A medical device company is a business that produces different designs and types of medical devices (diagnostic ultrasound products, x-ray machines, medical lasers, syringes and needles, test kits, blood glucose meters, forceps et al). A medical device can be any instrument, apparatus, implement, machine, appliance, implant, software, material, or other similar or related products.
The global medical devices market in 2020 was valued at $456.9 billion, which increased at a compound annual growth rate (CAGR) of 4.4 percent since 2015. Despite an expected decline of -3.2 percent in 2020, it is expected to rebound in 2022 with a 6.1 percent CAGR and reach $603.5 billion in 2023.
The United States remains the largest medical device market in the world: $156 billion (40 percent of the global medical device market in 2017). By 2023, it is expected to grow to $208 billion.
Steps on How to Start a Medical Device Business
Table of Content
Conduct Market Research
The first step in the market research process for your medical device business is to develop market-based research questions in line with your overall business goal and objective. Please note that market research helps businesses measure their reputation in the market over a period of time. It is a great way to measure the progress of your business as well as compare your status to your competitors to see where you are trailing or where you have an advantage.
a. Who is the Target Market for Medical Device Business?
- Medical laboratories
- Medical colleges
- Dental clinics
- Optical center
- Botox clinics
- Medical-related clinics
- Medical device wholesale distributors
- Medical device retailers
- Healthcare centers
- Medical Research institutes
- Veterinary clinics
b. Is Medical Device Business a Profitable Business?
Yes, the medical device business is profitable. As a matter of fact, the global medical device market will reach $745.0 billion by 2030, growing by 5.0 percent annually over 2020-2030 owing to the aging population worldwide, the prevalence of infectious diseases as well as the increasing prevalence of chronic diseases, technological innovation, and penetration of healthcare insurance.
c. Are There Existing Niches in the Industry?
Although there is no niche area in the medical device business, it is common for some medical device manufacturers to specialize in any of the following areas;
- Neuromodulation and spinal devices
- Cardiovascular devices
- Diabetes devices
- Other devices
- Irradiation devices
- Patient recovery and noninvasive devices.
d. Who are the Major Competitors?
- Medtronic PLC.
- Abbott Laboratories
- General Electric Company
- Danaher Corporation
- Boston Scientific Corporation
- Johnson & Johnson
- Varian Medical Systems Inc.
- Siemens Healthineers
- Cardinal Health
- B. Braun
- 3M Health Care
- Zimmer Biomet
e. Are There County or State Regulations or Zoning Laws for Medical Device Business?
Yes, there are county or state regulations and zoning laws for medical device manufacturers. In the United States, it wasn’t until the Federal Food, Drug, and Cosmetic Act (FD&C Act) in 1938 that medical devices were regulated. Later in 1976, the Medical Device Amendments to the FD&C Act established medical device regulation and oversight as we know it today in the United States.
Please note that if you are planning to house your production factory in a purpose-built facility or propose an extension to an existing building, you must apply to your local planning department for approval. Ideally, an architect experienced in factory planning will draft your initial plans.
They might collaborate with, or seek input from, your local Fire Safety Officer to ensure that the appropriate safety measures have been accounted for, under the safety regulations as defined in the Regulatory Reform Order.
f. Is There a Franchise for Medical Device Business?
No, there are no franchise opportunities for the medical device business.
g. What Do You Need to Start a Medical Device Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Production facility
- Computers, Laptops, and Servers
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Production Machines, Equipment, and Tools
- Supply of Raw Materials
- Startup Capital
Memorable Name ideas for Medical Device Business
- Two Cent© Medical Device, Inc.
- MT Technologies® Medical Device and More, LLC
- Mike and Co© Medical Device, Inc.
- Medic Solutions® Medical Device, Inc.
- The Expats™ Medical Device, Inc.
- GE Engineering™ Medical Device, LLC.
- San Tamils© Medical Device, LLC
- Sheen Global® Medical Device, Inc.
- Lance Bowline© Medical Device, Inc.
- Wana Bros© Medical Device, Inc.
- Mili Cent® Medical Device, Inc.
