Overview

Canada’s medical devices industry is highly diversified, and most firms are small and medium-sized enterprises (SMEs).  The primary activities include research and development of medical, diagnostic, and therapeutic apparatuses, as well as the manufacturing and regulation of these devices. The market is valued at approximately USD$6.5 billion and is expected to grow by 2.1% per year until 2026.

The Canadian market presents opportunities for U.S. exporters of medical devices.  Total imports of medical devices satisfy approximately seventy percent of domestic demand.  In 2021, the U.S. supplied approximately 32% of Canada’s total medical equipment and supplies manufacturing imports, followed by China (20%), Mexico (9%), and Germany (4%). While these numbers are down from 2020, it is likely due to hospitals and other medical facilities reduced post-pandemic spending ability. Imports are expected to return to pre-pandemic levels over the next three years.

The market was directly impacted by the COVID-19 pandemic, which resulted in an increased demand for devices to diagnose and treat COVID-19 and a decreased demand for some devices used in non-COVID-related procedures.  Other factors that impacted the industry this past year included global medical device supply chain disruptions and changes in regulations to allow for the speedy authorization of devices to address COVID-19.

The medical device industry is experiencing increased demand due to the rise of chronic disease and an aging population. In 2019, for those over the age of 20, 44% reported having at least one chronic disease. Additionally, the median age of all Canadians is 41.1 years old with seven million Canadians being older than 65, accounting for 18.5% of the population, which has grown significantly since 2016.

Canada’s mixed public-private healthcare system is comprised of the public sector which finances healthcare services, and the private sector which delivers these services.  Procurement is mandated differently by each province. Provincial governments across Canada are currently implementing or exploring changes to healthcare procurement – including centralization initiatives. All citizens and permanent residents of Canada are eligible and benefit from free hospital and physician services and pay only for excluded services, which can include outpatient prescription drugs and dental care.

A public facilities budget is dictated by the provincial government and thus can change year to year, and is affected by the external economic environment. Consequentially, in Canada while operators benefited from increased federal funding during the beginning of the COVID-19 pandemic, a significant financial strain was then placed on the healthcare industry, causing hospitals, and other operators, to spend less money on medical devices.

U.S. exporters need to be aware that all medical devices are regulated by Health Canada’s Medical Device Bureau of the Therapeutic Products Directorate and governed by Canada’s Food and Drugs Act and Medical Device Regulations. Under these laws, all medical devices are categorized in four classes and manufacturers for class II, III, and IV need to hold a Canadian Medical Device License (MDL) and be certified through the Medical Device Single Audit Program (MDSAP) to maintain a medical device license.

Best Prospects

The key product and services segmentation of the industry are cardiovascular and respiratory devices which make up 22.3% of the market, followed by surgical devices (19.4%), medical and industrial diagnostic devices (18.1%), spinal devices (11.7%), and diabetes monitoring devices (6.3%). Similarly to the U.S., Manufacturers and distributors of medical devices produce revenue in Canada by selling these devices to hospitals, clinics, primary care physicians, and pharmacies.

Opportunities and Trends to Consider

Opportunities in the health care industry concerning medical devices are being led by macroeconomic environmental trends. The six macro trends to take into consideration are demographic, economic, political, ecological, socio-cultural, and technological. In terms of demographic’s Canada has an aging population, which provides an opportunity to focus on medical devices to aid older population groups.

Important economic trends include high inflation and supply chain issues, which allow U.S. companies to increase exports to Canada due to geographical proximity. In a post-pandemic environment, however, the aftermath of the economic strain put on the healthcare system has decreased public spending ability. Politically, with an increased focus on health, there are stricter regulations and best practices for healthcare products. Canada’s changing ecological environment is also essential when considering population movement and the geographical area to invest in medical supplies distribution. For Canadians, health and well-being is a top priority. U.S. medical device companies will have to consider these cultural changes when designing medical devices. Finally, advances in technology, including a larger focus on data analytics and artificial intelligence (AI), will change where public investments are directed and allow the standards of diagnostic medicine to evolve.

Virtual Care and Digitalization

During the Covid-19 pandemic, medical care and services needed to adapt to changing public health measures. Virtual care became a credible means to access healthcare professionals while respecting public health guidelines. Post-pandemic, telehealth provides an interesting opportunity to permanently change how patients seek medical help. Telehealth is mainly affected by public perception; addressing technology and data security is, therefore, key. Medical devices that incorporate any level of virtual care must take into consideration public trust and changing regulations.

The Canadian telehealth market, however, was experiencing steady growth before the Covid-19 pandemic, and the market is currently growing at 35% per year due to the need for offering healthcare services to rural communities and to the subsector becoming increasingly mainstream. One risk to providing virtual care is the lack of compatibility across provinces, so the difference in regulation between geographic areas must be considered when designing and exporting to Canada.  

With macroeconomic trends, like advanced technologies and AI, digital medicine is a sub-sector of the healthcare industry that is experiencing substantial growth. Digital medicine includes the production of medical devices that combine hardware and software to measure, intervene, and diagnose medical ailments. Digital software aims to innovate the medical experience by targeting three segments of healthcare. First, it aims to create a flow of data that can give high-speed results to patients and doctors, both in and out of medical facilities. Second, digital medicine aims to be non-human readable technology, producing algorithms to run on large samples of data that cannot be analyzed by a medical professional. Third, examining genomic sequencing and future predictions of abnormal heart conditions. Lastly, digital medicine aims to share medical diagnoses with some room for doctors to correct false positives/negative data in real-time. Digital medicine devices, depending on the function of the product, could be classified under diagnostic apparatus or patient aid services which are leading sub-sectors.

The larger environmental trend of personalization within products is also affecting the healthcare industry. Utilizing data analytics and AI will allow medical devices to be more personalized and accurate to the individual patient. These advances in technology are due to an increased public and private investment to drive predictive, preventative, and personalized medicine.

Procurement     

Hospitals and other health care providers in Canada can procure their equipment, supplies, and services individually or as part of group purchasing (GPO) or shared services organizations (SSO). Hospitals alone account for an estimated 26.4% of total healthcare spending.  Other significant buyers include medical professionals, such as dentists, eye-care specialists, and other professionals in nursing homes and residential care facilities. Private clinics and outpatient facilities are also experiencing a growing demand for medical equipment, including devices, instruments, and supplies.

Healthcare systems in Canada use various competitive tendering processes for the procurement of medical devices and equipment. U.S. suppliers looking to export to Canada should refer to the individual provinces’ tendering websites for information concerning procurement opportunities available in each province.

Ontario and Quebec account for most of the industry, with 29.3% of the country’s hospitals being in Ontario and 17.7% in Quebec. In terms of business concentration of medical devices, Ontario and Quebec naturally lead as well, with 46.8% and 22.3% of the industry, respectively.

Resources

Major Events and Trade Shows in Canada

• Canada’s Medtech Conference, October 12th and 13th 2022 - Virtual
• E-health Annual Conference and Tradeshow, May 28th to 31st 2023 – in-person
• FIME, July 27th to 29th 2022 – in-person with optional virtual meetings

Canadian Government

• Health Canada – Safe Medical Devices Canada
• Health Canada – Software as a Medical Device (SaMD)

Commercial Services

For additional information on this sector, please contact Commercial Specialist Connie Irrera at Connie.Irrera@trade.gov or by phone at (514) 908-3662 or cell (514) 592-7871.