MEDICAL DEVICES AND MEDICAL DISPOSABLES

Transcription

1 EU MARKET SURVEY 2001 MEDICAL DEVICES AND MEDICAL DISPOSABLES VOLUME II CENTRE FOR THE PROMOTION OF IMPORTS FROM DEVELOPING COUNTRIES

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3 EU MARKET SURVEY 2001 MEDICAL DEVICES AND MEDICAL DISPOSABLES Compiled for CBI by: Netherlands Economic Institute in collaboration with Mr. W.K. Hoppe March 2001

4 DISCLAIMER The information provided in this survey is believed to be accurate at the time of writing. It is, however, passed on to the reader without any responsibility on the part of CBI or the authors and it does not release the reader from the obligation to comply with all applicable legislation. Neither CBI nor the authors of this publication make any warranty, expressed or implied, concerning the accuracy of the information presented, and will not be liable for injury or claims pertaining to the use of this publication or the information contained therein. No obligation is assumed for updating or amending this publication for any reason, be it new or contrary information or changes in legislation, regulations or jurisdiction.

5 New CBI Publication with new format and contents partly, replacing CBI market survey Medical Devices and Medical Disposables, May 1996

6 Photo courtesy: Medeco / Sherwood Medical /

7 CONTENTS REPORT SUMMARY 6 1 PRODUCT CHARACTERISTICS Product groups Customs/statistical product classification 8 2 INTRODUCTION TO THE EU MARKET 11 3 CONSUMPTION Market size Market segmentation Consumption patterns and trends 15 4 PRODUCTION 18 5 IMPORTS Total imports Imports by product group The role of the developing countries 28 6 EXPORTS Total exports 30 7 TRADE STRUCTURE EU trade channels Distribution channels for developing country exporters 33 8 PRICES AND MARGINS Prices and margins Sources of price information 35 9 OPPORTUNITIES FOR EXPORTERS 36 APPENDICES 37 1 Detailed import/export statistics 37 2 Standards organisations 46 3 Sources of price information 47 4 Trade associations 48 5 Trade fair organisers 53 6 Trade press 56 7 Trade promotion organisations 58 8 Other useful addresses 59 9 List of developing countries List of Netherlands importers and most EU importers Useful Internet sites References n.a. 5

8 REPORT SUMMARY This survey profiles the EU market for Medical Devices and Medical Disposables. The emphasis of the survey lies on those products, which are of importance to developing country suppliers. The major national markets within the EU for those products are highlighted. The survey includes contact details of importers, trade associations, and other relevant organisations. Furthermore statistical market information on consumption, production and trade, and information on trade structure and prices and margins is provided. As an exporter you need this information to formulate your own market and product strategies. In order to assist you with this CBI developed a matching EU Strategic Marketing Guide Medical Devices and Medical Disposables It aims to offer a practical handbook for exporters engaged, or wishing to engage in exporting Medical Devices and Medical Disposables to the European Union. It aims to facilitate exporters in formulating their own markets and product strategies through the provision of practical information and a methodology of analysis and ready-to-fill-in frameworks. As mentioned above, statistical market information on consumption, production and trade, and information on trade structure and prices and margins, which is required for the ready-to-fill-in frameworks, can be found in this EU Market Survey. The medical devices and medical disposables studied in this Market Survey include: Medical disposables: Wadding, gauze and bandages; Surgical gloves; Syringes, needles and catheters; Wound closure products; Nappies and similar hygiene products; Medical devices: Preparation for x-ray examinations; Surgical instruments and appliances; Electro-diagnostic apparatus; Dental instruments. Consumption According to CBS Datashop information total value of EU consumption in 1998 of medical devices and medical disposables amounted to US$ 9,874 million. The medical disposables are the largest market, accounting for 65 percent of this figure, while medical devices amounts to a lesser 35 percent of the total. The main markets for medical devices and medical disposables in the EU are Germany, France, Italy and the UK, followed on a distance by Spain, the Netherlands and Belgium. The products with the highest consumption levels are Wadding, gauze and bandages, Syringes, needles and catheters, Nappies and similar hygiene products and Surgical instruments and appliances, together accounting for 90 percent of consumption of medical devices and medical disposables. Production Within the EU medical devices and medical disposables industry is characterised by concentration, i.e. a few large enterprises control the market. At the same time the EU is facing greater competition from non-eu countries. Since the largest EU countries have the largest consumption of medical devices and medical disposables, it is not a surprise that also these larger countries have the main industries. The main producing countries, therefore, are Germany, France, Italy and UK. Imports In 1999, total EU imports of medical devices and medical disposables amounted to a volume of 837,927 tonnes, which represented a value of US$ 10,200 million or 11,062 EUR. Between 1997 and 1999 total EU imports of medical devices and medical disposables increased with 14 percent in terms of value and volume. Leading importers of medical devices and medical disposables in 1999 include, in order of import volume: Germany, France, the Netherlands, UK and Belgium/Luxembourg. In 1999 EU imports of medical devices and medical disposables from developing countries is low and amounted to US$ 537 million (5.3 percent) which equalled approximately 74,000 tonnes (8.8 percent). In the period , imports from developing countries increased in terms of volume (from 8.1 percent to 8.8 percent) but decreased in terms of value (from 5.6 percent to 5.3 percent). The EU imports from developing countries were particularly high for Surgical gloves (62 percent), and to a lesser extent relatively high for Surgical instruments and appliances (7.6 percent), Wadding, gauze and bandages (6.9 percent) and Syringes, needles and catheters (3.2 percent). Exports In 1999 the EU exported 966 thousand tonnes worth US$ 11,326 million of medical devices and medical disposables. The value as well as the volume of these exports has increased with more than 25 percent since Medical disposables accounted for 63 percent of the exports, and medical devices only for 37 percent. 6

