Outlook for the MedTech Industry 2025

The medical technology industry in Germany is generally considered a pillar of the economy. However, sentiment is subdued, and the economic weakness in the country is weighing on both morale and revenue forecasts. The EMS service provider Plexus takes a look at the issues that manufacturers will particularly face by 2025, and the trends that offer hope.

#1 Status of MedTech Germany

Basically, it must be said: Compared to other industries, German medical technology manufacturers are doing well. According to BVMed's Autumn Survey 2024, the industry remains the export champion. The expected global revenue growth in 2024 is 3.5%. However, domestically, the estimated increase is just 1.2%. Compared to the previous year's 4.8%, this is a significant decline. A return to a solid growth path is far off and will likely take more than 12 months. Many reasons for the economic slowdown can be found—and not only in medical technology.

As in the electronics industry, there is also a lack of orders in the MedTech sector. What was massively increased during the Corona years must now be gradually reduced. Only when associated cash flow problems and investment backlogs are resolved can order levels return to a solid growth trajectory. Not only the German market is affected; China is also weakening. Additionally, a protectionist global environment, which according to the industry association Spectaris is threatened by the new US government, complicates matters.

#2 Agile Ways Out of the Cost Crisis

An increasing factor contributing to the tense situation is also the high costs. While from January to August 2024, the revenue of the German medical technology industry exceeded the previous year's level by 1.6%, producer prices also rose during the same period—by nearly 3%. Whether for energy, materials, or raw materials, in logistics and transportation, or personnel—manufacturers are struggling with persistently high costs.

The increasing pressure affects the investment capacity of the German location. According to BVMed, almost one-third (30%) have scaled back their investments compared to the previous year. Another third of the surveyed companies are shifting investments abroad. Outsourcing production, as well as other tasks such as development and aftermarket services, are likely top of the list.

It is clear: those who want to break free from the current stagnation and remain competitive in the long term must further optimize their processes and try to free up internally bound capacities and resources. Cost pressure forces companies to change their strategy and relocate production out of high-cost countries. Collaborating with partners on complex and thus costly tasks can be a way to increase agility and resilience.

#3 Heavy Compliance Burden

What plagues manufacturers besides costs are the regulatory requirements perceived as excessive—both at the national and EU levels. The effort increases year by year and is particularly frustrating when the lack of harmonization between directives leads to partly duplicate reporting obligations (e.g., LskG and CSRD). Bureaucracy not only costs money but also blocks important specialists, who are painfully missing elsewhere.

The European Medical Devices Regulation (MDR) remains a long-term construction site. Industry associations repeatedly called for a comprehensive revision of the directive last year. In October, the European Parliament finally adopted a resolution for amendments, which calls for proposals by the end of the first quarter of 2025. Whether a revision will actually take place and what it will look like remains to be seen. 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 Green Deal does not stop at MedTech manufacturers—including the Eco-design Directive, CSRD, and the planned PFAS ban for 2026. While CO2 accounting and ESG reporting are still relatively straightforward for some medical products (e.g., accessory materials), the complexity of reporting increases with the complexity of medical devices. Systematic analysis approaches like Product Lifecycle Assessment (LCA) provide a framework to gather key figures, not only to reduce CO2 emissions but also to save costs.

Overall, the market for green technology and sustainability will continue to grow and is expected to reach a market volume of $105 billion by 2032. Technologies, solutions, and processes are in demand to practically implement the increasing demand for environmentally friendly products with a low carbon footprint. Manufacturers are already relying on an extended ecosystem, where partners provide specialized expertise and service providers undertake sustainability-related tasks (e.g., waste transport and disposal).

#5 Year of Confidence for AI

A similar growth in medical technology is promised by the use of artificial intelligence (AI). However, whether this promise will be fully realized as early as next year is questionable. Work is underway on smart surgical robots, AI apps for cancer detection, and virtual assistant doctors. In practice, however, these are usually AI features used mainly where manufacturers and providers can control them—and where they do not cause harm to humans in case of failure.

The EU AI Regulation rightly classifies AI-based medical devices as high-risk AI systems and sets high regulatory requirements accordingly. Development takes time and requires expertise that still needs to be built in many places. The ROI of investments is far from guaranteed given the experimental nature of AI. Despite all the expected benefits, almost two-thirds (65%) of MedTech companies have concerns about integrating AI into medical devices.

Where AI already significantly improves efficiency is in operational processes and the optimization of manufacturing, development, and supply chain processes. Another promising area is laboratory diagnostics, where deep learning technologies are increasingly used for analysis.

#6 Cybersecurity as a Supply Chain Issue

With AI and the increasing digitalization of medical devices in diagnostics, consultation, and monitoring, cybersecurity remains a key issue in 2025. The NIS2 Directive introduces not a new regulation but a revised and stricter regulation for manufacturers. The requirements and sanctions explicitly target "particularly important entities," including clinics, medical care centers (MVZ), and other healthcare facilities.

Companies must identify, assess, and document security risks according to NIS2 and provide the necessary technical and organizational frameworks and tools. The regulation explicitly includes the supply chain, including EMS service providers, partners, and suppliers. Close cooperation with stakeholders and security partners is becoming increasingly important. According to a study by Plusnet, only 52% of German companies have fully or partially implemented the NIS requirements for supply chain security. Manufacturers will still have a long to-do list next year to protect products and ensure secure data exchange (keywords: data protection, intellectual property).