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Why invest in Western Europe?
Five of the ten largest medical device markets in the world are in Western Europe; Germany, France, the UK, Italy and Spain. Like all other sectors, the medical device markets will be impacted by the current eurozone crisis in the short term. This is a danger for domestic manufacturing industries, especially in Germany, which rely on demand for exports of their products. For instance, in the three month period between August and October 2012, medical device exports increased by only 0.6% in Germany and fell by 4.4% in the UK. However, beyond the current recession, the countries of western Europe are expected to return to growth with leading markets averaging average annual growth of 1.6% between 2014 and 2018.
What factors are affecting medical device market growth?
The mature and high value medical device markets in Western Europe are wealthy and developed. There is a tension between attempting to contain health costs and a desire to remain at the forefront of technological innovation. Hospitals will need to invest in the provision of new medical equipment and technologies to maintain this high standard of care.
In addition, healthcare services will need to become more efficient in order to cope with financial pressures and the needs of ageing populations. As part of this, there will be an increased demand for efficiencies, for example, medical devices that facilitate minimally invasive surgery, which can increase the number of operations performed in day surgery and ensure a faster turnaround of patients. Despite recessionary pressures, market growth rates over the coming years will be positive.
A market within a market
There has been a strong growth in imports across Western Europe in recent years, and imports tend to account for around 80% of the market. Most importantly, trade between EU countries dominates the import market, and companies wanting to exploit the full potential of major European countries need to ensure an effective marketing and distribution network.
Other factors affecting the market's growth potential include changes in the regulatory environment or government measures such as spending controls on medical devices. The significant increase in the migratory population, along with an increasing and needy population of elderly people will see demand for medical devices and equipment maintained.
Highlights from the Region
The French medical device market ranks among the top five largest markets in the world, and is the second largest in Europe, behind Germany. Consumption of medical equipment and supplies was valued at US$13.3 billion in 2012, equal to US$209 per capita. New measures have recently been taken to control spending on medical devices, similar to those already in force for pharmaceuticals. For this reason, the medical market is only likely to see moderate growth over the next five years. Medical device imports grew by 0.8% to US$11.2 billion in 2011, although not all imported products are destined for the domestic market. In recent years, there has been a marked rise in re-exports in certain sectors, most notably pacemakers. Francois Hollande became France's first left-wing president in nearly two decades when he beat Nicolas Sarkozy in the May 2012 presidential elections. The Socialists also won an outright majority in the legislative elections that took place in June 2012. The new government has retained the target to reduce the general government budget deficit to 3.0% in 2013, which will require freezing the bulk of state spending in real terms next year.
The German medical device market is the third largest in the world, ranking behind the USA and Japan. In 2012, the German medical device market was estimated at US$23.3 billion, equal to US$285 per capita. Although in decline, the population of Germany still accounts for around 20% of the total population of Western Europe with an estimated 81.8 million inhabitants in 2013. At over 11.7% of GDP, healthcare expenditure is at a high level but is increasingly constrained. The domestic market remains tight, with continued downward pressure on prices. Government funding of hospitals in recent years has remained static, therefore hospitals in the public sector are maintaining existing equipment rather than investing in new appliances. This has led to domestic producers becoming increasingly reliant on the export market.
The UK has one of the largest medical device markets in the world; it was valued at US$8.9 billion in 2012, equal to US$142 per capita and it is projected to increase by a CAGR of 6.0% until 2017. The growth of the UK market is predominantly import-led as many domestic manufacturers are not able to rapidly adjust to changes in demand. This has led to a succession of trade deficits since 2001. The import market has not been immune to the recession, however. It has faltered since mid 2008, and the US dollar total in 2011 was lower than that in 2007. Health expenditure was estimated at US$234 billion in 2012, equal to 9.5% of GDP. Healthcare spending is one of the areas that the Conservative/Liberal-Democrat coalition government has been looking at to create savings and efficiencies, as it works to reduce the deficit.
These Quarterly Updated Reports Analyse the Issues
The Outlook for Medical Device Markets in Western Europe is published by Espicom Business Intelligence. Each report provides an individual and highly-detailed analysis of each market, looking at the key regulatory, political, economic and corporate developments in the wider context of market structure, service and access. The reports are available individually or as a discounted collection, and the price includes 4 completely updated reports sent quarterly and details of local medical equipment distributors.
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