SIC 3845

This classification comprises establishments primarily engaged in manufacturing electromedical and electro-therapeutic apparatus, such as magnetic resonance imaging equipment, medical ultrasound equipment, pacemakers, hearing aids, electrocardiographs and electromedical endoscopic equipment. Establishments primarily engaged in manufacturing electrotherapeutic lamp units for ultraviolet and infrared radiation are classified in SIC 3641: Electric Lamp Bulbs and Tubes.

NAICS Code(s)

334517 (Irradiation Apparatus Manufacturing)

334510 (Electromedical and Electrotherapeutic Apparatus Manufacturing)

Industry Snapshot

In the late 1990s, the electromedical and electro-therapeutic apparatus industry had 458 establishments. These establishments shipped $13.5 billion worth of goods in 2000, compared to $11.5 billion in 1997.

Born from the rapid technological advances that occurred in the electronics field following the war, specifically from the technological achievements that spawned the semiconductor and computer industries, the list of products manufactured by companies within the electromedical industry comprises a host of medical devices regarded in the 1990s as indispensable to the practice of medicine. These products include pacemakers, heart defibrillators, magnetic resonance imaging (MRI) devices, ultrasonic scanning devices, computerized axial tomography (CAT) scanners, and cardiographs, as well as a number of other medical devices equally essential to the diagnosis and treatment of diseases.

Organization and Structure

Approximately 400 companies in the United States manufactured electromedical or electrotherapeutic devices as their primary business in the late 1990s. Of the approximately 450 manufacturing establishments operated by the industry's manufacturers, roughly 200 employed 20 or more workers. Compared to the typical size of a manufacturing facility in the United States, the electromedical industry exceeded the national standard, employing nearly 100 workers per establishment.

California led all other states in electromedical device production, manufacturing 19 percent of the industry's total shipments and employing 15 percent of the industry's total workforce. With its 90 manufacturing facilities, California contained more than twice as many facilities as the second and third ranking states, Minnesota and Florida.

Although classified as a distinct industry by the U.S. Government's Standard Industrial Classification Manual in the early 1990s, the electromedical industry was not always regarded as such, functioning for roughly the first 25 years of its existence in an ancillary position to the then-larger X-ray apparatus and tubes industry. From the early 1960s to 1987, electromedical industry statistics were combined with those of the X-ray apparatus and tubes industry. During that time, the electromedical industry evolved from a group of manufacturers representing a modestly sized market into a genuine industry of it own. The classification "X-Ray Apparatus and Tubes; Electromedical and Electrotherapeutic Apparatus," initially was a logical combination of what became two separate industries, primarily because the X-ray apparatus segment overshadowed the smaller electromedical segment, generating the bulk of the industry's revenue and representing a more formidable economic force.

In 1987, when many industries were reclassified to more accurately reflect the true nature of American industry, the X-ray apparatus and tubes segment of the classification "X-Ray Apparatus and Tubes; Electromedical and Electrotherapeutic Apparatus," became SIC 3844: X-ray Apparatus and Tubes and Related Irradiation Apparatus, while the electromedical segment, by then a larger industry than the X-ray apparatus industry, became SIC 3845: Electromedical and Electrotherapeutic Apparatus. This reclassification by the Standard Industrial Classification Manual , however, came more than a decade after the electromedical industry had eclipsed the X-ray apparatus industry in magnitude, serving as a somewhat belated recognition of the electromedical industry's force. Consequently, during the electromedical industry's prolific rise to the fore in the 1970s, all of the statistics that tell the story of its growth are somewhat inflated due to the inclusion of the statistical information generated by X-ray apparatus manufacturers.

Background and Development

In the half century following World War II, the electromedical industry recorded greater growth than the four other industries composing the medical and dental industrial category, outpacing the revenue growth of the surgical and medical instruments industry, the surgical appliances and supplies industry, the dental equipment and supplies industry, and the X-ray apparatus and tubes industry. The rise of the electromedical industry to a position of prominence within the medical and dental category was attributable primarily to the revolutionary nature of the products manufactured under its purview, a diverse selection of technologically sophisticated medical devices that greatly ameliorated the art of medicine not only in the United States, but throughout the world.

