The US medical supplies and devices manufacturing industry includes about 11,000 companies with combined annual income of $75 billion. Major companies include Johnson & Johnson, GE Healthcare, Siemens Medical Systems and Medtronic. The industry is highly concentrated with the 50 largest companies accounting for about 75 percent of revenue. The scope of the following analysis involves medical supply and device manufacturers that produce ophthalmic, surgical and dental instruments and supplies used in the medical field. This analysis does not include companies that produce and manufacture x-ray or electro-medical devices and equipment.

This market has seen significant effects due to government involvement and legal liability concerns that can have an ultimate impact on an organization’s bottom line. Healthcare costs are continuing to experience an exponential increase causing private insurers and government programs such as Medicare to limit payments for several medical treatments that require medical supplies or devices. In light of this, the market is seeing a greater resistance from doctors and hospitals when it tries to increase prices on medical devices, which in turn, is why the industry has only seen around a five percent increase in surgical and medical instruments in the last 10 years. In addition to these limitations, the dependence on regulators has come with a high cost to companies. Increased government regulation has increased overall compliance costs, thus reducing overall revenues. To add to these costs, new medical devices introduced in the United States also require approval from insurers, and if the insurers deem the devices to be too expensive, despite approval by the FDA, they can be unsuccessful and cost organizations a great deal. To offset these high costs, United States lawmakers are urging the Government Accountability Office to investigate why medical manufacturers do not receive incentives to develop products to treat rare diseases, similar to the incentives that drug companies receive. Overseas, products marketed in Europe require a CE mark of approval under the European Union Medical Device Directive to help maintenance quality excellence. Also, products often require an ISO 9000 certification of quality. As government policies continue to provide strict regulation on this market, organizations will continue to have to weigh the costs of doing business.