2018 Forecast Analysis Report on the US Disposable Medical Supplies Industry

This industry report is the 2018 US disposable medical supplies forecast analysis report. The analysis invokes the data from 2012-2017, in-depth expounds the status quo of the development of disposable medical products in the United States and the market analysis and forecast for 2018-2022.

1. Emphasis

Demand for disposable medical supplies in the United States is expected to grow at an annual rate of 4.1% to $66.6 billion in 2022. Aging population and changing epidemiological trends will underpin the growth by contributing to an increase in overall patient activity. Disposable medical supplies will continue to be widely used, but the high-growth segment also addresses infection prevention issues and offers improved performance and convenience advantages.

However, most products will still be affected by cost control pressure, which will restrain the growth of their demand value.

Epidemiology and demographic trends at the heart of growth

As the elderly population uses medical services more intensively, the aging of the "baby boomer" population presents an opportunity for medical disposables. Sales momentum will further stem from changing epidemiological patterns, especially the increasing number of patients being treated for age-related and chronic diseases such as diabetes and urinary incontinence.

Ongoing Threat of Healthcare Acquired Infections (HAIs) Presents Opportunity

Treatment of HAI in the form of extended hospital stays, medication management, and outpatient services adds approximately $30 billion annually to US national health expenditures. Disposable medical products will see greater gains as regulations, insurance and best care practices increasingly need to address these issues.

Key beneficiaries of focus on HAIs include: surgical drapes and gowns, patient gowns, examination and surgical masks, medical kits and trays, intermittent urine and ablation catheters, medical gloves, specimen collection devices, single-use surgical instruments and medical waste disposal product.

Product innovation spurs value-added purchases in wound management segment

Wound management disposables will experience changing demand patterns based on new product launches and advancements in minimally invasive medical technologies. These innovations will drive sales beyond established products such as staples, sutures, tapes and tapes, particularly benefiting opportunities for:

• Wound closure (growth factors include ease of application, accelerated healing action and reduced risk of patient complications) Primary beneficiary: Tissue sealants

• Wound dressings (performance innovation and speed of healing severe tears will provide opportunities for new formulations) Key beneficiaries: Collagen, alginate and synthetic foam formulations

• Disposable bandages (opportunities exist for specialty designs for high value-added applications such as blood collection and sports medicine)

Drug delivery products to lead sales, demand growth and breadth of applications

Growth opportunities for drug delivery products exist in segments that protect patients and healthcare workers from infection and in products used to deliver chronic and acute care, including infusion sets and safety engineered prefilled syringes and inhalers.

However, among all drug delivery disposables, sales of disposable dialysis devices nearly doubled from 2007 to 2017 and will grow the fastest through 2022 as population aging patterns lead to increasing patient numbers.

Interest in Convenience to Drive Sales of Medical Disposable Product Kits

Convenience advantages in preparing instruments and supplies for surgery and other patient procedures will underpin the gains from sales of medical kits and trays. Additionally, specific procedure kits and trays will be appreciated for their contribution to more efficient inventory management when purchasing and storing surgical products.

Likewise, self-medication activities by consumers, coupled with increased on-site healthcare capacity at businesses and schools, will boost first aid kit earnings.

Hospitals will remain top market; home healthcare will be fastest

Depending on the nature of patient activity undertaken, hospitals will remain the largest and most diverse market for medical disposables, offering opportunities across all product groups and accounting for nearly half of total product demand in 2022.

Home healthcare will generate a 20% gain in 2022 as cost containment pressures encourage self-treatment, preventive medicine and shorter hospital stays.

2. Market environment

(1) Historical trends

The total demand for disposable medical supplies in the United States in 2017 was $54.3 billion, with an average annual growth rate of 4.5% between 2007 and 2017. Factors that affect earnings include:

• Increase in inpatient, surgical, outpatient and home healthcare events

• Introducing improved value-added products for surgery, drug delivery, wound management and other applications

• Adopt the HHS Action Plan to Prevent Healthcare-Associated Infections

• Gradual implementation of the Patient Protection and Affordable Care Act of 2010, including mandating individual mandates for health insurance

The 2009 HHS Action Plan for Preventing Healthcare-Associated Infections, developed by the U.S. Department of Health and Human Services (HHS), outlines government-recommended infection prevention strategies in several specific areas.

