We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Health

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is Medical Industry Analysis?

By A. Garrett
Updated: May 17, 2024
Views: 6,187
Share

Medical industry analysis is the use of financial statistics, data, and industry trends related to the medical field. Such business analysis is employed by firms already in the medical field seeking to expand operations, entrepreneurs seeking to start businesses in the industry, and investors looking to purchase stock in companies based in this market segment. Industry analytics tailored to the medical field allow such corporations and individuals to evaluate the industry climate in order to determine the likelihood of profit or return on capital. Entering or investing in the medical trade without performing medical industry analysis lowers returns because the providers of capital are unable to appropriately allocate risk of loss.

When conducting medical industry analysis, companies or businessmen focus on the various market segments of the medical field, factors that influence growth and profitability, barriers to entry such as government regulations, and the existence of competitors. Understanding the nature of the market segment is an integral part of industry analysis. This involves researching the products, services, costs, and sources of demand for each segment.

There are several segments associated with the medical field. Despite being connected under the healthcare sector, each segment has different start-up costs, expenses, and sources of revenue that must be considered prior to entering the market. For example, the hospital segment of the medical industry requires a physical building, medical personnel, and a steady stream of equipment and supplies. This segment is usually regulated by the government and payment typically comes from billing the insurers of patients. Failing to gain proper understanding of the nature of the market segment lowers the efficacy of medical industry analysis because businesses or investors will not be aware of costs specific to that particular segment.

Profit is the goal of any business or investor. Medical industry analysis helps individuals and entities determine the potential for profitability based on the customer base and suppliers. Conductors of medical industry analysis rely on information gleaned from market segment research about customers and billing practices. They also review the financial records of companies already in the field in order to identify the sources of the biggest costs to the company.

For example, improvements in technology and the quality of medicine have led to longer lifespans. This provides hospitals with a larger pool of patients that will be in need of medical services as they continue to age. Also, the availability of insurance or government subsidized health care ensures that providers of such services to those patients will be compensated promptly. Obtaining the necessary medical equipment, supplies and medicine are usually some of the biggest expenses the hospital will have. Medical supply distributors and pharmaceutical companies usually operate out of a market segment with little competition, as a result that can charge higher prices.

Medical industry analysis also helps prospective investors identify potential barriers to entry. An individual conducting the analysis typically reviews state laws regarding medical practices, the regulations for manufacturers of medical supplies and the licensing requirements for operating a medical facility. Once the investor has knowledge of the requirements, he must calculate the amount of capital he would have to spend to satisfy them. Some companies may find that the costs to expand into the market are too great and abandon their efforts.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-is-medical-industry-analysis.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.