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UnlockingvalueinMedTechC(D)MOs

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Trends,keysuccessfactorsandM&Ainvestmentopportunities

JULY2026

2TheMedTechC(D)MOmarket

Executivesummary

MedTechC(D)MOmarket

TheMedTechmarketasawholeisforecasttogrowatarateof7%perannumto2030.However,theMedTechC(D)MOmarketisexpectedtoexceedthisrateandanticipatedtogrowat8-9%duetoacontinuedoutsourcingshift.TheIVD,cardiology,orthopedic,audiology,neurology,roboticsanddrugdeliverysegmentsareamongthemostpromisingforC(D)MOsand

investors.AttractiveinvestoropportunitieslieinareaswithalargeMedTechmarket,strongC(D)MOmarketgrowthandactiveconsolidation,suchasrobotics.

Trends

Ashifttowardde-riskedandpartiallyregionalized,compliance-readysupplychainsisunderway,drivenbylocalcontentrequirements,suchasinChina,andtougherregulationsoverall.

Winningframework

C(D)MOmarginsaremoststronglydrivenbycomplexity,differentiatedpositioninganddedicatedsegmentorcapabilityexpertise.Metalhigh-precisionengineeringspecialistsachievethebestmargins,supportedbypositiveend-market

fundamentalsinorthopedicsandcardiologyandbottleneckcapabilitiesin,e.g.,nitinolmanufacturing.Supplyreliability,highestqualityandprovencapabilitiesforcomplexdesignsandmanufacturingarekeyOEMrequirementsforC(D)MOs.

SuccessintheC(D)MOmarketdependsonbuildingaplatformthatisspecialized,combinesend-to-enddesignformanufacturingcapabilitieswithafootprintclosetokeycustomers,andleveragesautomation.

M&As

TheC(D)MOdealmarketisreopeningdueto,forexample,anongoingconsolidationofsuppliersatOEMs,supplychain

normalizationandaprivateequityexitbacklog.M&Avalueisdrivenbydifferentiatedcapabilitiesalongthevaluechain.C(D)MObuyersfavorstronggrowthandmarginprofiles,ade-riskedcustomerandplatformbaseandend-to-endserviceofferings.

3TheMedTechC(D)MOmarket

Introduction

WiththeMedTechC(D)MOmarketreturningtohealth,weprovideawinningframeworkforplayersandaguideforM&Ainvestors

TheMedTechC(D)MOmarketischanging.IncreasingcostpressuresandstrainedglobalsupplychainsatMedTechOEMsaresqueezingestablishedplayersandforcingthemtoadapt.Atthesametime,theriseoflarge,professionalizedC(D)MOplatformsandincreasingconsolidationarecreatinganewcompetitivelandscape.

Thepurposeofthisstudy–writtenjointlybyRolandBergerandWilliamBlair–istwofold.First,toprovideaholisticassessmentoftheMedTechC(D)MOmarket,itsplayersandtrendsaswellasourviewonkeysuccessfactors.Andsecond,toevaluateplatformdevelopmentstrategies.

Toachievethis,thestudydrawsonaproprietarymarketmodel,expertinterviews,datafromLSIInsightsandourM&Aandcapitalmarketsexpertise.Uniquely,itisthefirsttodifferentiatebetweenCMOs,C(D)MOsandplatformscomprisingOEMelementswiththeirownproductsandCDMOelementsintheirplatform–so-calledhybridCDMOs.

OverviewofglobalMedTechmarket

Inrecentyears,theMedTechmarkethasenduredpronouncedvolatility,limitinggrowth.TheCOVID-19pandemicresultedindemandspikes,whilebetween2021and2024inventoryover-stockingandsubsequentde-stockingamplifiedorderandrevenuefluctuations.Morerecently,geopoliticaltensions,tariffsandinflationhavedisruptedsupplychainsanddelayedpurchasingdecisions.

Lookingahead,weexpectacceleratedgrowth,particularlydrivenbyAsianeconomies.

