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Industry profile

1. Background

In Canada, medical devices are regulated under the Food and Drugs Act as a Class I, II, III or IV with Class I representing devices that present the lowest risk and Class IV the highest. The Food and Drugs Act provides a definition of a regulated medical device.

Examples of medical devices include pacemakers, artificial heart valves, diagnostic and imaging equipment, in vitro diagnostics, dialysis equipment, hip and knee implants, synthetic skin, surgical tools, infusion pumps, life support machines, catheters, bandages, as well as some information and communications technologies.

Firms in the medical device sector are highly R&D intensive and technology intensive, and the complexity of medical device products continues to increase with the inclusion of multiple technologies into a given product. Technologies such as advanced materials, microelectronics, biotechnology, and software and informatics are now routine technologies featured in medical devices. Canadian and international companies continue to innovate further to develop new products and enhance the features of existing medical devices.

Firms in the medical device sector are highly R&D intensive and technology based.

2. Global medical device industryFootnote 1

Globally, the medical device industry has a low level of industry concentration, with no single large firm controlling the sector. Small companies are common and typically specialize in developing niche technology. During the past five years, the trend toward consolidation has continued, leading to a further reduction in the number of large companies.

In 2019, the key business segments of the global medical device market were:

  • diagnostic imaging, such as MRI and CT-scan (23% of world market)
  • consumables (17%)
  • patient aids (such as hearing aids and pacemakers) (13%)
  • orthopaedic products (12%)
  • dental products (8%), and
  • other medical equipment (28%).*
    *(Note: does not add to 100% due to rounding)

Medical device companies are expected to realign their business structures and strategies to compete in the changing global environment (characterized by growth of emerging markets, health care reform and cost containment). Anticipated changes include company restructuring as well as an increased reliance on strategic alliances and outsourcing for marketing, distribution, research and manufacturing activities.

3. Medical device industry in CanadaFootnote 2

Similar to the global sector, Canada’s medical device sector is highly diversified and low in concentration. The majority of firms are small and medium-sized enterprises (SMEs).

The medical device sector is an export-oriented industry that manufactures equipment and supplies. Purchasers include Canadian and international hospitals, physician’s offices, laboratories, clinics, as well as patients (through direct purchases).

The sector is driven by product innovation. The industry is able to draw on world-class innovative research being conducted in Canadian universities, research institutes and hospitals, some of which has been spun-off into Canadian medical device companies.

The majority of medical device establishments are located in the provinces of Ontario, Quebec, British Columbia and Alberta.

4. Canadian and international market for medical devicesFootnote 3 Footnote 4 Footnote 5

Canada's medical device market

Canada’s medical device market had an estimated value of USD$7.3 billion in 2019, accounting for about 1.8% of the global market. The following are key expenditure areas, as a percentage of total 2019 medical device sales in Canada:

  • Diagnostic imaging (20% of Canadian market)
  • Consumables (17%)
  • Patient aids (15%)
  • Orthopaedic and prosthetic (12%)
  • Dental products (9%), and
  • Other, including wheelchairs, ophthalmic instruments, anaesthesia apparatus, dialysis apparatus, blood pressure monitors, endoscopy apparatus, hospital furniture (27%)*
    *( Note: does not add to 100% due to rounding)

International medical device markets

In 2019, the global market for medical devices was valued at USD$410 billion, excluding in vitro diagnostics. With a market of USD$177 billion or 43% of the global market, the United States is the world’s largest and most developed market, as well as the leading supplier of medical devices.

Emerging markets are seen as a very promising market for medical device manufacturers for their less complex regulatory frameworks and potential for growth. More modern technologies, such as telehealth, are also beginning to be adopted into these markets. Low cost, generic orthopedics, have an opportunity for growth in emerging markets and there may be an uptick in acquisitions with companies looking to get access to these demographics.

5. TradeFootnote 6

From 2015 to 2019, Canadian medical device exports increased from CAD$3.2 billion to $4.3 billion and imports increased from $8.6 billion to $9.4 billion. The trade gap decreased from $5.4 billion in 2015 to $5.1 billion in 2019, a decrease of 6%. This brings the import to export ratio down to 2.2 in 2019, from 2.7 in 2015. Canada’s largest trading partner for medical devices is the United States.

