PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Reminder About Small Business and Innovation During the COVID-19 Crisis: The Medical Device Industry

By at 10 April, 2020, 2:42 pm

by Raymond J. Keating-

The coronavirus outbreak naturally has brought attention to various tools and technologies on the medical and treatment front that play a critical role in treating patients. Many Americans have a newfound appreciation for the importance and the vitality of this industry.

In fact, the U.S medical device market is the largest on the planet, according to a SelectUSA.gov report. The industry “includes almost 2 million jobs in the United States, including both direct and indirect employment. Medical technology directly accounts for well over 300,000 of these jobs.”

It also was noted in the SelectUSA.gov analysis, “U.S. medical device companies are highly regarded globally for their innovative and high technology products. R&D spending continues to represent a high percentage of medical device industry expenditures, averaging 7 percent of revenue. Compared to several other industries including automotive, defense, and telecommunications, the medical device industry invests a higher percentage of yearly revenues into product innovation, reflecting the competitive nature of the industry and constant innovation and improvement of existing technologies.”

For good measure, this is an industry overwhelmingly populated by small and mid-size businesses. Consider the breakdown among employer firms (latest Census Bureau data 2017) in the surgical and medical instrument manufacturing sector:

Size of Firms by Number of Employees      Percent of Total Employer Firms in the Surgical and Medical Instrument Manufacturing Sector
Less than 10      47.9%
Less than 20      61.2%
Less than 100      82.2%
Less than 500      91.1%

 

A few years ago, I participated in a debate over health care policy at Stony Brook University, and the other person on my team was a doctor who had performed surgeries around the globe. A key point he made was that the tools and technologies at his disposal in the United States were the latest available, while in countries with government-run health care systems – i.e., socialized medicine – the equipment used was actually decades behind the U.S.

That serves as a powerful warning against government efforts over-regulate or micro-manage health care, and a powerful reminder that it is a private system that provides the incentives – including, for example, protecting intellectual property – for entrepreneurship and investment to occur that result in advancements that improve and save lives.

Stay safe, healthy and innovative!

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

News and Media Releases