Medical Device Contract Manufacturing Market Size, Share & Trends Analysis Report By Device (Class I, Class II, Class III), By Product (Electronics Manufacturing Services, Raw Materials, Finished Goods), By Services (Product Manufacturing and Assembly Services, Quality Management Services, Packaging and Sterilization Services, Regulatory Consulting Services, Product Design and Development Services) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global medical device contract manufacturing market size was valued at USD 97.96 billion in 2023. It is estimated to reach USD 233.83 billion by 2032, growing at a CAGR of 10.15% during the forecast period (2024–2032). Medical device businesses have increased their outsourcing due to rising demand for medical devices, which is being driven by the global healthcare industry. Moreover, advances in technology have increased the efficiency and quality of contract manufacturing services, making them more appealing.

Highlights

• Class II dominates the device segment.
• EMS dominates the product segment.
• Product manufacturing and assembly services dominate the services segment.
• North America is the highest shareholder in the global market

Contract manufacturing in the medical device market involves outsourcing the production of medical devices or their components to specialized third-party manufacturers. This approach is increasingly favored by original equipment manufacturers (OEMs) due to its ability to reduce costs, accelerate time-to-market, scale production, and ensure the delivery of high-quality products. The medical devices produced through contract manufacturing play a critical role in diagnosing and treating various medical conditions, significantly influencing the quality of patient care and contributing to healthcare expenses.

Moreover, the medical device contract manufacturing market encompasses a wide range of services, including the design, development, and manufacturing of devices across all three regulatory classes—Class I, Class II, and Class III. By collaborating with contract manufacturers, medical device OEMs can ensure that the devices meet stringent health and safety standards, ultimately providing reliable and effective solutions to address diverse healthcare needs.

Market Dynamics

Global Medical Device Contract Manufacturing Market Drivers

Vendors' Focus on Advancing Contract Manufacturing Capabilities

The focus on advancing contract manufacturing capabilities among vendors is a key driver in the global medical device contract manufacturing market. As the demand for innovative, high-quality medical devices grows, Contract Manufacturing Organizations (CMOs) are increasingly investing in their capabilities to meet the evolving needs of Original Equipment Manufacturers (OEMs) and maintain a competitive edge. This includes expanding service offerings to provide end-to-end solutions, from product design and development to regulatory compliance and post-market surveillance. For instance, companies like Jabil and Flex have significantly enhanced their capabilities to offer comprehensive services, making them preferred partners for medical device companies.

Furthermore, CMOs are developing specialized expertise in niche areas, such as surgical instruments, orthopedic implants, and cardiovascular devices, to better serve their clients' specific needs. By focusing on these specialized segments, CMOs can offer tailored solutions that enhance the value they provide to OEMs. For example, companies like Integer Holdings and TE Connectivity have developed specialized capabilities in cardiovascular device manufacturing, which has helped them secure long-term contracts with leading medical device companies. Such factors drive market growth over the forecast period.

Global Medical Device Contract Manufacturing Market Restraint

High Investment and Regulatory Landscape

Contract Manufacturing Organizations (CMOs) are under constant pressure to invest in advanced manufacturing technologies and equipment to meet evolving regulatory requirements and satisfy customer demands, all while keeping costs competitive. This challenge is compounded by the substantial financial commitments required for innovation. According to a report by Deloitte, the medical device industry is projected to invest approximately USD 38 billion in research and development by 2024, underscoring the relentless need for technological advancements. For CMOs, staying relevant and maintaining market share necessitates keeping pace with these advancements, despite the high costs involved.

The regulatory landscape further complicates this balance. The medical device industry is subject to stringent quality control and compliance standards enforced by regulatory bodies such as the U.S. Food and Drug Administration (FDA) and the European Union's Medical Device Regulation (MDR). A study by the Regulatory Affairs Professionals Society (RAPS) estimates that regulatory compliance can consume up to 25% of the total manufacturing cost for medical devices. This substantial cost burden requires CMOs to allocate significant resources to compliance efforts, which can strain operational budgets and limit their capacity to invest in new technologies or expand manufacturing capabilities.

Global Medical Device Contract Manufacturing Market Opportunities

Strategic Collaborations between OEMs and CMOs in the Medical Device Industry

Strategic collaborations between Original Equipment Manufacturers (OEMs) and Contract Manufacturing Organizations (CMOs) in the medical device industry present significant growth opportunities in the global market. These collaborations are increasingly driven by the need for cost-effective manufacturing, access to specialized expertise, and the ability to focus on core competencies. By partnering with CMOs, OEMs can outsource non-core activities such as product design, prototyping, regulatory compliance, and large-scale production, allowing them to concentrate on research and development, marketing, and distribution.

One of the key benefits of these collaborations is the access OEMs gain to CMOs' specialized knowledge and advanced technologies. For instance, CMOs like Flex and Jabil offer state-of-the-art facilities and expertise in areas such as additive manufacturing and automation, enabling OEMs to leverage these capabilities without the need for significant capital investment. This access not only results in cost savings but also improves operational efficiencies, making it easier for OEMs to bring innovative products to market faster.

A survey by the Pharmaceutical Contract Manufacturing & Contract Services Association (PCMCS) highlights that approximately 70% of medical device companies outsource some manufacturing activities to CMOs. This trend underscores the growing reliance on CMOs for critical aspects of the production process. The collaborations between OEMs and CMOs also facilitate knowledge sharing and technology transfer, further enhancing the development of innovative products and processes.