9 The most important export products included Nappies and similar hygiene products (32 percent), Syringes, needles and catheters (19 percent), Wadding, gauze and bandages (13 percent). The leading EU exporters of medical devices and medical disposables in 1999 are Germany (28 percent), the Netherlands (13 percent), UK (11 percent), France (9 percent) and Belgium/Luxembourg (9 percent). After you received/collected your information you should analyse the information. In order to judge the attractiveness of the market, sales channel or customer you should use/develop a classification or score system. For more detailed information on market research reference is made to CBI s Export Planner (2000). Opportunities for exporters Due to the increasing importance of time saving products and extramural health care, the EU demand for medical devices and medical disposables is expected to exhibit modest growth in the near future. There are opportunities for these products since it is too costly for producers to produce low profile bulk goods within the EU. Moreover, some of the developing countries have important natural resources like cotton available at hand. In 1999 products from developing countries that were imported into the EU in relatively large amounts, and which have therefore good opportunities for exporters, are: Wadding, gauze, bandages; Surgical gloves; Syringes, needles and catheters; and Surgical instruments and appliances. The trade channel offering the best chances for developing countries is the importer/manufacturer or the agent because of their knowledge of the EU market. A few large companies manufacturing medical devices and medical disposables in the EU are Lohmann (Germany), Smiths & Nephew (UK), Brunswick (Belgium) and Philips Medical (the Netherlands). Market research This EU Market Survey and the EU Strategic Marketing Guide serve as a basis for further market research: after you have read this survey and filled in the frameworks in the strategic marketing guide it is important to further research your target markets, sales channels and potential customers. Market research depends on secondary data (data that have been compiled and published earlier) and primary data (information that you collect yourself). An example of secondary data is this EU Market Survey. Primary data are needed when secondary data are falling short of your needs, for example when researching your specific type of consumer about the acceptance of your specific product. Sources of information are among others (statistical) databanks, newspapers and magazines, market reports, (annual) reports from branch associations, but also shops in target countries, products or catalogues from your competitors, and conversations with suppliers, specialists, colleagues and even competitors. 7

