Q4 2019 results of engineering service providers are coming, and one thing is strongly evident, the high growth of medical technology engineering segments. Three pureplay service providers which provide revenue by vertical segments witnessed a very high growth (more than five times of engineering services growth) in medical technology practice this quarter. Their base of medical practice is smaller but it definitely looks like a trend. My informal channel checks with large engineering service providers that have larger medical technology practices also confirm this trend that the medical technology segment is growing higher than other verticals.
Why the medical technology segment is growing higher?
- A big untapped market with a low R&D outsourcing intensity
- Use of digital and emerging technologies such as AI/ML in medical devices, 3D printing, robotic surgery, AR/VR in medical training and telemedicine, IoT enabled connected medical devices, analytics for patient care, nanomaterials, precision medicine, blockchain etc.
- Expansion of offerings beyond the medical device to other segments in the medical sector, such a hospital, pharma, biotech, healthcare ISV, etc.
- Extension of services beyond new product development (NPD) and compliance to manufacturing services, including MES and Industry 4.0, managed services with IoT, clinical trials, business consulting services, etc.
- Demand is rising in many countries because of the ageing population and low penetration of medical facilities
- Increase in regulatory compliance including MDR, FDA and local regulations in different countries, regions
Bottomline: Medical technology is one bright spot in engineering services this quarter. I think the best time for the medical technology segment is ahead of us. If it is not growing for your firm, you might be missing a trick or two =)