Medical devices: Insights from KPMG’s 2016 Global Manufacturing Outlook

Medical devices

Chris Stirling, KPMG’s Global Chair Life Sciences provides a perspective on the challenges and opportunities facing medical device manufacturers.

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Key medical device data points from KPMG’s 2016 Global Manufacturing Outlook

  • 55 percent of medical device respondents said that inorganic investments would drive their growth strategy
  • 58 percent cited the cost of labor as significant factor impacting growth 
  • 42 percent will place significant investment into robotics.

Sector insights from Chris Stirling, KPMG’s Global Chair Life Sciences

Facing continuous regulatory change and a slowdown in global economic growth, medical device manufacturers are fighting to improve both their top and their bottom lines. In both respects, innovation will be key to success.

To improve the top line, medical device manufacturers will need to quickly become more agile, responsive and innovative, particularly given the continuously shifting regulatory environment and increasingly fierce competition from non-traditional players such as Google. This will require a closer focus and better understanding of the consumer. And it will require greater flexibility in their supply chains.

Medical device respondents to this survey voiced a high preference for inorganic growth, recognizing that – to meet their growth targets and innovation objectives – they will need to take bold moves. While the slowdown in economic growth will likely bring continued pressure on prices and challenges across the supply chain, medical device organizations are clearly focused on opening up new markets and new segments in the search for growth.

Many medical device organizations are also struggling with the rising cost of labor – not only on the manufacturing floor but also as they start to compete more fiercely for talent that combines both industry knowledge and future-focused skill sets, this is having an impact on the bottom line.

The fact that 42 percent of medical device respondents said they would invest significantly into robotics is therefore not surprising: by automating the manufacturing floor, medical device organizations can shift their salary budgets towards retaining the right talent to support future growth. Robotics will also help them achieve improved flexibility and speed to market in their operations.

To achieve both top line and bottom line growth in this environment, medical device organizations will need to remain focused on improving agility, particularly in the areas of supply chain management and innovation.

Two key questions

Q: What is the greatest threat to growth for medical device manufacturers today?

Chris: Regulatory change.


Q: What are medical device companies doing differently do drive growth?

Chris: Life-changing innovation.

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