10 1 PRODUCT CHARACTERISTICS 1.1 Product Groups This chapter focuses on the product characteristics of medical devices and medical disposables. The medical devices and medical disposables discussed in this survey can be classified in the following groups: Medical disposables: Wadding, gauze and bandages Surgical gloves Syringes, needles and catheters Wound closure products Nappies and similar hygiene products Medical devices: Preparations for x-ray examinations Surgical instruments and appliances Electro-diagnostic apparatus Dental instruments Strictly speaking according to the HS code classification syringes, needles and catheters are classified as surgical instruments. In this survey, however, these products are classified as medical disposables as they are, in most cases, only used once. Furthermore, the product group called preparations for x-ray examinations is sometimes referred to as a pharmaceutical. Both classifications are possible. 1.2 Customs/Statistical Product Classification On January 1, 1988 a unified coding system was introduced to harmonise the trading classification systems used world-wide and to allow for improved international comparability of foreign trade statistics. This system, the Harmonised System (HS), is based on a ten-digit product classification. Table 1.1 gives a list of the HS codes relevant for this survey. Note that the list of medical devices and medical disposables is not exhaustive. This is, however, not the purpose of the survey. Table 1.1 HS code classification of medical devices and medical disposables MEDICAL DISPOSABLES 1. Wadding, gauze, bandages HS 3005 Wadding, gauze, bandages and the like, e.g. dressings, adhesive plasters clean non sterile, poultices, impregnated or covered with pharmaceutical substances or put up for retail sale for medical, surgical, dental or veterinary purposes 2. Surgical gloves HS Surgical gloves, of vulcanised rubber other than hard rubber (excluding fingerstalls) 3. Syringes, needles and catheters HS HS HS Syringes, whether or not with needles, used in medical, surgical, dental or veterinary sciences Tubular metal needles and needles for sutures, used in medical, surgical, dental or veterinary sciences Catheters metal needles, plastic cannulae and the like, used in medical, surgical, dental or veterinary sciences (excluding syringes, tubular metal needles and needles for sutures) 4. Wound closure products HS Sterile surgical catgut, similar sterile suture materials and sterile tissue adhesives for surgical wound closure; sterile laminar and sterile laminar tents; sterile absorbable surgical or dental haemostats 8

11 5. Nappies and similar hygiene products HS HS Nappies and similar hygiene products, of paper pulp, paper, cellulose wadding or webs of cellulose fibres (excluding those put up for retail sale) Nappies and similar hygiene products, of paper pulp, paper, cellulose wadding or webs of cellulose fibres, put up for retail sale MEDICAL DEVICES 6. Preparations for x-ray examinations HS HS Reagents for determining blood groups or blood factors Opacifying preparations for x-ray examinations; diagnostic reagents for administration to patients 7. Surgical instruments and appliances HS HS HS HS Instruments and apparatus for measuring blood-pressure Endoscopes used in medical, surgical, dental or veterinary sciences Transfusion apparatus used in medical, surgical, dental or veterinary sciences Anaesthetic apparatus and instruments 8. Electro-diagnostic apparatus HS HS Electro-cardiographs Electro-diagnostic apparatus, incl. apparatus for functional exploratory examination or for checking physiological parameters (excluding electro-cardiographs) 9. Dental instruments HS HS Dental drill engines, whether or not combined on a single base with other dental equipment Dental Instruments and appliances n.e.s. 9

12 The pictures hereunder give some examples of the medical devices and medical disposables, which are addressed, in this survey. 1. woundclosure (nonwoven) 3. nappies (nonwoven) 2. woundclosure 4. surgical gloves 10