Imports

In 2019, medical device imports from the United States were valued at CAD$4.1 billion, representing 43% of Canada’s total medical device imports. Following the U.S., the largest countries for medical device imports were China (9%), Mexico (9%) and Germany (6%).

Exports

In 2019, Canada’s medical device exports to the United States were CAD$3.0 billion, or 70% of Canada’s total medical device exports. The next three leading destinations for Canada’s medical device exports were the Netherlands (4%), Japan (3%), and Germany (3%).

6. Global trendsFootnote 7 Footnote 8

  • Demographic shift will continue to play a major role in the growth of the medical device industry: UN projections show the percentage of elderly people increasing from 8.3% in 2015 up to 17.8% by 2060. This will continue to drive demand for medical devices and new technologies.
  • The prominence of digital health in the form of telehealth, or remote monitoring technologies, has been magnified by the pandemic and this rise may continue in the long term due to customer preference towards its inherent convenience. However, hesitancy to adopt new technologies by the older segment of the population may curb short-term growth.
  • The level of acquisitions in the orthopaedics portion of the medical device industry decreased in 2020 due to a drop in orthopedic revenues. Both revenues and acquisitions are projected to partially recover in 2021 as companies seek to obtain access to new technologies and markets.

7. Industry associations in Canada

A number of national and regional associations represent companies in Canada’s medical device industry, including:

National:

  • Medtech Canada

Regional:

  • BioAlberta
  • BioNova
  • Bioscience Association Manitoba
  • LifeSciences British Columbia
  • Life Sciences Ontario
  • Ontario Bioscience Innovation Organization
  • PEI Bio Alliance

8. Federally-funded research support and tax incentive programs Footnote 9

Several federally funded research programs and councils support health-related research in Canada: the Canadian Institutes for Health Research (CIHR); Networks of Centres of Excellence; National Research Council (NRC); and the Natural Sciences and Engineering Research Council (NSERC). The NRC delivers the Industrial Research Assistance Program (IRAP) which helps firms develop and commercialize technologies though funding and advisory services.

The Canadian Scientific Research and Experimental Development (SR&ED) tax incentive program, administered by the Canada Revenue Agency, encourages Canadian businesses of all sizes, and in all sectors to conduct R&D in Canada. It is the largest single source of federal government support for industrial R&D. It provides claimants cash refunds and/or tax credits for their expenditures on eligible R&D work done in Canada.

9. Research and Translational Centres

In addition to the National Research Council Medical Devices Research Centre, Canada counts a number of networks and centres for research and commercialization that support the growth of the medical device sector. A number of these networks are not-for profit corporations that match research expertise with business needs in order to stimulate commercialization. These networks and centres include:

  • adMare BioInnovations Canada, which merged with the Accel-Rx Health Sciences Accelerator – Accel-Rx, in 2020 (Vancouver, BC)
  • The Centre for Probe Development and Commercialization (Hamilton, ON)
  • The Quebec Consortium for Industrial Research and Innovation in Medical Technology (MEDTEQ) (Montreal, QC)

Examples of Canadian translational centres:

  • The Lawson Health Research Institute (London, ON)
  • The McEwen Centre for Regenerative Medicine (Toronto, ON)
  • MaRS Innovation (Toronto, ON)
  • McEwen Centre for Regenerative Medicine (Toronto, ON)
  • The Montreal Heart Institute (Montreal, QC)
  • The Ontario Brain Institute (Toronto, ON)
  • Princess Margaret Hospital Global Cancer Centre (Toronto, ON)
  • Sunnybrook Health Sciences Centre (Toronto, ON)
  • The Toronto Rehabilitation Institute (Toronto, ON)

Footnotes

Footnote 1

FitchSolutions, Global Medical Devices Report Q1 2021

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Footnote 2

IBIS World, Medical Devices Report July 2020

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Footnote 3

FitchSolutions, Global Medical Devices Report Q1 2021

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Footnote 4

FitchSolutions, United States Medical Devices Report 2020

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Footnote 5

FitchSolutions, Canada Medical Devices Report Q1 2021

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Footnote 6

Global Trade Atlas

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Footnote 7

FitchSolutions, Global Medical Devices Report Q1 2021

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Footnote 8

Mercer Capital, 5 Trends to Watch in the Medical Device Industry in 2018, 2018

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Footnote 9

IBIS World, Medical Devices Report July 2020

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