Backontrack

Afteradifficultfewyears,theglobalMedTechmarketisforecasttoreturntostronggrowth

GlobalMedTechmarketdevelopmentbyregion,2021-2030[USDbn]

HistoricaldevelopmentForecast

CAGR'21-'25

CAGR'25-'30

6.6%

922

863

387

810

353

760

713

293

5.4%

321

9.9%

669

266

7.6%

242

628

219

562

591

542

187

199

160

374

147

341

153

180

3.5%

141

326

136

311

130

4.1%

125

284

116

259

114

248

120

358

271

297

4.6%

4.7%

2021202220232024202520262027202820292030

US

RoW

Europe

Source:LSIInsights,deskresearch,interviewswithmarketparticipants

4TheMedTechC(D)MOmarket

C(D)MO-focusedMedTechmarketsegments

WithinMedTech,theIVD,cardiology,orthopedic,audiology,neurology,roboticsanddrugdeliverysegmentsaremostrelevantforC(D)MOinvestors

TheMedTechmarketcomprisesabroadrangeofsegments,whichdiffersignificantlybysizeandoutlook.Forourstudy,weselectedseventhatareamongthemostrelevanttotheC(D)MOmarket,fastgrowingandattractiveforaconsolidationplay.

IVD(in-vitrodiagnostics)

Coversconsumables,reagentsandinstrumentsforin-vitroblood,urine,etc.tests.Moderateunderlyinggrowthdrivenbyrisingtestingvolumes;C(D)MOgrowthdrivenbyincreasingOEMpreferenceforscalablepartners.

Cardiology

Complex,regulateddevices(catheters,stents,etc.)meanhighcosts,butanagingpopulationsupportsgrowth.C(D)MOsbenefit,asOEMsoutsourcehigh-specsubassembliesandfinalproducts.Thesegmentfacescontinuedreimbursementpressure,requiringC(D)MOstobeparticularlycostefficientandcreativeindefiningannualcost-downmeasuresforqualifiedspecialists.

Orthopedics

Metal-intensivesegment(jointimplants,surgicalinstruments,etc.),withstringentregulation.Maturewithsteady,procedure-drivengrowth.OEMsincreasinglydemandC(D)MOshavefullsystemownership,whilesupplierconsolidationisacceleratingshareshifttoscaledC(D)MOs.

Audiology

Miniaturizedelectronicdevices(hearingaids,cochlearimplants,etc.)requirespecialistproduction,bolsteringC(D)MOgrowth.Underlyingmarketgrowthsupportedbyriseinuseofhearingsolutions.

Neurology

Manysystems(neuromodulators,thrombectomytools,etc.)havehighinspectionintensity,raisingcosts.Thisspecializationrequirement,combinedwiththeneedforhighflexibility,drivesOEMoutsourcingtoC(D)MOs.Growthdrivenbyincreasingadoptionofdevicesanddeviceinnovations.

Robotics

Robot-assistedsurgeryplatformsandrelatedinstrumentsimproveprecisionbuthavehighCOGS.OEMsverticallyintegratesystemstoprotectIP.Expandingusecasesdrivestronggrowth,withOEMsoutsourcingcomplex,integration-heavysystemstoC(D)MOs.

Drugdelivery

Devicessuchaspens,inhalersandpre-filledsyringesareproducedathighvolume,requiringscale.OEMsthereforeoutsourcemuchproductiontoindustrializedC(D)MOs.Underlyinggrowthsupportedbyshifttoself-administeredsolutions.

Overleaf,thesegmentsarefurtheranalyzedtoidentifywhichofferthebestopportunitiesforinvestors.

AboutC(D)MOs

C(D)MOs(contractdevelopmentandmanufacturingorganizations)differfromCMOsinthattheyofferdesign/developmentservicesaswellasmanufacturing.AcrossMedTechsegments,C(D)MOsenableOEMswithdeepmaterialexpertise,segment-specificknow-howandadvancedmanufacturingcapabilities.Theyprovidethescale,speedandcostefficiencyrequiredtoacceleratetimetomarket,flexcapacityandsustainablycapturegrowth.

