked first, electromedical equipment second, surgical and medical equipment third, and surgical appliances and supplies sixth. In the international arena, the U.S. medical device industry "remains the leading supplier to the $70.9 bil. global market," with medical equipment exports reaching $7.4 bil. in 1992, an increase of 9.5% over the previous year. Exports accounted for almost 21.9% of product shipments compared with 14.8% 10 years ago, Commerce emphasizes. Medical device imports rose 3.8% in 1992, "the first time in four years that imports grew less than 5%." Slackened imports contributed to a $3.1 bil. trade surplus, "the largest to date," Commerce observes. In the European Community, U.S. exports reached $2.2 bil. in 1992, while the U.S. remained Japan's leading foreign device supplier with $1 bil. in 1992 shipments, up 13% from the previous year and "accounting for nearly 50% of total imports." U.S. imports from Japan increased less than 1% to $1 bil. in 1992, "virtually offset[ting] exports." Both Canada and Mexico were leading export destinations for U.S. device firms in 1992, with exports amounting to $945 mil. and $424 mil., respectively. The North American Free Trade Agreement will create an estimated $32.7 bil. market for medical products, Commerce notes, and should provide even greater access for U.S. device firms. The six countries including Korea and Taiwan that comprise the Association of Southeast Asian Nations "represent a small but rapidly growing market" for U.S. medical device companies. While U.S. exports to ASEAN nations were only $380 mil. in 1992, "they are expected to grow rapidly in the future," Commerce projects, despite "fierce" competition from Japan and Germany. Imports from ASEAN nations stood at $240 mil. in 1992 for a trade surplus of $139 mil. In another developing area, Eastern Europe, U.S. device exports rose 29% to $28.6 mil. in 1992.
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