Januar 16, 2025
Digitalisation
Outlook for the German MedTech Industry 2025
Medical technology in Germany is actually considered an economic guarantor. But the mood is clouded and the economic weakness is weighing on both minds and sales forecasts. The EMS service provider Plexus takes a look at the topics that will particularly concern manufacturers in 2025 and the trends that give hope.
#1 Status MedTech Germany
Basically, one has to say: Compared to other industries, German medical technology manufacturers are doing well. According to the BVMed autumn survey 2024, the industry remains the world export champion. The expected global sales development in 2024 will increase by 3.5%. Domestically, however, the estimated increase is just 1.2%. This is a significant decrease compared to the previous year at 4.8%. A return to a solid growth path is a long way off and will most likely be more than 12 months away. There are many reasons for the economic weakness - and not just in medical technology.
As in the electronics industry, there is also a lack of orders in the MedTech sector. What was massively increased in the Corona years must first be gradually reduced. Only when the associated cash flow problems and investment backlogs resolve can the order situation return to its solid growth path. It's not just the German market that is affected, China is also weakening. Added to this is a protectionist global environment, which, according to the industry association Spectaris, is threatened by the new US government.
#2 Agile ways out of the cost crisis
A further aggravating factor for the tense situation is the high costs. While from January to August 2024, according to the Federal Statistical Office, sales in the German medical technology industry exceeded the previous year's level by 1.6%, producer prices also rose in the same period - by almost 3%. Whether for energy, materials or raw materials, in logistics and transport or in personnel - manufacturers are struggling with the persistently high costs.
The increasing pressure is affecting the investment capacity of Germany as a location. According to BVMed, almost a third (30%) have reduced their investments compared to the previous year. Another third of the companies surveyed are shifting investments abroad. Outsourcing production, but also other tasks such as development and aftermarket services, are likely to be at the top of the list.
One thing is clear: If you want to fight your way out of the current stagnation and remain competitive in the long term, you have to further optimize your processes and try to free up internally bound capacities and resources. Cost pressure is forcing companies to change strategy and relocate production away from high-cost countries. Collaborating with partners on complex and therefore expensive tasks can be a way to increase your own agility and resilience.
#3 Heavy compliance burden
In addition to the costs, what plagues manufacturers are the regulatory requirements that are perceived as excessive - both at national and EU level. The effort increases from year to year and is particularly annoying when the lack of harmonization between the guidelines sometimes leads to duplicate reporting obligations (example: LskG and CSRD). The bureaucracy isn't just about money. It also blocks important skilled workers who are sorely lacking elsewhere.
The European Medical Device Regulation (MDR) remains a long-term construction site. Last year, associations repeatedly called for a comprehensive revision of the directive. In October, the European Parliament finally passed a resolution on the change, which calls for proposals by the end of the first quarter of 2025. It remains to be seen whether an amendment will actually take place and what it will look like. However, without regulatory expertise and external support, it will be difficult for manufacturers to keep pace with changes in the dynamic compliance landscape.
#4 Sustainability ecosystem
The topic of sustainability also takes up a lot of space in the compliance catalog. The EU's Green Deal does not stop at MedTech manufacturers - from the Ecodesign Directive to CSRD to the PFAS ban planned for 2026. While the CO2 accounting or ESG reporting for some medical devices (e.g. accessory material) is still relatively straightforward, the complexity of the reporting increases as the complexity of the medical devices increases. Systematic analysis approaches such as the Product Lifecycle Assessment (LCA) provide a framework for collecting important key figures and not only reducing CO2 emissions, but also saving costs.
Overall, the market for green technology and sustainability will continue to grow and reach a market volume of 105 billion US dollars by 2032. Technologies, solutions and processes are required to be able to practically implement the demand for environmentally friendly products with a low CO2 footprint. Manufacturers are already relying on an expanded ecosystem in which partners provide specialist expertise and service providers take on sustainability-relevant tasks (e.g. waste transport and disposal).
#5 Probationary year for AI
The use of artificial intelligence (AI) promises similar growth in medical technology. However, it is questionable whether this promise will be 100% fulfilled next year. There is a lot of work being done on smart surgical robots, AI apps for cancer detection and virtual assistant doctors. In practice, however, these are usually AI features that are primarily used where manufacturers and providers can control them - and where they do not harm people in an emergency.
The EU AI regulation rightly classifies AI-based medical devices as high-risk AI systems and sets the regulatory requirements accordingly high. Development takes time and requires expertise that still needs to be developed in many places. Given the experimental nature of AI, the ROI of the investment is far from guaranteed. Despite all the expected benefits, almost two thirds (65%) of MedTech companies express concerns about integrating AI into medical devices.
Where AI is already significantly improving efficiency is in operations and in optimizing processes in manufacturing, development and supply chain. Another exciting area of application is laboratory diagnostics, in which deep learning technologies are increasingly used for analysis.
#6 Cybersecurity is a supply chain issue
With AI and the increasing digitalization of medical devices in diagnostics, consultation and monitoring, cybersecurity will also remain a main topic in 2025. The NIS2 directive does not impose a new regulation on manufacturers, but it does represent a revised and stricter one. The requirements and sanctions are explicitly aimed at “particularly important facilities”, which also include clinics, medical care centers (MVZ) and other health facilities.
According to NIS2, companies must identify, defuse and document security risks and provide the necessary technical and organizational framework and tools. The regulation expressly also covers the supply chain, including EMS service providers, partners and suppliers. Close cooperation with the respective stakeholders and security partners is therefore becoming increasingly important. According to a study by Plusnet, only 52% of German companies have fully or at least partially implemented the NIS requirements for supply chain security. Manufacturers still have a long to-do list ahead of them next year to protect products and guarantee the secure exchange of data (keywords: data protection, intellectual property).
Source: Plexus Corp. / Machine translation