Truly a product of a technologically modern society, the electromedical industry owes its emergence largely to research and development conducted in the 1950s by scientists and manufacturers in the then-nascent semiconductor and computer industries. From these two technological staging grounds, combined with advancements in the electronic field resulting from the enormous effort put forth by the nation's space program, the process by which electronic technology developed was greatly accelerated. The knowledge gained from these three components of American industry, each heavily dependent on electronic technology, proved to be a boon to other industries as well, strengthening some, while enabling the outright creation of others. Such was the case with the electromedical industry, which emerged during the 1960s.

To be sure, there were precursors to electromedical devices before the 1960s. Electrical pulsing as means to treat a variety of ailments had been employed since before the turn of the twentieth century, but these early devices were more curiosities than representative of a genuine industry. Instead, perhaps the first piece of equipment that could justify prognostications for the emergence of a future electromedical industry appeared in the late 1950s, when Earl Bakken, chairman of a biomedical company named Medtronic, and cardiologists from the University of Minnesota developed one of the first workable cardiac pacemakers.

Nothing more than an automobile battery resting on a dolly and attached to the patient's chest through wire cables, this first pacemaker was rather primitive, but led to further advancements and the emergence of much smaller versions that soon were regarded as viable medical devices suitable for implantation. As improvements were made in pacemakers, additional products that would later compose the electromedical industry, such as ultrasonic medical equipment and cardiographs, were developed as well. Their development would take time, but the developmental challenges, though formidable, were not the major obstacles barring the appearance of the electromedical industry. Instead, marketing these new products posed the greatest challenge to the fledgling electromedical manufacturers, as industry participants found it difficult to convince the medical community that electromedical devices provided in many cases a preferable alternative to extant medical equipment. This took time as well, but eventually doctors and hospital administrators embraced the new electronic equipment, and by the end of the 1960s, the industry began to emerge as a recognizable economic force.

For electromedical manufacturers, the rewards were worth the wait. The industry quickly flourished, its growth fueled by the widespread acceptance of all kinds of electromedical equipment throughout U.S. health care institutions. Sales amounted to a modest $233 million in 1967, particularly small considering electromedical manufacturers were responsible for generating only a fraction of the total, overshadowed by their larger cousins, X-ray apparatus manufacturers. But the electromedical industry would not be cast in this supportive role for long, and indeed from this point forward, growth of the electromedical industry would outpace that of the X-ray apparatus industry and thereby fuel the growth of the industry as whole. When, five years later, total sales climbed to $429 million, the leap was even more pronounced for electromedical manufacturers, having started from much below the $233 million figure in 1967, yet accounting for a large part of the nearly $200 million increase.

By 1974, the electromedical industry had closed the gap separating its revenue production with that of the X-ray apparatus industry and drew even, with each segment accounting for half of the $650 million in sales recorded that year. With slightly less than 100 X-ray apparatus and electromedical device manufacturers in the country at that time, the number of manufacturers would swell to nearly 240 into years, a dramatic increase once again reflective mainly of the electromedical industry's rapid rate of growth. From 1974 to the end of the decade, the electromedical industry's revenue volume skyrocketed at a compound annual rate of 31 percent, an increase that dropped to a less prolific 16.4 percent when adjusted for inflation, yet still representative of robust vitality.

Still benefiting from further improvements and from the continued acceptance of their products, which by the mid-1970s had firmly established the electromedical industry as a major player in the broadly defined medical industry, electromedical manufacturers had made great strides since the first awkward and rudimentary pacemaker appeared in the late 1950s. No longer attached via cable or measuring as large as a hat box, pacemakers were now roughly the size of a fingertip and enjoyed widespread demand. In 1970, 53,000 pacemakers were implanted, and by 1976 the yearly implants had increased to 175,000, representing a quarter of a billion dollars in sales. At this time, the prospects for further sales appeared almost guaranteed, as a development of great significance augured a dramatic increase in the number of pacemakers installed each year. Powered by mercury-zinc batteries, pacemakers typically needed to be replaced at least three times during a patient's life span, but the use of lithium-powered batteries, a development that promised to reshape the market for pacemakers, reduced the average replacement expectation of pacemakers to one per patient. Although the switch to lithium-powered batteries would sharply reduce the industry's replacement sales, the prospect of undergoing fewer surgical procedures induced more patients to opt for pacemaker implants, which drove sales upward.