Twoviewsexist,somearguingthatC(D)MOsshouldnotselltheirownproducts,asthisputsthemindirectcompetitionwiththeircustomers.Otherssaytheycouldusethesynergiesasadesignandmanufacturingpartnertosell,forexample,slightlymodifiedproductsseparately.Ouranalysishasshownthattherearesuccessfulmodelsofbothpure-playC(D)MOsandhybridC(D)MOswiththeirownOEMbusiness.

5TheMedTechC(D)MOmarket

Source:LSIInsights,interviewswithmarketparticipants

Bestofthebunch

Thesevensegmentswereselectedbybalancingsize,growthandrelevanceforC(D)MOs

SelectionofthemostrelevantMedTechsegments,2025[USDbn]

Focusofthisstudy

18

CAGR'25-'30[%]

∑USD273bn

DigitalHealth

17

16

15

14

13

12

11

10

9

8

Wearables

Robotics

Device

ReprocessingServices

Drug

Delivery

Diabetes

Fluid

InfectionControl

Segmentselectioncriteria:

•Meaningfuladdressablespend(segmentsize)

•Underlyinggrowthdynamics

•Outsourcingpropensity

(willingnessofOEMsto

outsourcemanufacturing)

•Demandforspecific

capabilities(forexample,manufacturingcomplexityorregulatoryburden)

Audiology

Management

Aesthetics&Dermatology

Dental

Other

7

Energy-BasedDevices

CompressionTherapy

6

Neurology

5

WoundCare

SurgicalMeshes

DiagnosticImaging

Cardiology

4

OphthalmicDevices

Anesthesia&Respiratory

IVD

3

SurgicalDevices

Endoscopy&Laparoscopy

Nephrology&

Orthopedics

2

Patient

Monitoring

UrologyDevices

1

0246810121416182022242628303234363840424446485052545658606264666892949698100

Salesbysegment,'25[USDbn]

●

●Notinscope

Prioritized(inscope)

●Marketsize[2025]

6TheMedTechC(D)MOmarket

Fundamentals:InvestoranalysisofC(D)MO-focusedsegments

Largemarketsize,stronggrowththatisincreasinglyoutpacingtheunderlyingmarketandconsolidationpotentialarethekeyindicatorsforC(D)MOinvestors

ThetotalmarketvalueofthesevensegmentswasUSD46billionin2025,withannualgrowthof8-9%expectedthrough2030.

Thetoprowbelowshowsthatoutsource-heavysegments,suchasdrugdelivery,orthopedicsandrobotics,arethefastestgrowingforC(D)MOs.

ThebottomrowhighlightshowMedTechC(D)MOrevenueisincreasinglyoutgrowingunderlyingdevicemarkets.ThisisduetoOEMsregionalizingtheirfootprints(especiallyinEurope,NorthAmericaandChina)astheylookforpartnersthatcancovertheentirevaluechain,fromdesigntopackaging.

InvestorscanfindthemostattractiveopportunitiesinareaswithlargeunderlyingMedTechmarketsize,disproportionateC(D)MOmarketgrowthandactiveconsolidation.Theseincluderoboticsplatforms,drugdeliverydevicesandIVDconsumables.

Segmentbreakdown

ComparisonofsegmentC(D)MOgrowthforecastvs.overallexpectations

1

2

3

4

5

6

7

IVD

Cardiology

Orthopedics

Audiology

Neurology

Robotics

Drug

delivery

DerivationoftheglobalC(D)MOmarketsizebysegment,2025[USDbn]

c.42%

c.37%

c.32%

c.36%

c.31%

c.37%

c.52%

93.0

9.9

66.2

15.8

56.2

17.9

8.7

23.4

39.1

3.1

4.9

11.2

3.9

7.3

(65%)

3.6

2.5

1.1

(30%)

1.9

1.3

(40%)

23.4

15.6

8.9

8.9

(50%)

3.5

1.5

(30%)

(40%)

24.4

14.6

9.8

(40%)

In-house

C(D)MO

COGSshareforOEMs

Segmentmarketsize

GlobalMedTechC(D)MOmarketoutlooksegment,2025-2030[USDbn]