- Cletus McPherson® Medical Engineering, LLC
- Stretch® Medical Device, Inc.
- International Engineering Corporation, Inc.
- Garry Holmes® Medical Device USA LLC.
- Emmy Allen® Medical Engineering, Inc.
- Denis Palermo® Medical Device USA LLC
- Fahrenheit ® Medical Device, LLC
- Star Engineering® Medical Device USA LLC
- Back Space® Medical Engineering USA LLC.
Register Your Business
a. What Type of Business Structure is Best for Medical Device Business?
Even though there are several options when it comes to the business structure of a medical device business, the one that most players in this line of business consider is the LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Medical Device Business?
- General Business License
- Fire, Health, and Safety Permit
- Zonal Permits (Applicable in some cities)
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Medical Device Business?
- ISO 13485 Certification (ISO 9001- 13485)
- Product Assurance and Management Systems Certification
- Medical Device Quality and Design Certificate – UCSC
- FDA CFR Part 820
- CMDCP (Certified Manufacturing Device Compliance Professional)
- GMPCP (Current Good Manufacturing Certified Professional)
- GMP ICH Q7
- GAMP (Good Automated Manufacturing Practice).
e. What Documents are Needed to Open a Medical Device Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a medical device production business, usually you may need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for someone to infringe on your work or copy your designs.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Medical Device Business?
When it comes to starting a medical device business, the startup costs could range from $250,000 to over a million dollars depending on how much equipment the business owner decides to purchase, the production facility, and the space leased. Please note that this amount includes the salaries of all staff for the first month of operation.
b. What are the Cost Involved in Starting a Medical device Business?
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
- Promotional expenses for the opening of the medical laboratory for $3,500, as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring a business consultant – $2,500.
- Insurance coverage at a total premium – $2,400.
- The cost of payment of rent for 12 months at $1.76 per square foot in the total amount of $275,600.
- The cost for facility remodeling and equipping the facility – $250,000.
- Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
- The cost for start-up inventory (raw materials) – $150,000
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost of purchase and installation of CCTVs: $3,000
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
- The cost of launching a website: $600
- Miscellaneous: $5,000
c. What Factors Determine the Costs of Opening a Medical Device Business?
- The size of the medical device business
- The choice of location
- The required licenses and permits
- The type of facility
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing
- The cost for furnishing and equipping the facility
- The cost for insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your medical device production business, but, if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Medical Device Production Business?
- Rent and lease
- Supplies and inventory (materials and supplies, and packaging supplies et al)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Maintenance of machines and equipment
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (President) – $75,000 Per Year
- Factory Manager – $55,000 Per Year
- Merchandise Manager – $45,630,000 Per Year
- Engineers and Devices Designers – $45,000 Per Year
- Accountant (Cashier) – $38,500 Per Year
- Marketing and Sales Executives – $38,000 Per Year
- Machine Operators – $35,100 Per Year
- Customer Service Executive – $30,000 Per Year
- Security Guard -$27,000 Per Year
g. How Do You Get Funding to Start a Medical Device Production Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from, government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Fahrenheit® Medical Device, LLC is a registered medical device production business that will be located in an industrial area in Lakewood, Colorado. We have been able to secure a long-term lease agreement for a facility in a strategic location with an option of a long-term renewal on terms and conditions that are favorable to us.
The facility has government approval for the kind of business we want to run and it is easily accessible. We are in the medical device production business to engage in the production of different types of medical devices. We are also in business to make profits and at the same to give our customers value for their money.
b. Products and Service
- Neuromodulation and spinal devices
- Cardiovascular devices
- Diabetes devices
- Other devices
- Irradiation devices
- Patient recovery and noninvasive devices.
c. Mission Statement
Our mission is to build a highly successful, profitable business venture; a medical device production business whose brand will be known all around key cities in the United States of America and the globe.