By 1976, the electromedical and X-ray apparatus industry's aggregate revenue neared the $1 billion mark, then shot past it the following year, increasing 86 percent to reach $1.88 billion. Underpinned by strong pacemaker sales and even stronger ultrasonic equipment sales, which were increasing 18 percent annually, the electromedical industry approached the end of its decade of prodigious growth nearing $2.5 billion in sales. Success came slower in the early 1980s, but only in contrast to the dramatic growth of the 1970s. Sales eclipsed $5 billion in 1984, then began to suffer in the ensuing years, falling 2.7 percent in 1985 and increasing only marginally thereafter, as flat demand, a buildup of inventories, and strong competition from imports combined to arrest the industry's expansion.

In 1987, the electromedical industry was separated at last from the X-ray apparatus industry, their respective statistics no longer pooled together. In the last year of their combination, total sales were estimated to be $5 billion; their separation gave, for the first time, a clear indication of their individual magnitude. The electromedical industry emerged as a $3.57 billion industry, employing 29,200 workers, while the X-ray apparatus industry's value of shipments amounted to $1.55 billion and its workforce totaled 8,700.

As the electromedical industry entered the late 1980s, manufacturers attempted to effect a recovery from the mid-1980s, a downturn that was exacerbated by the increasingly cost-conscious health care industry. By 1989, price increases at the manufacturer level averaged only 3 percent in the previous four years, as increased competition and production overcapacity limited the manufacturers' ability to raise prices. Profits suffered as a result, but revenue continued to grow, sending many manufacturers overseas to forge joint ventures with other companies to lessen the financial constraints of a capital-intensive business.

After recording double-digit growth between 1987 and 1990, the electromedical industry entered the early 1990s watching its inspiring growth shudder to a stop, particularly in 1993, when sales were flat. In 1994, the industry's revenue total was an estimated $6.23 billion. The industry-wide stagnation of the early 1990s was attributable largely to a sharp decline in MRI shipments, which plummeted nearly 20 percent compared to shipment increases of pacemakers and ultrasonic scanning devices of 3 and 5 percent, respectively. The decline in MRI shipments, more capital-intensive than pacemakers or ultrasonic scanning devices, was attributed primarily to recessive economic conditions during the early 1990s, coupled with uncertainty regarding the future of health care as a result of President Bill Clinton's health care reforms.

Looking forward from the mid-1990s, prognostications for the electromedical industry were predicated on the further technological development of MRIs, and generally on advancements emanating from the diagnostic side of the electromedical industry. With improved imaging systems, operating at significantly higher speeds, this type of electromedical equipment provided the industry's best answer to the health care industry's need for costcutting, more efficient equipment in the 1990s.

Tattoo removal was also becoming a large market for the electromedical industry. A dermatological laser distributed only by Laser Photonics, Florida, signed a 1996, three-year deal for $5.4 million to provide medical lasers for removing tattoos, pigmented skin, and unwanted hair to American Laser Corp.

Current Conditions

A solid U.S. economy, growing at a steady pace throughout the late 1990s benefited this industry. In the late 1990s, a total of 542 establishments produced electromedical and electrotherapeutic apparatus. Revenues were $11.36 billion, almost doubling those of the early 1990s. The value of industry shipments increased from $12.16 billion in 1999 to $13.57 billion in 2000. However, employment in the industry decreased from 55,000 in 1997 to 52,300 in 2000.

At the close of the twentieth century, medical device manufacturers can be subject to product-liability claims in state court. The U.S. Supreme Court found Medtronic Inc., the world's largest pacemaker manufacturer, liable for design defects, a ruling that could influence the 11 million people in the United States with such implanted medical devices as pacemakers, silicone breast implants, hearing aids, penile implants, hip replacements, and knee replacements. The company had 1999 sales of $4.1 billion and employed 21,794 people.

Industry Leaders

The largest manufacturer in the electromedical industry during the 1990s, General Electric's Medical Systems Group based in Milwaukee, Wisconsin, stood as a classic example of the electromedical industry's efforts to further penetrate the international electromedical market and reduce the production costs of its products. With joint ventures scattered across Asia, General Electric's Medical Systems Group entered into a joint venture with a personal computer manufacturer, Wipro Ltd., in India in 1990 to produce and sell a wide variety of ultrasound devices. By forging such ties, the Medical Systems Group became one of General Electric's most profitable divisions in the mid-1990s, recording more than $5 billion in sales in 1993. In 1998, the Medical Systems Group recorded sales of $4.8 billion, an increase of a half billion dollars over 1997. In December, 1999, General Electric purchased OEC Medical Systems, Inc. This company had 1998 sales of $188.7 million, and further strengthened General Electric's place at the industry's forefront.