The Patient Protection and Affordable Care Act of 2010 and its individual mandate, which went into effect in 2014, increased the number of people covered by health insurance.

As a result, various patient activities increase and sales opportunities for selected medical disposables expand. However, the tax bill passed by the U.S. Congress in December 2017 has removed the financial penalties assessed for failing to comply with individual authorization requirements. This action will reverse much of the positive impact of the Patient Protection and Affordable Care Act on the U.S. disposable medical supplies market.

Factors that have historically slowed down the growth of the medical disposables market include cost containment mechanisms in the form of fixed and value-based reimbursement rates.

These controls have resulted in hospitals, outpatient facilities, doctors' offices, and other healthcare providers becoming increasingly price-sensitive in their purchasing behavior. Advances in non-invasive and minimally invasive medical technology have also slowed progress in historical demand for disposable medical supplies by lowering overall product demand in surgery, drug delivery, diagnostic testing, dialysis, respiratory therapy, and other direct patient care.

(2) Major economic indicators

(3) Trade

In 2017, imports accounted for approximately 29 percent of domestic demand for disposable medical supplies, and exports accounted for the same proportion of shipments. A wide range of industries use outsourcing and offshoring to obtain commodity-based products, such as examination gloves, driving the heavy penetration of imports.

Historically, such outsourcing and offshoring manufacturing operations have been concentrated in the Asia-Pacific region, with China, India, Malaysia, Singapore and Thailand being the major national suppliers. More recently, industry competitors in the United States have adopted “nearshoring” sourcing and production strategies, using contractors or setting up corporate operations in Mexico.

Nonetheless, the U.S. medical disposables industry meets more than 70% of domestic product demand through onshore manufacturing operations. Additionally, nearly 29 percent of U.S. production comes from export markets. Most industry leaders -- including Becton Dickinson, Cardinal Health, Johnson & Johnson and 3M -- are maintaining extensive domestic manufacturing operations.

(4) Rules

good manufacturing practice

Like all medical products, the manufacture of medical disposables requires compliance with relatively stringent Good Manufacturing Practices (GMPs) established by the U.S. Food and Drug Administration (FDA) Office of Device Evaluation.

GMPs are regulations that set standards for the handling, processing and storage of products, as well as guidelines for record keeping and employee training:

• For sterile disposables, GMP requires isolated shipping and storage areas, production quarantine stations and clean rooms with air filtration systems.

• For non-sterile types, the standard is less restrictive and involves following guidelines to ensure product safety.

All medical supplies and equipment facilities must be certified by FDA prior to operation.

New Product Approval Requirements

Commercial approval requirements for medical disposables vary according to the nature of the product involved:

• Products for external use that pose a negligible risk of injury to patients or staff are generally defined as Class I devices that can be marketed as long as they are manufactured in accordance with current GMP.

• Moderately invasive supplies, such as syringes and needles, are designated as Class II devices and, prior to commercial launch, must be tested and shown to meet established performance standards for the product type involved.

• Invasive devices such as angiography and angioplasty catheters are Class III devices and must be tested for performance and safety and pre-approved by FDA before introduction.

Healthcare-Associated Infection Safeguards

The reduction of HAI is one of the major challenges facing the American medical community. Most of these infections occur in hospitals, where patients with weakened immune systems are exposed to airborne and fluid-borne pathogens. Historically, HAIs have afflicted approximately 2 million hospital patients and are directly or indirectly responsible for more than 90,000 deaths per year. Treating these infections in the form of extended hospital stays, drug therapy, and outpatient services adds about $30 billion to U.S. national health spending each year.

Supply and Equipment Reprocessing Standards

Another regulatory factor affecting the medical disposables industry in the long term involves FDA guidelines and requirements for device reprocessing. Historically, the pursuit of cost savings and increased efficiency has driven many hospitals to reprocess high-priced medical equipment originally intended for single use.

