How quickly time flies. 2024 is in the proverbial rearview mirror and the first month of 2025 is nearly a memory. Last year, not surprisingly, the medtech industry continued its transformation on multiple levels, encompassing both interesting and exciting trends at the OEM supplier and strategic OEM customer stages. 

As the backbone of medtech manufacturing, OEM suppliers continued to grow in 2024. To enhance their value proposition, OEM CDMOs (contract design manufacturer organizations or OEM suppliers) have been making important investments, including reshoring/near shoring, automation (suppliers’ version of “robotics”), their own version of supply chain optimization, and acquisitions (M&A).

MPO readers are likely well-versed on reshoring/near shoring, an industry trend that started during President Trump’s first administration and escalated thereafter due to COVID-19-induced supply chain challenges. MPO’s bi-annual Medtech Forum (taking place this year in Costa Rica) underscores the importance of this issue to medical device OEM suppliers. 

Industry 4.0 or “smart” automation is another COVID-19-driven trend that has enabled critical OEM suppliers to improve their efficiencies through robotics in their production facilities. Integrated manufacturing and “lights out” production are eliminating some of the expensive human labor previously required on the assembly line. This improves both actual bill of material costs and quality metrics as well-oiled machines (literally) provide more consistency in their output.

To achieve supply chain optimization, CDMOs are implementing their own version of supplier consolidation and instituting Lean Six Sigma strategies to reduce manufacturing steps and thereby save costs for their OEM customers.

Supplier-centric M&A continued to reshape the value chain last year as evidenced by Argosy Healthcare Partners’ recapitalization of and partnership with contract manufacturer Command Medical and Amphenol Corporation’s $2 billion purchase of Carlisle Interconnect Technologies. Private equity (PE) firms are contributing to this revamped supply chain as well by investing in new “platform” companies that eventually could be added to OEM’s supplier cadre.  

Medtech OEMs like Stryker Corp., J&J MedTech, Medtronic, Boston Scientific Corp., and GE Healthcare made significant strides in tweaking their growth strategies to reflect healthcare’s continuous evolution toward a digital future. OEMs increasingly incorporated artificial intelligence (AI) and machine learning (ML) into their solutions, and steadily embraced robotics in surgical procedures. Their business plans also were influenced by the growth of wearables for home care monitoring and wellness; various regulatory difficulties in global markets; diagnostics challenges due to U.S. Food and Drug Administration (FDA) oversight of laboratory assessments and reimbursement for home point-of-care test use; growth of ambulatory surgery center (ASC) procedures; telehealth’s “in, out, or maybe” status; data ownership and benefit issues; PE’s increasing ownership of healthcare clinics; and the impacts of both strategic M&A and corporate spinoffs. A brief look at each aforementioned industry driver follows.

AI and machine learning: Led by companies such as GE Healthcare (organically and through M&A), OEMs are warming to the idea of using AI and ML to enhance product performance. Even once gun-shy orthopedic giants like J&J MedTech and Zimmer Biomet Holdings Inc. (ZB) are becoming AI/ML converts. While increasingly available in product solutions, reimbursement for AI and ML enhancements continues to be an impediment for greater adoption. AI/ML reimbursement is likely to become a pivotal issue this year.

Robotics: Whether it assumed the form of new funding or a new product approval, robotics significantly impacted the medtech industry in 2024 and will continue to do so this year. Intuitive Surgical (with its da Vinci 5 robot) and Stryker Corp. (with Mako) currently lead the robotics charge but lots of challengers are waiting in the wings (specifically, Medtronic’s Mazor guidance system, J&J MedTech’s OTTAVA and Velys systems, CMR Surgical’s Versius, ZB’s Rosa, Moon Surgical’s Maestro, Globus Medical’s Excelsius, Smith+Nephew’s CORI, and Think Surgical’s TMINI, among others). Major market leadership changes are unlikely this year but the playing field could look radically different in 2026, depending on each company’s success (or failures) in 2025.

Wearables: With some help from Apple (watch), Google (Fitbit), and others (i.e. the Oura Ring 4, Samsung Galaxy Ring, etc.), wearables are more accessible and available than ever. Expect this trend to continue in 2025 and these products to become increasingly more valuable as they offer more medical grade solutions.

Regulatory challenges: Regulations have been and continue to be a tailwind for some and a headwind for others. The EU MDR, for example, has been a years-long headwind for companies mainly conducting business in Europe, and that crosswind is showing no signs of easing up. Moreover, the EU MDR is a threat to patient care, as its unnecessarily burdensome process may lead some companies to pull their products from the market. On the other hand, outside of diagnostics, the FDA has been more industry friendly in recent years but that cordiality could change with the new presidential administration. Of course, this all depends on who is ultimately chosen and approved to run the organization.

Diagnostics difficulties: The agency has overstepped its bounds in trying to regulate laboratory developed tests, which provide valuable insights for patients with various conditions, including cancer.  Hopefully the Trump 2.0 administration will use its lighter touch on regulations to ease the FDA burden on this matter. Since there are many excellent point-of-care diagnostics that are still not reimbursed, it would make sense for the new administration to re-examine this issue, but quite frankly, it’s unlikely to happen.

Ambulatory surgery center growth: ASC growth is challenging medtech manufacturers to optimize both cost and logistics to appease ASC buyers. This dynamic is not discussed much but may be one of the greatest impacts in this decade on product pricing, especially in orthopedics.

Telehealth: While convenient for many patients, telehealth has been on and off life support many times since the pandemic. However, this digital solution is finally becoming a more acceptable part of the overall healthcare landscape, so perhaps there will be a renewed focus on more appropriate reimbursement models to make this modality more effective.

Big data: Healthcare data has become crucial to medtech innovation and development, but there are unresolved questions about its ownership, benefits, and best ways to safeguard it. Although support for patient-owned medical data is slowly gaining within the industry, it has been at a snail’s pace, so any big changes are unlikely to occur in 2025. Thankfully cybersecurity is improving, as attacks seem to grow in both frequency and scope with each passing year.

PEs’ clinic ownership: Private equity firms buying clinics across multiple patient care settings is either an increasingly alarming issue or a matter of improving provider productivity, depending upon one’s viewpoint. Our take: Pricing transparency should be most important regardless of the ownership group. 

M&A/spinoffs: M&A continues to impact strategic industry giants. Prime examples last year were 3M Healthcare’s spinoff (now Solventum) and the $4.2 billion sale of Edwards Lifesciences’ critical care portfolio to BD to allow the former to focus on  cardiac care moving forward. 

These are just a few of the issues currently impacting the medtech industry, though there undoubtedly will be many others as a new presidential administration takes shape in the United States, geopolitical tensions continue worldwide, and Mother Nature lobs more curveballs our way. Here’s to an eventful and prosperous 2025!

Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.

Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.