Regional Analysis

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America Dominates the Global Market

North America holds the most significant share of the global medical device contract manufacturing market and is expected to experience substantial growth during the forecast period. This dominance is driven by several key factors. First, leading medical device companies such as Medtronic, Stryker, and Boston Scientific frequently outsource manufacturing to Contract Manufacturing Organizations (CMOs) in the region, capitalizing on their specialized expertise and cost-effective solutions. Second, the region benefits from a favorable regulatory environment, with well-established and stringent frameworks enforced by bodies like the U.S. Food and Drug Administration (FDA). These regulations ensure high-quality standards in medical device manufacturing, making North America an attractive market for CMOs.

Additionally, North America boasts a robust healthcare infrastructure, which continually drives demand for innovative and technologically advanced medical products. This, in turn, fuels the expansion of the contract manufacturing industry. The region’s highly skilled and trained workforce further enhances the capabilities of CMOs, enabling them to offer specialized manufacturing services for complex medical devices. Moreover, according to the Advanced Medical Technology Association (AdvaMed), the U.S. medical device industry alone employed over 2 million people in 2021, underscoring the sector's significant contribution to the economy and its role in supporting the growth of contract manufacturing in the region.

The Asia-Pacific region, encompassing countries like China, India, Japan, and South Korea, is emerging as a sub-dominant force in the global medical device contract manufacturing market. This growth is fueled by increasing healthcare expenditure, as governments across the region invest in healthcare infrastructure and expand access to medical services. For example, China's "Healthy China 2030" initiative is driving significant investments in healthcare, boosting the demand for medical devices. Moreover, the region's aging population, particularly in Japan and China, is leading to a surge in age-related diseases, creating a heightened need for advanced medical devices.

Furthermore, supportive government policies, such as India’s “Make in India” initiative, are attracting foreign investments and promoting the development of the medical device manufacturing sector. The Asia-Pacific region's cost-effective manufacturing capabilities also make it an attractive destination for companies looking to outsource production. This combination of factors is positioning the region as a key player in the global medical device contract manufacturing market.

Segmental Analysis

The global medical device contract manufacturing market is segmented by device, product, and service.

Based on the device, the global market is bifurcated into Class I, Class II, and Class III.

The Class II segment dominates the global medical device contract manufacturing market due to its inclusion of more complex devices that pose a moderate risk to patients compared to Class I devices. These devices often have sustained contact with internal organs, making them crucial in clinical settings but also increasing the risk of complications, such as infections. Class II devices encompass a wide range of essential medical tools, including X-ray machines, CT scanners, in vitro diagnostics (IVDs), biomarkers, and test kits.

The rising prevalence of chronic diseases has significantly driven the demand for these devices, as they play a vital role in diagnosis, monitoring, and treatment. This segment's dominance is further reinforced by its critical function in healthcare, particularly in managing and diagnosing chronic conditions, which are on the rise globally. As healthcare systems prioritize early detection and continuous monitoring, the demand for Class II devices is expected to grow, solidifying its leading position in the market.

Based on the product, the global market is bifurcated into electronics manufacturing services (EMS), raw materials, and finished goods.

The EMS (Electronics Manufacturing Services) segment holds the dominant market share in the global medical device contract manufacturing industry, primarily due to its comprehensive range of advanced services. EMS providers deliver high-quality manufacturing, prototyping, testing, new product development, regulatory certifications, supplier management, and documentation, alongside maintenance and repair services. The production of complex medical equipment, such as MRI machines and digital X-ray machines, demands proven system-level capabilities and sophisticated assembly processes, areas in which EMS providers excel.

Additionally, medical OEMs are increasingly drawn to EMS providers with a substantial global presence, as this enhances their scalability and boosts investor confidence. By leveraging the advanced capabilities of EMS providers, OEMs can ensure the efficient and reliable production of complex medical devices, solidifying the EMS segment's leadership in the market.

Based on services, the global market is segmented into product manufacturing and assembly services, quality management services, packaging and sterilization services, regulatory consulting services, and product design and development services.

The product manufacturing and assembly services segment holds the largest market share in the medical device contract manufacturing market. This dominance is attributed to the specialized expertise that Contract Manufacturers (CMs) offer in producing high-quality medical devices. CMs focus on specific manufacturing processes, allowing them to provide specialized services to OEMs, including the production of both novel and existing devices. By partnering with CMs, OEMs can concentrate on developing new products and expanding their market reach without the need for significant capital investments.

Additionally, assembly services are a critical component of the device manufacturing process, with Design for Manufacturing and Assembly (DFMA) being a key differentiator between contract manufacturers and traditional medical device manufacturers. The outsourcing of assembly tasks is particularly prominent in the U.S. manufacturing sector, where it continues to expand, reflecting the growing reliance on CMs to enhance efficiency and reduce costs in the production process.

Recent Development

• August 2024 - A new player in the healthcare sector, Salt Medical, a Contract Development and Manufacturing Organization (CDMO) with a focus on the production of medical devices, is set to move into Claregalway Corporate Park in County Galway. With Salt Medical's coming, Claregalway will become even more of a center for cutting-edge medical technology and experience a surge of innovation and opportunity.
• January 2024- Integer Holdings, a leading medical device contract manufacturer, acquired Pulse Technologies, a provider of medical device manufacturing services. This acquisition enhances Integer's capabilities, expanding its offerings in the development and production of medical devices.