Contract manufacturing
upported by an ageing population, a rising incidence of chronic disease, and an increased focus on early diagnosis and treatment, the global medical device contract manufacturing market is expected to grow at an 11% CAGR and exceed $125bn by 2027. This growth is also supported by increasing demand for outsourcing by medical device OEMs as they focus more on product design, development, marketing and sales. Many are consolidating their outsourcing partner base and shifting volumes to those that can support the full product life cycle, from pre-production services to complex manufacturing and post-production services.
Rising tide S
In addition, the medical device space is normalising following a few years of significant disruptions: raw material supply chain issues experienced as a result of Covid-19 have largely been resolved and the demand swings as a result of inventory stocking and de-stocking have normalised. Many medical device manufacturers are resuming their typical ordering cycles, creating steady demand and revenue for contract manufacturers and bolstering optimism in the space. With these factors in place, medical device contract manufacturing has experienced strong M&A momentum over the past 12 months, and we believe it will continue to do so. The sector’s strong and sustainable growth continues to attract attention from a wide range of private equity groups and strategic buyers. An example is Tinicum’s purchase of Harris Williams client Greene Group Industries (GGI), a leading outsourced provider of design, engineering and manufacturing focused on the advanced surgical device and minimally invasive device end markets.
Illustrating growing strategic buyer activity, Ametek acquired Paragon Medical while DuPont acquired Spectrum Plastics, both transactions approaching nearly $2bn. The fact that Paragon and Spectrum focus on different manufacturing processes and end markets is representative of strategic buyer interest across the broader medical device contract manufacturing segment. In fact, in our estimation, the majority of M&A transactions in the sector in 2023 were completed by strategic buyers. And for quality businesses across size ranges, valuations have generally been strong.
MD Tyler Bradshaw and director Taylor Will of Harris Williams Healthcare & Life Sciences Group, which provides healthcare and life sciences M&A and private capital advisory services, explore the key investment areas for medical device contract manufacturing.
Medical Device Developments /
www.nsmedicaldevices.com
Medical Device Developments /
www.nsmedicaldevices.com
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Carsten Reisinger/
Shutterstock.com
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