13 2 INTRODUCTION TO THE EU MARKET The European Union (EU) is the current name for the former European Community. Since 1 January 1995 the EU has consisted of 15 member states. Negotiations are in progress with a number of candidate member states, many of whom already have extensive trade and co-operation agreements with the EU. It is envisaged that 5 of these countries will become members in In 1999, the size of the EU population totalled 375 million. Total GDP in 1999 equalled US$ 8,458.3 billion at current prices, while the average GDP per capita (at current exchange rates) amounted to US$ 22,575 in 1998 (OECD, 2000). The most important aspect of the process of unification (of the former EC countries) which affects trade is the harmonisation of rules in the EU countries. As the unification allows free movement of capital, goods, services and people, the internal borders have been removed. Goods produced or imported into one Member State can be moved around between the other member states without restrictions. A precondition for this free movement is uniformity in the rules and regulations concerning locally produced or imported products. Although the European Union is already a fact, all the regulations have not yet been harmonised. Work is in progress on uniform regulations in the fields of environmental pollution, health, safety, quality and education. On 1 January 1999, the Euro (EUR) became the legal currency within eleven EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg,, Spain, and Portugal. Their national currencies are now subdivisions of the Euro and will continue to circulate as legal tender until Circulation of Euro coins and banknotes will begin on 1 January 2002 and these will gradually replace national currency notes and coins, which must be withdrawn by 1 July At present, banking is possible in both the Euro and in national currency. The most recent Eurostat trade statistics quoted in this survey are from the year On 1 January 1999, statistical and contractual values in ECU were converted into Euro s on a 1:1 exchange rate. The EUR/ US$ exchange rate currently (January 2001) stands at US$ 0.94 for one Euro.In this market survey, the US$ is the basic currency unit used to indicate value. Values for dates after 1 January 1999 are also expressed in Euro s. Trade figures quoted in this survey must be interpreted and used with extreme caution. The collection of data regarding trade flows has become more difficult since the establishment of the single market on 1 January Until that date, trade was registered by means of compulsory customs procedures at border crossings, but, since the removal of the intra-eu borders, this is no longer the case. Statistical bodies like Eurostat Exchange rates of EU currencies in US$ Country Currency January 2001 European Union ECU EUR Austria Ash Belgium/Luxemb. Bfr Denmark Dkr France Ffr Finland FM Germany DM Greece GRD Ireland I Italy L Netherlands NLG Portugal Esc Spain Ptas Sweden Skr United Kingdom GB Source: CBS Statline (February 2001) 11

14 cannot now depend on the automatic generation of trade figures. In the case of intra-eu trade, statistical reporting is only compulsory for exporting and importing firms whose trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about EUR 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated. 12

15 3 CONSUMPTION 3.1 Market size Figure 3.1 below presents the consumption of medical devices and medical disposals valued in US$ millions. The European Union is one of the leading markets for medical devices and medical disposables in the world, with consumption amounting to US$ 9,874 million in Germany is by far the largest market for medical devices and medical disposables within the European Union, with almost one fifth (20 percent) of total EU consumption of medical devices and medical disposables. France, Italy and UK each amount to 14 percent of European consumption of medical devices and medical disposables. Please note that the consumption data presented in this survey are derived from data on production, imports and exports. The data are, therefore, indicative and may be distorted for various reasons. First, it is an indirect way of estimating consumption figures, introducing inaccuracy of import and export figures (due to the threshold value for statistical reporting as indicated in section 2) into the estimate of consumption. Second, the indirect method is distorted by time differences between, or varying valuation methods applied to the part of imports which is (re-) exported (so-called transition trade). Third, the disaggregated production data (CBS Datashop) used are incomplete because some figures are not reported for various reasons, please see section 4 for further explanation on this. Concerning the largest EU markets, the production (and consumption) data on Germany, France, Italy and UK are fairly complete since only a few product groups are unreported by the national statistical offices. For Belgium and the Netherlands several product groups are not reported, while the reported production data add to zero. Also the data for Luxembourg and Ireland are rather incomplete. Production and consumption figures are calculated on the basis of estimated per capita figures. Figure 3.1 Consumption of medical devices and medical disposables in EU markets, 1998 Value in US$ million United Kingdom 1,164.4 Sweden Finland Portugal Austria Luxembourg 9.6 Italy 1,831.7 Ireland 89.6 France 1,905.5 Spain Greece Germany 2,927.0 Denmark Belgium ,000 1,500 2,000 2,500 3,000 3,500 Source: CBS Datashop (1998) Note: due to incompleteness of data the estimates for Austria, Belgium, Ireland, Luxembourg and the Netherlands are calculated on the basis of consumption per capita estimations. 13

