The Dynamic Medical Technology Industry: An American Asset

The medical technology industry continues to be one of the most vital and dynamic sectors of the U.S. economy and a leading force in the revolution that is transforming America’s health care system. Medical technology innovators are at the center of America’s new economy.

A Global Leader

In over 6,000 companies, the medical technology sector directly employs more than 350,000 Americans, with many more jobs created to support the industry. In 2002 alone, U.S. medical technology sales topped $75 billion while generating a trade surplus of $62 billion over last decade. By any relevant measure of growth, the medical technology industry sets a standard of growth that would be the envy of most business sectors.

Rapid Innovation

Innovation is the key to the success of the U.S. medical technology industry. Spending on research and development for the sector equals 12 percent of sales, approximately four times the average for other manufacturing sectors. This R&D investment is necessary because medical technology innovation is more like innovation in the computer than the drug industry. There are few stand alone breakthroughs in the medical technology industry; instead, innovation is iterative and rapid, as the average product lifecycle is only 18 months.

Small Companies, Big Breakthroughs

Unlike many industries, the medical technology sector is one arena where innovators and entrepreneurs do not have to be big to thrive. Ninety percent of the medical technology industry is composed of firms with fewer than 100 employees, and most of those companies focus on niche products with revenues of less than $100 million. Nevertheless, the medical technology industry is the largest segment represented on Forbes and Business Week’s lists of fastest growing small companies.

Endless Exciting Possibilities

The future of the medical technology industry looks to be even brighter than the present. Coming breakthroughs in miniaturization and nanotechnology will allow for more targeted delivery of therapies. Molecular and gene-based diagnostics will detect diseases earlier in its progression, improving patient outcomes and lowering treatment costs. Replacement organs and tissue engineering advances will provide radical new options for addressing the most serious disease conditions. Finally, harnessing the power of information technology will allow critical medical data to be processed and transmitted rapidly over great distances, saving both patients and physicians time and speeding delivery of treatment.

-August 13, 2004