In addition, reprocessed single-use devices (SUD) are already widely available from many commercial companies with sterilization capabilities. These devices were not formally regulated by the government until the passage of the Medical Device User Fee and Modernization Act of 2002. Growing concerns about the risk of infection transmission from reprocessed SUDs have prompted the FDA to develop regulations governing their approval.

OSHA standard

The role of the Occupational Safety and Health Administration (OSHA) in the regulation of single-use medical supplies involves establishing:

• Guiding principles designed to protect workers from exposure to pathogenic microorganisms and toxic chemicals

• Standards related to handling and disposal of potentially hazardous products

For example, the agency requires workers who use high-level disinfectants to wear protective gloves and splash goggles. In healthcare and life sciences facilities, OSHA regulations are partially responsible for the high demand for disposable gloves, protective personnel clothing, and infectious waste disposal products.

Additionally, the Needle Bar Safety and Prevention Act (NSPA) 2000 states:

• OSHA has developed detailed standards covering the identification, evaluation, selection, use and disposal of sharps medical devices

•Hospitals and other healthcare facilities keep records of sharps injuries

3. Segmentation and prediction

(1) Products

U.S. demand for disposable medical products is projected to reach $66.6 billion in 2022, up 4.1% from $54.3 billion in 2017. The growth will be attributed to the increasing preference of healthcare providers and patients for value-added products with enhanced safety, convenience and anti-infection properties.

Medical Disposables includes more than 10,000 products with varying sales volume and growth potential. For analytical purposes, these items can be grouped into three major product groups—drug delivery, wound management, and nonwoven medical—and one large residue category consisting of more than a dozen different product families.

Drug Delivery Disposables

Demand for drug delivery disposables is expected to grow at an annual rate of 4.4% to $17.2 billion in 2022. Suppliers of these products will benefit from the following key growth drivers:

• Increasing number of hospital admissions, surgical procedures, outpatient and home care events

• Rising prevalence of chronic conditions requiring regular long-term intravenous (IV), parenteral, inhalation, dialysis or transdermal therapy

• Continued strong focus on infection prevention across the healthcare industry, which will facilitate the use of higher value-added safety engineered supplies and equipment

On the contrary, factors slowing down the growth of the market include:

• Development of alternative medicines for oral or topical administration

• Adapt respiratory and dialysis therapy to a compact and portable delivery system, reducing disposable parts

• Increased multi-source availability, which will reduce overall pricing flexibility for most products

Disposable drug delivery spans five broad categories of single and short-term use products used to inject drugs and other substances into the body or to remove obstructions in and out of the body. These product groups are:

• Infusion products (such as IV administration sets, premixed IV solutions, IV catheters, enteral feeding sets and IV assist devices)

• Syringes and needles (eg, prefilled and clinical units)

• Inhalation devices (eg, respiratory aids, prefillable inhalers, oxygen delivery supplies, anesthetic disposables, nebulizers, and humidifiers)

• Dialysis disposables (hemodialysis and peritoneal dialysis products)

• Transdermal patches

Wound Management Disposables

Demand for wound management disposables is expected to grow at an annual rate of 3.8% to nearly $14.6 billion in 2022. Sales growth will be driven by:

• An upward trend in surgical volume

• Increasing number of injuries and age-related skin damage

• A trend to promote self-healing, including the use of adhesive bandages and first aid kits

• Emerging sports medicine department

In contrast, overall growth opportunities will be driven by:

• Advances in minimally invasive surgery

• Price sensitivity status and multiple supplier availability of most large selling wound management disposables

• Limited opportunities for innovation in several product lines

Wound management disposables fall into four broad categories:

• Wound closures (eg, sutures, surgical staples and disposable suturing devices, tissue sealants and adhesives, anti-adhesion agents, hemostats)

• Disposable bandages (eg, adhesive bandages and tapes, cast and gauze bandages, pads and compressions)

• Wound dressings (eg, biological, synthetic and non-adherent types)

• Other products include first aid kits, medical sponges and medical cotton products