8.6%

14.79.8

20252030

58%

2025203020252030202520302025203020252030

42%

75%

51%

107%

78%

8.0%

9.9%

17.3%

10.2%

7.6%

11.8

12.9

2.0

2.2

2.4

8.9

1.5

1.3

7.3

1.1

7.0%

21.9

15.6

20252030

51%

UnderlyingMedTechmarketCAGR'25-'30

MedTechC(D)MOmarketCAGR'25-'30

Source:LSIInsights,Gain.Pro,CapitalIQ,deskresearch,interviewswithmarketparticipants

7TheMedTechC(D)MOmarket

Source:LSIInsights,Gain.Pro,CapitalIQ,deskresearch,interviewswithmarketparticipants

TrendsanddriversintheC(D)MOmarket

Localizationandgrowingregulatorypressurearedrivingashiftinthemarket,withintegratedC(D)MOplayerssettobenefitmost

Changedrivers

ThethreetrendpillarsbehindthestructuralshiftintheC(D)MOmarketandtheirimplicationsforinvestors

Platformconsolidation&verticalintegration

Macroeconomictrends

OEM-driventrends

C(D)MO-specifictrends

Regionalization/nearshoring

Outsourcing

Regulatorypressure

Supplierconsolidation

De-stocking

Risk-basedC(D)MOsourcing

Engineering

TheC(D)MOmarketisundergoingastructuralshifttowardlocalized,compliance-readysupplychains.Threetrendpillarsarebehindtheshift–macroeconomic,OEMdrivenandC(D)MOspecific–withthemacroeconomictrendsofnearshoring/regionalizationandtighteningregulatoryexpectationsasthekeydrivers.Eachtrendpillarhasspecificimplicationsforsegmentsandinvestors.

Automation&

digitalization/AI

Macroeconomictrends:Buildnearshore(EU/US)footprintandbest-in-classsupplychaincapabilitiestoturntariffs/regulationintosharegains,pricingpowerandapremiumexit.

•NearshoringisacceleratingasOEMs

de-risktariffs/geopoliticsanddemandlocalizedqualifiedcapacity

•Regulatorypressureisrising,

increasingdemandforC(D)MOswithstrongQA,validationanddocumentationthroughput

•De-stockinghasbeenatemporarydrag('23-'24)withunevenrecoverybysegment;normalizationalreadyunderway

•OutsourcingpenetrationisstructurallyincreasingasOEMsconvertCAPEXtovariablecost1

•OEMswantfewerpartnerswithend-to-endaccountability;

integratedC(D)MOswin

disproportionatewalletshare

•Selectioncriteriaareshiftingto

risk-adjustedTCO;qualitytrack

record,supplyreliabilityandtimetomarketcanoutweighunitprice2

•PlatformconsolidationcontinuesasC(D)MOsassembleintegratedcapabilitystackstomatchOEMs'"fewer,better"sourcing

•Automation&digitalizationare

becomingtablestakestoimproveyield,traceability,laborproductivity

•EngineeringanddesigncapabilitiesbecomecriticaltowinOEMsand

expandshareofwalletwithexistingcustomers

OEM-driventrends:Buildequitystoryonbeingbigenoughtobesafe(quality,supplyreliability,capacity)andbroadenoughtocoverscope(end-to-endvaluechaincapabilities,specificdomainknow-how).

C(D)MO-specifictrends:Consolidatebottleneckcapabilitiesandautomateatscaletodeliverbetterquality,fasterramp-upsandlowercosttoserve,unlockingmarginexpansion–buy-and-buildandoperationalexcellenceasenablers.

Positive

Negative

Stronglypositive

Stronglynegative

Neutral

Impact

Together,themarkettrendsdrivedemandforintegratedC(D)MOswithend-to-endvaluechaincoverage,specialistcapabilitiesandquality/regulatoryfocusatscale.WithOEMexpectationsrising,professionalC(D)MOsarewellpositionedtodrivealreadyacceleratingindustryconsolidationandbenefitfromthestructuralmarkettailwinds.