16 Differences of consumption levels between countries are caused by two main factors: the welfare level of the country and the government concern with health care in general. A higher welfare level leads to more spending on medical devices and medical disposables. For example consumption of medical products per head is higher in the Netherlands, UK, Germany, Belgium, France and Italy than in EU countries where welfare levels are lower. The role of the government is important for health care, since governments generally play a major role in financing the health system, including health insurance, targeted subsidies and the ownership of real estate in the sector. Especially Germany is known for its well-organised health system and high per capita consumption of medical devices and medical disposables. In addition, the market for various products in the EU used to be differentiated on the basis of local labour costs. For example, countries like France, Spain and Italy traditionally consumed relatively large amounts of traditional, re-usable, syringes and needles since cleaning, re-packing and sterilisation was done by abundant and relatively cheap labour. At present, however, with tight labour markets and increasing costs of labour, disposable alternatives for syringes and needles become standard practice throughout the EU. Another recent trend in countries like the Netherlands, Belgium, Germany and UK countries that have severe human resource problems is the increasing use of disposable balloon catheters and urine bags for post-operative patients, saving time for the after-care of the patient. The price of a balloon catheter plus a urine bag is far lower than the cost of nursing time that would otherwise be necessary. The relative importance of the nine major product groups as distinguished in section 1.1, is shown in figure 3.2 below. The figure presents the percentages, based on 1998 figures, of a particular product group in the total of medical devices and medical disposables consumption. The statistics show that the consumption of the medical disposables, i.e. 65 percent, is larger than the consumption of medical devices, i.e. 35 percent. The largest product groups within the medical disposables are Wadding, gauze and bandages (26 percent), Nappies and similar hygiene products (22 percent) and Syringes, needles and catheters (15%). This could be explained, among other things, by the trend in EU member state policies towards a reduction in public expenditure since the mid-nineties. This reduction decreases hospital treatment and increases home nursing. This leads to an increase in the market for user friendly products such as Wadding, gauze and bandages and Nappies and similar hygiene products. The other large product group, accounting for the main part of the medical devices consumption, is Surgical instruments and appliances (26 percent). Note, however, that the same in-accuracy and incompleteness of data mentioned above effect these estimates by product group as well. The sales of disposable products generally shows a stable pattern. Delivery arrangements can be made on annual contracts with regular monthly shipments. Note that numbers of examination gloves, disposable syringes and needles used in hospitals are huge since after each examination the products are discarded. Therefore, the products need an efficient warehousing and distribution to ensure continuous supply to the end-user. The sales of medical devices requires more profound knowledge of the product and its applications. Although some stock is useful, a delivery time of 6 to 8 weeks is usually acceptable. Warehousing and logistics play a somewhat less important role for medical devices. Figure 3.2 EU consumption of medical devices and medical disposables by product group, Share of total value (%) Electro-diagnostic apparatus 1% Surgical instruments and appliances 26% Dental instruments 5% Wadding, gauze and bandages 26% Surgical gloves 1% Preparations for x-ray examinations 3% Source: CBS Datashop (1998) Nappies and sililar hygiene products 22% Woundclosure products 1% Syringes, needles and catheters 15% 14

17 3.2 Market segmentation The market for medical devices and medical disposables can broadly be divided into two segments: Intramural market, which consists of: Hospitals; Psychiatric institutions. Extramural market, which consists of: General practioner s (GP s); Specialist doctor practices; Dental practices. Note that there is a small consumer market segment for example for gloves, wadding and gauze as well, but this segment is estimated to be very small (around 2 3 percent of the consumption of medical devices and medical disposables) and will be neglected in the rest of this survey. Intramural market In most EU member states a tendency can be observed towards a decrease in the number of hospital and psychiatric beds. This can partly be explained by government measures taken to cut down on public expenditures. Table 3.1 shows a decrease in the number of beds between 1997 and 1998 for the Netherlands and for Germany. Presently, the intramural market exceeds the extramural market in size with respect to the consumption of medical devices and medical disposables. The Dutch Central Bureau of Statistics, Eurostat and OECD are recently working together to make an up-to-date and reliable survey of the European health care sector. The majority of the hospitals, approximately 80 percent, purchase their medical products through a buying co-operative. These co-operatives are regionally oriented and represent hospitals within a certain geographic coverage. The major benefit of joining a co-operative is the reduction of prices (discounts) that result from increased bargaining power with potential suppliers. Extramural market The same problems with respect to data gathering appear in the extramural market. Table 3.2 gives an indication of the size of the extramural market in 1998 and 1999 and suggests that the number of practices is declining while the number of patients per practice is increasing. Overall the consumption of medical devices and medical disposables in the extramural market is increasing. 3.3 Consumption patterns and trends This section will highlight various factors that influence the consumption of medical devices and medical disposables. It will be indicated how these factors will create opportunities for providers from developing countries. Table 3.1 Size of the intramural market by the absolute number of beds Country Number of hospital beds Number of psychiatric beds ,998 78,944 26,657 26,013 France 498,929 n.a. 71,930 n.a. Germany 580, ,629 62,185 60,808 Source: CBS Datashop (1998) Table 3.2 Size of the extramural market by the absolute number of practices Country Number of physicians or doctors Number of dentists Number of physiotherapists ,987 46,101 n.a. n.a. n.a. n.a. Belgium n.a. 40,291 n.a. 7,106 n.a. n.a. France 177, ,431 n.a. n.a. n.a. 49,341 Germany 291, ,032 62,564 62,277 n.a. n.a. The United Kingdom n.a. n.a. 26,424 25,801 n.a. 15,206 Source: CBS Datashop (1998) 15