Other important manufacturers in the electromedical industry include Marconi Medical Systems (formerly Picker International Inc.), based in Cleveland, Ohio, and St. Jude Medical, Inc., based in St. Paul, Minnesota. Marconi Medical Systems reported revenues of $1.5 billion in sales and employed approximately 5,000 person in 1999. St. Jude Medical, Inc., a heart valve manufacturer, acquired Ventritex, a leading heart defibrillator company, for $501 million in 1997. St. Jude Medical is the world's leading manufacturer of mechanical heart valves. This company recorded sales of $1.1 billion in 1999, employing approximately 4,000 people. In December, 1999, St. Jude Medical announced the first implants of the Photon DR Dual—Chamber Implantable Cardioverter Defibrillator.


Total employment during the electromedical industry's history generally paralleled its pattern of revenue growth, climbing while sales increased and leveling off when revenue growth became less prolific. In 1974, when the industry already was experiencing a phenomenal surge of growth and its total employment included employees involved in the production of X-ray apparatus, there were 13,000 employees composing its workforce. Two years later, total employment vaulted to 30,900, largely due to the growth of the electromedical segment of the industry. This figure continued to increase, reaching 41,500 by 1981, then climbing to 48,800 by 1984, at which time total employment in the industry began to record successive annual declines as manufacturers streamlined their operations. By 1988, total employment had fallen to 31,400, then began to increase once again, rising to 34,400 by 1991.

Of the 34,400 people employed by the electromedical industry in 1991, less than half were production workers, an atypical ratio of production workers to salaried employees in American manufacturing industry. The greater proportional representation of salaried employees, those performing managerial, administrative, or technical duties, was primarily due to the technological sophistication of the products manufactured by the industry, which, as the level of sophistication increased over the course of the industry's existence, winnowed the ranks of production workers in the industry. These trends have continued into 1998, when 46,416 people were employed in this industry with less than half being production workers.

Generally, production workers were employed on a full-time basis during the 1990s, averaging 4 percent more hours per year than the typical production worker employed by other manufacturing industries. Production workers in the electromedical industry generally earned more per hour than their counterparts as well, averaging $10.91 per hour in 1989, compared to the national average of $10.49 per hour. In 1996, this average hourly wage increased to $12.90, and in 2000, the wage increased to $15.51.

Of the 458 establishments in the electromedical industry, the majority of them are located in California. Other states with significant concentrations of establishments in this industry include Minnesota, Florida, and Massachusetts.

America and the World

Historically, the electromedical industry's international presence has been a major source of its strength, providing manufacturers with ample room to market their highly sophisticated products in markets bereft of similar equipment. In 1993, this presence continued to support the industry at a time when domestic conditions had soured. In that year, U.S. exports of electromedical equipment increased 8 percent to $2.4 billion, giving U.S. manufacturers a $1.1 billion trade surplus. Much of this business was attributable to the strong sales performance of electrodiagnostic devices, ultrasonic scanners, and patient monitoring systems. These products were sold chiefly to European Community countries, Japan, and Canada. In 1997, exports totaled $2.6 billion.

Research and Development

Recent technological advances have led to the improvement of current instruments. One such device, a smaller, lighter, defibrillator, restores the heartbeat of cardiac arrest victims more quickly than the older version. Since it improves the survival rate of these patients, sales of the instrument are expected to reach $150 million per year by 2000.

New diagnostic tools and surgical devices are expected to benefit the industry and patients alike. In-body blood and tissue surveillance systems sales approximated $360 million in 1996, and the industry anticipates sales of $630 million by the year 2000. A non-invasive, 15-minute cancer test, approved in 1997, was expected to reduce the number of biopsies and increase early detection of the disease.

Further Reading

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"Breast Disease (Screening) Adjunctive Screening Device Enhances Early Detection." Cancer Weekly Plus , 11 November 1996.

"Brit, Dr. Reddy's Lab in Technical Collaboration." Business Line , 10 July 1996.

Chiu, Yvonne. "California Couple Markets Reusable Fertility Test Device." Sacramento Bee , 12 April 1996.

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