1Toacceleratelaunchesandaccessspecialistprocesses,e.g.,sterilepackaging/sterilizationcoordination;

2Esp.inrobotics,drugdelivery,cardioandneurosegments;

8TheMedTechC(D)MOmarket

Source:RolandBerger

Trenddeepdive:Outsourcing

OutsourcingpenetrationandimpactaregrowingallalongtheMedTechvaluechainasOEMsincreasinglyleverageC(D)MOexpertise

Amongthetrends,outsourcingstandsoutduetoitsstronglypositiveimpact.OutsourcingpenetrationisrisingalongtheentirevaluechainasOEMsincreasinglyleverageC(D)MOsfordesignandengineeringsupport.Withsupplierconsolidationalsogrowing,spendisbeingconcentratedonfewer,morecapableC(D)MOpartnersthathaveabroaderscopeacrossthevaluechain.Theabilitytoofferbottleneckcapabilities–scarce,hard-to-qualifyprocesses–andexecutionstrength(throughAI,forexample)furtherenhancesattractiveness.

Example:ASiliconValleypharmaceuticalcompanyoutsourceditsnext-geninhalertoanelectronicsC(D)MO.TheC(D)MOtransformedthebulkyprototypeintoacompact,clinicallyreadydevicebymanagingeverythingfromarchitectureredesigntoISO13485-compliantmanufacturing.

Impactfactor

C(D)MOscanbenefitfromOEMoutsourcingateverystageoftheMedTechvaluechain

Component

manufacturing

Tooling

Assembly

Sterilization

Packaging

Logistics

Design&

development

Downstreamintegration

Manufacturingcapabilities

•Theshifttoend-to-endmanufacturingnecessitatesdownstreamintegrationtomaterializeoperationalefficienciesandmaximizevalueforOEMs

•Risingandevolvingregulations(e.g.,EUMDR/IVDR)necessitatespecializedexpertise

andcapital-intensiveinfrastructure,whereoutsourcingallowsOEMstonavigate

regulatorycomplexityandensurecompliancewithoutsignificantinternalinvestment

•Increasedcomplexityofmedicaldevicesandtheincreaseduseofsophisticatedmaterialsdrives

OEMstooutsourcespecializedprocesseswithintooling,componentmanufacturingandassemblytoC(D)MOswiththerequiredtechnicalexpertiseandadvancedmanufacturingtechniques

•Reducingtotalproductioncosts/efficiency

byutilizingoutsourcedmanufacturingservicesinordertoleverageC(D)MOs'operational

efficiencies,suchasoptimizedmoldingprocessesandadvancedtooling

Upstreamintegration

•Increasedproductcomplexityrequiresspecializeddesign&developmentandengineeringcapabilities

•OEMsmakeuseofanacceleratedtimetomarket withfasteranddevelopment

•OEMs'logisticsistypicallyhandledby

specializedthird-partylogisticsproviders

•C(D)MO-ledlogisticsismorecommon

prototypingproduct

•Esp.forsmallercompanies,outsourcingdesignanddevelopmentcanreducefixedcostsorreducetimetomarketbyutilizingoperationalefficiencies

asabundledservice,notastandalonedifferentiator

Overallmarketimpact:

Stronglypositive

Positive

Neutral

Negative

Stronglynegative

9TheMedTechC(D)MOmarket

efficiencyandsupplychainexcellence.Source:Gain.Pro,CapitalIQ,deskresearch,interviewswithmarketparticipants

MedTechC(D)MOarchetypes

C(D)MOscanbeclassifiedintofourdistinctarchetypes,eachwithdifferentlevelsofexpertiseandOEMintegration

So,howcanMedTechC(D)MOsoptimizetheirgrowthandmargins?Overthenextfewpages,welookatthestructuralandfinancialfactorsthatdeterminesuccess,endingwithourfive-pointwinningframework.

First,thereisnosinglerecipeforsuccess.TherearefourdifferentarchetypesofMedTechC(D)MOsinthecompetitivelandscape,eachdefinedbytheirdegreeofspecializationandintegration–successfactorsdependonthearchetype.

1.C(D)MOwithsegmentexpertise:SpecializesinasingleMedTechsegment,buildingdeepclinical,regulatoryandapplicationexpertise.

2.C(D)MOwithmaterialexpertise:Specializesinprocessingandmanufacturingaspecificmaterialclass,suchaspolymers,metalmachiningorelectronics.ReliedonbyOEMsforcomplexmaterialperformanceanddesignformanufacturability.