Our vision is to be among the top 3 medical device production companies in the world.
d. Goals and Objectives
The goals and objectives of a medical device production business are to design and produce different types of medical devices for the healthcare industry.
e. Organizational Structure
- Chief Executive Officer (President)
- Factory Manager
- Merchandise Manager
- Engineers and Device Designers
- Accountant (Cashier)
- Marketing and Sales Executives
- Machine Operators
- Customer Services Executives
- Security Guard
a. SWOT Analysis
- A product that can effectively serve the purpose it was created for
- The best price/deal they can get for any of our medical devices in the whole of the United States of America
- Opportunity to choose from a wide range of medical devices
- Availability of money back policy for first–time customers who just want to try out our medical devices
- Large distribution network
- Excellent customer service
- Financial Constraints
- A new business that will be competing with well-established medical device production brands
- Inability to retain our highly experienced employees longer than we want
- A rise in the demand for medical devices due to the ongoing Covid19 pandemic
- Online market, new services, new technology, and of course the opening of new markets
- Increase of the number of healthcare centers and hospitals within our target market area.
- The arrival of new medical device production business within our market space
- Unfavorable government policy and regulations.
- Economic uncertainty
- Liability problems
b. How Do Medical Device Production Businesses Make Money?
Medical device production businesses make money by selling a wide range of medical devices and also by offering after sales services and maintenance.
c. Payment Options
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Place adverts on both print (newspapers and healthcare magazines) and electronic media platforms
- Sponsor relevant community-based events / programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your Bill Boards in strategic locations around your city or state
- Distribute your fliers and handbills in target areas
- List your medical device production business in local directories / yellow pages
- Advertise your medical device production business on your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions where your medical device production business is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.
a. How Much Should You Charge for your Product?
The price of the medical devices depends on the type, size, and brand of the product.
b. How Much Profit Do Medical Device Production Business Owners Make a Year?
It depends, but available reports show that the national average earnings for medical device production business owners are approximately $120,000 per year.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the medical device production business
- The location of the medical device production business is covering (online or strictly bricks and mortars)
- The management style of the medical device production business
- The business approach of the medical device production business
- The advertising and marketing strategies adopted by the medical device production business.
- The number of years the medical device production company is in business
d. What is the Profit Margin of a Medical Device Production Business?
The profit margin of a medical device production business is not fixed. But basically, the medical device industry has been highly attractive, with 5 percent average annual growth and operating margins between 23 and 25 percent.
e. What is the Sales Forecast?
- First Fiscal Year (FY1): $5,950,000
- Second Fiscal Year (FY2): $7,550,000
- Third Fiscal Year (FY3): $10,680,000
Set Up your Office
a. How Do You Choose a Perfect Location for Medical Device Production Business?
- The demography of the location (number of healthcare centers and hospitals et al)
- The demand for medical devices in the location
- The purchasing power of medical clinics and hospitals in the location
- Accessibility of the location
- The number of medical device production businesses and other medical devices importers in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Medical Device Production Business?
- Orlando, Florida
- Los Angeles, California
- Chicago, Illinois
- Boston, Massachusetts
- Silver Spring, Maryland
- Rowland Heights, California
- Portland, Oregon
- New York City, New York
- Atlanta, Georgia
- Dallas, Texas
c. What Equipment is Needed to Operate a Medical Device Production Business?
- Calibrating Machines
- Digital Machines.
When it comes to hiring employees for a standard medical device production business, you should make plans to hire a competent chief executive officer (president), production manager, engineers and device designers, merchandize manager, accountant, marketing and sales executives, tailors, machine operators, and security guard.
Launch the Business Proper
You can open your medical device production business by organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the medical device production business, you will be able to officially inform people in your city that your medical device production business is open for business.
a. What Makes a Medical Device production Business Successful?
- Choose a good location and showroom facility
- Make sure your medical devices are unique and the finishing is topnotch
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your medical device production business
- Leverage on all available online and offline platforms to promote your medical device production business
b. What Happens During a Typical Day at a Medical Device Production Business?
- The production factory is open for the day’s work
- The facility is cleaned and well-arranged
- Factory swings into action (production of medical devices)
- Deliveries of orders are made
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Medical Device Production Business?
- Excellent engineering and technical skills
- Excellent device designs skills
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Work experience in a medical device production business environment
- Experience in designs and engineering
- Experience in managing people
- Experience in business administration.