In This Article:
Through 2024, advancements in AI and predictive analytics rapidly revolutionized the Medical Instruments industry, driving innovation in diagnostics, patient monitoring and personalized treatment. AI-powered algorithms are enabling medical devices to analyze vast datasets in real time, providing accurate predictions and actionable insights for clinicians. Predictive analytics enhances device performance by identifying potential failures and optimizing maintenance schedules, ensuring reliability and reducing costs.
In patient care, AI-integrated devices are advancing early disease detection and risk assessment, leading to improved outcomes. In 2025, the rapid adoption of generative Artificial Intelligence (genAI) and digital therapeutics is expected to take the healthcare industry by storm. GenAI has already started to showcase its proficiency across a range of healthcare fields, from time-consuming administrative tasks to critical areas like technological discovery and clinical trials.
However, a deteriorating geopolitical situation, supply chain bottlenecks leading to a tough situation related to raw material and labor costs, freight charges, as well as healthcare staffing shortages, have put the industry in a tight spot again. Meanwhile, industry players like Masimo Corporation MASI, Penumbra PEN and Veracyte, Inc. VCYT have adapted well to changing consumer preferences and are still witnessing an uptrend in their stock prices.
Industry Description
The Zacks Medical - Instruments industry is highly fragmented, with participants engaged in research and development (R&D) in therapeutic areas. This FDA-regulated industry comprises an endless number of products, starting from transcatheter valves to orthopedic products to imaging equipment and robotics. Among the recent trends, currently, AI is being rapidly used in quick and accurate diagnosis, detection and treatment of diseases. Other focus areas of development within Medical Instruments include telemedicine, robotic-assisted surgeries, 3D-printed devices, continuous glucose monitoring systems, gene editing and nanomedicine, among others.
3 Trends Shaping the Future of the Medical Instruments Industry
genAI Revolution: Since 2023, there has been an increase in the adoption of genAI within the medical instruments space, with “hyper personalization” being the primary feature of genAI-driven treatment options. Added to this, genAI is rapidly paving the way for efficient operational management within the industry. GenAI, while analyzing vast and complex genetic and molecular data, is expected to help healthcare reach new heights in terms of predictive treatment options and smart hospital systems. Going by a Global Marketing Insights report of December 2024, the global genAI in healthcare market was valued at $1.8 billion in 2023 and is expected to witness a CAGR of 33.2% from 2024 to 2032. Rapid advancement in deep learning and natural language processing (NLP), increasing demand for personalized treatment, growing investment in healthcare AI and rising healthcare data volumes are the major growth factors. This apart, the application of AI in the diagnostics space is growing enormously with the market expected to witness a CAGR of 24.6% by 2034 (Precedence Statistics data).
M&A Trend Continues: The medical instruments space has been benefiting from the ongoing merger and acquisition (M&A) trend. It is a known fact that smaller and mid-sized industry players attempt to compete with the big shots through consolidation. The big players attempt to enter new markets through a niche product. As published in a Medical Device Network reportof December 2024, there were 168 M&A deals announced in the third quarter of 2024 worth $14.4 billion. In value terms, it is a 247% increase compared to the year-ago period. In terms of deal volume, it was a 47% increase from the third quarter of 2023. The largest of the deals of 2024 was the $13.1 billion acquisition of Shockwave Medical by Johnson & Johnson. Another significant acquisition of the quarter was Becton, Dickinson and Company or BD’s purchase of the Critical Care division of Edwards Lifesciences for $4.2 billion.
Business Trend Disruption: Per IMF’s October 2024 World Economic Outlook Update, real GDP growth is projected to be 3.2% in 2024 as well as 2025, below the historical (2000–19) average of 3.8%. Per the report, a few countries, especially low-income developing countries, have seen sizable downside growth revisions, often as a result of increased conflicts. The good news is that there are projections of a global decline in inflation in 2025. After peaking at 9.4% year over year in the third quarter of 2022, headline inflation rates are now projected to reach 3.5% by the end of 2025, below the average level of 3.6% between 2000 and 2019. However, the IMF apprehends that, despite this, downside risks are rising, backed by issues like escalation in regional conflicts, monetary policy remaining tight for too long, and a possible resurgence of financial market volatility with adverse effects on sovereign debt markets. Further, there are chances of higher nominal wage growth, which in some cases reflects the catch-up of real wages, accompanied by weak productivity, which could make it difficult for firms to moderate price increases, especially when profit margins are already squeezed.