18 Table 3.3 Demographic structure within the European Union (1999) Country < 20 years years years > 60 years Total Germany % Austria % Belgium % Denmark % Spain % Finland % France % Greece % Ireland % Italy % Luxembourg % % Portugal % The United Kingdom % Sweden % EU average % Source: Eurostat (1999) Demography The first and most important factor that influences the consumption of medical devices is the demographic structure of the market. The life span of the EU population has increased considerably over the last decades. The consequence is an ageing population, which causes an ever-increasing need for medical care. The table above shows that Italy, Greece and Germany have the highest share of people older than 60 years. For Germany this implies high a level of consumption of medical devices and medical disposables, in fact it is the highest in the EU. Also Italy shows high levels of consumption of medical devices and medical disposables. However, for Greece, though having a large share of older people, the consumption level of medical devices and medical disposables is not very high. Since health care standards in Greece are relatively low, and despite the high percentage of older people, the consumption lags behind. Socio-economics The generally tight labour market in the EU countries, also seriously effecting the medical sector, is of considerable influence on the consumption of medical devices and, especially, on the consumption of medical disposables. In other words, since the proper cleaning and sterilisation of this product is time consuming, disposable catheters became more widely used. Other disposables that are increasingly popular include syringes and needles, disposable apparel and accessories. Environment In the European Community care for the environment is an important issue. Over the last decade awareness of environmental issues has grown among governments, industries and consumers alike. The consumer is increasingly taking environmental aspects into account in his or her buying decision. The EU as well as the national governments have taken initiatives towards the industry by more stringent legislation. Manufacturers nowadays must adhere to all local environmental regulations and the EU broad regulations. Medical devices and medical disposables, often composed of different materials such as rubber, metals and textiles, are subject to a number of environmental regulations. These regulations affect the production process itself through setting standards for the allowable environmental impact. For example if nickel and chromium plating is used for the manufacture of surgical instruments, then the production process should comply with all relevant local and international regulations and standards. Also the packaging material should comply with EU standards aiming at a recovery quota and at controlling the presence of mercury, lead, cadmium and hexavalent chromium in the packaging. In Appendix (8) addresses are given of where you can find specific information on the operational regulations. See also the CBI publication Strategic Marketing Guide Medical Devices and Medical Disposables It is essential that the products offered on the EU market adhere to the respective standards in the field of environment. 16

19 Product Quality and Design Changing the product quality or design in any appreciable manner is a sometimes long and difficult process, since the regulations could require that the Annex 10 of the Council Directive be applied and a clinical evaluation must be made. The major changes that can occur in the short run in practice are therefore limited to the materials used for certain products. In this case the manufacturer of the raw material must prove whether the material is clinically suitable for the purpose for which the product is intended. Examples of such innovations that create new market opportunities, include: Traditional latex may be replaced by so called low protein latex, medical grade plastics or silicone rubber; P.V.C. products, catheters, infusion- transfusion systems, connecting tubes etc. may be replaced by other plastic materials for more patient comfort. various medical disciplines in which the customer can identify his needs easily. For more information with respect to trade fair organisers, places and dates see Appendix 5 and the CBI publication EU Strategic Marketing Guide 2001 Medical Devices and Medical Disposables. Price sensitivity and brands The usefulness of brands in the Medical Device market is very limited. Since the manufacturer is obliged to register his name and address with the health authorities and all the products must bear the CE mark, the producer of an unknown brand is directly traceable. In general prices for medical devices and medical disposables are fairly stable. However, negotiating on prices can cause some fluctuations in prices. These negotiations may result in a considerable decline of the margin for the distributors. Negotiations can also offer the exporter additional opportunities with respect to market entry and customer relations (for more information see the CBI publication EU Strategic Marketing Guide Medical Devices and Medical Disposables 2001 ). Factors that determine the discount include: The size of the order; The duration of the contract; The degree of competition with respect to the product in question. Promotion Due to the establishment of a single market and free movement of goods within the EU, the degree of competition has increased. An important way for a manufacturer or trader to promote products is to visit trade fairs. Two major trade fairs in Europe are Medica and Interhospital, both of which are held in Germany and regarded as the premier medical industry events in Europe and visited by potential customers from all over the world. When visiting a trade fair it is important that the manufacturer or exporter has a product catalogue preferably in full colour print. This catalogue should give a systematic overview of the product range in the 17