3.Hybridcapabilityplatform:Twosub-archetypes:AC(D)MO+addsadjacentservices(sterilization,logistics,packaging)andselectiveIPformoreend-to-endOEMsupport;ahybridC(D)MOcombinesC(D)MOserviceswithcommercializingownproducts,platformsorsubsystems.

4.Generalists:Large,multi-technologymanufacturingplatformsservingmultipleindustries,withMedTechasonevertical.Competeonscale,globalfootprint,cost

Chartingsuccess

MedTechwinnershavevaryinglevelsofIPownershipandC(D)MOexpertise

Hybrid

CDMO1

CDMO+2

C(D)MO

IndicativeI

Non-exhaustive

!

3

Thecompaniesarecharacterizedbasedonanoutside-inviewoftheircorefocusareas

4

Nordson

Röchling

Trelleborg

Xalta

PFMMedical

Jabil

Sanner

Heraeus

Schivo

TTMedic

Medical

Eptam

Plastiflex

Celestica

Norwood

Nolato

LREMedical

Benchmark

TTElectronics

VantedgeMedical

Scholz

GPE

2

Resonetics

TEBiomerics

1

ConfluentBytecBITGener8

Freudenberg

Osypka

ViantInteger

HippTechnologyGroup

HGMedical

GreeneJM

GroupIndustriesBalSeal

HitachiTecan

Stratec

Asteelflash

Tecdesign

Elektronik

FlexSanminaPlexus

MillstoneMGS

Planet

Innovation

Kimball

Electronics

ParagonMedical

MarleGroup

WildOrchid

Invetech

Opentrons

Precipart

Advantech

Intech

Raumedic

Avalign

Valtecne

Hamilton

Medevio

Tecomet

Medical

Acrotec

Precera

Zollner

HiArc

EPnP

Jüke

GCM

Elos

AI6

EMS3Broad

coverage

Interventional

Metal

specialists

Polymer

focus

Diagnostics,IVD,Specialized

lifescienceortho&robotics

Materialexpertise

Generalists

Segmentexpertise

1C(D)MOswithsegmentexpertise2C(D)MOswithmaterialexpertise3Hybridcapabilityplatforms4Generalists

1HavingownproductscommercializedasanOEMandactingasacontractmanufacturer;2CDMOswithadditionalcapabilities,e.g.,sterilization,packaging,logisticsandownIP;3Electronicmanufacturingservices

Source:Gain.Pro,CapitalIQ,deskresearch,interviewswithmarketparticipants

10TheMedTechC(D)MOmarket

MedTechC(D)MOmargindrivers

C(D)MOmarginsaremoststronglydrivenbycomplexity,nichepositioningandasharpfocusonaspecificsegmentorcapability

MarginsdifferacrosstheMedTechC(D)MOlandscape,rangingfromaround7%to24%EBITDA.ThiswiderangecanbeexplainedbythewaydifferentmargindriversimpactthedifferentC(D)MOsegments,archetypes,clustersandcompanies.Weoutlinethekeymargindriversandtheireffectsbelow.Inthenextpages,welookatmarginsinmoredetailbyfinanciallybenchmarkingC(D)MOs.

Keymargindrivers

Marginsvaryaccordingtosegmentexposure,specialization,materialfocusandvaluechaincoverage

Indicative

2

3

4

5

1

Interventional

&complexity-

drivensegments

Strategicfocuson

segments/capabilities

End-to-endvaluechaincoverage

Niche/specialist

positioningoverscale

Europeanengineeringstrengths

EBITDAmargin1

15.1%17.0%10.6%17.9%10.6%14.3%23.7%13.9%14.5%15.4%7.7%17.6%23.7%

C(D)MOsCDMO+

●

GeneralistsSpecialized

orthopedics&robotics

GeneralistsPolymer-Metal

USEuropean

HQHQ

EMSInterventional

focusedplayers

specialists

●

HybridCDMOs

Metalspecialists

Fullvaluechainintegration–especiallyupstreamdesign,

manufacturingandvalidation–drivesmarginexpansionbyincreasingscopeperprogram,customerstickinessand

