What to expect in 2012 in the medical market

Since taking on PlasticsToday's Medical Channel, Doug Smock has immersed himself in the market in several ways, including in-depth interviews with the CEOs of the sector's leading companies like Phillips Plastics, Vention Medical, Prent Corp., and more. Aided by the views from those corner offices, plus his own insights from 25 years in plastics, Doug puts forward five predictions for the medical market in 2012.

1.   Most importantly, business will continue to grow profitably in the 4-10% range. Demand in the United States for medical plastics will be approaching $6.7 billion in 2012, driven by an aging population and growing sophistication of healthcare treatment, among other factors. That represents more than 4 billion lb of plastics. Medical is definitely the place to be in 2012. Goldman Sachs is forecasting weakening U.S. economic activity in the first half of 2012 before a rebound to an anemic 2% annual growth rate.

2.   Efforts to control the spread of hospital infections will continue. Medicare officials decided two years ago to no longer cover health care costs for patients who acquire secondary infections while in the hospital. It's a particularly important development given the rise of new super bacteria that resist traditional treatments, such as Methicillin-resistant Staphylococcus aureus (MRSA). Look for announcements of new bug-fighting compounds at MD&M West in Anaheim, CA in two months.

3.   Requirements to control costs will accelerate. The annual cost employers paid for family healthcare coverage rose 50% to an average of $13,871 between 2003 and 2010, according to a new report from The Commonwealth Fund. The fact that employees' share of that cost rose 63% added to the pain. Every processor I talk to says their customers are looking for ways to reduce costs without sacrificing quality.

4.   Design will become more important. Materials are the single biggest cost in medical devices and packaging. Resin prices have been on a roller coaster ride the past three years and have risen dramatically since early 2010. That's a problem in medical because switching to a new material-or even an Asian supplier-can force a new review process. So OEMs' are looking for partners who can cut costs in new designs and engineer costs out of legacy designs. Design and new processing technology are also important in engineering new less-invasive medical devices.

5.   There will be a major shift to digital systems, both for recordkeeping and to allow remote monitoring of health conditions to reduce hospital visits. The worldwide market for Hospital Information Systems is forecast to grow at 13% annually to $18 billion by 2016, according to a new study from GlobalData. And look for a lot of new gizmos at the Consumer Electronics Show in Las Vegas next month that will boost wireless connectivity of remote monitoring equipment.