NicheC(D)MOsoutperform

large,diversifiedplatformsby

combiningsufficientscalewithfocus.Thisavoidsmargindilutionfrommulti-industryexposure

andorganizationalcomplexity

C(D)MOswithasharpfocusonspecificsegmentsormaterialcapabilitiesachievehigher

marginsthroughdifferentiation,deeperOEMintegrationand

lowerpricecompetition

C(D)MOswithaEuropeanHQ

benefitfromrelativelylower

costlevelsversustheUS,aswellastheirrespectivestrengths

inprecisionengineering.Thisisreinforcedbygeopoliticaluncertaintyand"buylocal"considerations

Interventionalandcomplexity-drivensegmentsdeliver

structurallyhighermargins

duetobottleneckmanufacturingprocessesandelevatedQAandvalidationrequirements

switchingcosts

1EBITDAmargin2024;2EBITDAmargin,last5Yaverage

11TheMedTechC(D)MOmarket

Source:Gain.Pro,CapitalIQ,deskresearch,interviewswithmarketparticipants

Financialbenchmarking:Marginsandgrowthbycluster

Metalspecialistsachievethehighestmarginsthankstotheirbottleneckcapabilities,EMSplayersthelowestduetocommoditization

PlottingmarginandgrowthprofilesbyMedTech/materialclusterallowsustocompareperformanceamongsegment-focused,material-focusedandgeneralistC(D)MOs,aswellashighlightthebestandworstperformingclusters.

Metalspecialistsandinterventionalplayersareamongthemarginandgrowthleaders,reflectingtheirbottleneckcapabilities,tightQAandhigherswitchingcosts.Behindthem,IVD/lifescienceandpolymer-focusedplayersperformsolidly,consistentwithhigherstandardizationandpricesensitivity.

Atthelowerend,scalealonedoesnotguaranteereturnsinEMSduetocommoditizationandlowerdifferentiation.Broad-coverageplayers,meanwhile,havemoderatemarginsdespitehighergrowth,suggestinggrowthisoftenvolume-ledandprofitabilityconstrainedbyproductmix.Aswesawinthemargindriversfigure,addingupstreamdesign,engineeringandnewproductintroduction(NPI)capabilitiesliftsprofitability,asearly-lifecycleinvolvementincreasescustomerstickiness.

Mixedperformance

Marginsvarysignificantlyacrosssegment-focused,material-focusedandgeneralistC(D)MOs

6.5%

13.1%

5.1%

12.9%

10.9%

13.8%

RevenueCAGR

'20-'24

14.0%

23.7%

17.9%17.6%

14.3%

10.0%

10.6%

7.7%

Interventional

Broad

coverage

Polymerfocused

Metal

specialists

Diagnostics,

IVD,

lifescience

EMS

Specializedorthopedics&robotics

N=5N=9N=4

Segmentexpertise

N=9

Generalists

N=10N=9N=5

Materialexpertise

EBITDAmargin,last5Yaverage

12TheMedTechC(D)MOmarket

Financialbenchmarking:Marginsandgrowthbycompanysize

SmallandmediumC(D)MOstendtobemoreprofitablethanlargerplayers,astheyareusuallymorespecialized

CompanysizeisanotherkeydeterminantofprofitabilityintheMedTechC(D)MOmarket,atleastaccordingtoournon-exhaustivebenchmarking.Itshowsthatsmallandmedium-sizedcompaniestendtoperformbest.

Smallfirmsinhigh-complexitynichescanbehighlyprofitable,withmarginsdrivenbycapability,notscale.

Mediumfirmsbenefitfromeconomiesofscaleandbettersupplierconditions,aswellasOEMsexpandingtheiroutsourcingscopetowardplayerswithniche/bottleneckcapabilities.

Largefirmshavelowerprofitabilityduetoactivityinmultipleindustries(partlyhighvolume/lowmargin),suchasautomotiveandconsumerelectronics.

Financialbenchmarkingbyarchetypeisalsotelling.GeneralistC(D)MOstypicallyexhibitlowtomoderatemarginsandstablegrowth,reflectingscaleadvantagesanddiversifiedrevenuestreams,whilematerialexpertise-driven