20 4 PRODUCTION The total EU production of medical devices and medical disposables in 1998 amounts to US$ 10,341 million. The main players in the industry are Germany (40 percent of production), Italy (15 percent), France (14 percent) and the United Kingdom (9 percent). Figure 4.1 presents the production figures for the EU member states for Note that production data as collected through the national statistical offices are not complete at the level of disaggregation applied in this study. Therefore, the presented data have to be interpreted with care. As mentioned already in section 3, production data for Germany, France, Italy and UK are fairly complete, only a few product groups are not reported, while for Belgium and the Netherlands several product groups are not reported and the groups that are reported amount to 0 production. There are various reasons for reporting of incomplete data. First, it might not be available. Second, the statistical offices are not allowed to publish data if there are less then three producers of a specific type of product, or if one producer controls more than 70 percent of total production. Notably, the European market for medical devices and medical disposables consists of a small number of large producers. As can be seen from figure 4.2 the production of medical disposables, accounting for 53 percent of the total, exceeds the production of medical devices, i.e. 47 percent of the total. Nappies and similar hygiene products (21 percent) are the largest product group produced within the EU. Syringes, needles and catheters (19 percent) and Preparations for x-ray examination (14 percent) follow this product group. Table 4.1 gives the six most important European manufacturers of medical devices and medical disposables. Most of the production of these Figure 4.1 Production of medical devices and medical disposables in EU countries Value in US$ million United Kingdom Sweden Finland Portugal Austria Luxembourg Italy Ireland France Spain Greece 27.1 Germany Denmark Belgium Source: CBS Datashop (1998) Note: due to incompleteness of data the estimates for Austria, Belgium, Ireland, Luxembourg and the Netherlands are corrected on the basis of opinions of experts. 18

21 Figure 4.2 EU production of medical devices and medical disposables by product group, Share of total value (%) Electro-diagnostic apparatus 14% Dental instruments 8% Wadding, gauze and bandages 9% Surgical gloves 0% Syringes, needles and catheters 19% Surgical instruments and appliances 11% Woundclosure products 4% Source: CBS Datashop (1998) Preparations for x-ray examinations 14% Nappies and sililar hygiene products 21% Table 4.1 Top 6 largest manufacturers medical devices and medical disposables in the EU Manufacturer Country Products Philips Medical Electro-diagnostic apparatus Lohmann Germany Wadding, gauze and bandages B. Braun Germany Catheters, wound closure products and other special products Smiths & Nephew The United Kingdom Wadding, gauze and bandages Becton & Dickinson Spain Syringes and needles Brunswick Belgium Syringes and needles manufacturers does not take place in the country of origin. Because of the high labour costs in Europe a lot of the production of parts and components takes place in foreign affiliates, mostly established in developing countries. The parts produced are then being imported and the final product is assembled in Europe. Germany is the largest manufacturer and also the largest importer, which is for a great deal to be attributed to the trans-national character of the manufacturing process. These leading manufacturers have developed strategies to obtain strong world market positions. Strategically they are looking for three elements: low wages, low local taxes, and short distribution routes. How they develop this strategy in practice depends on the type of product and the market. For example the largest surgical instrument manufacturer in the world, a German company called Aesculap, has manufacturing sites all over the world. These production sites provide them with bulk instruments produced to their own standards and specifications. Also these sites organize the local distribution of the medical devices and medical disposables. More technically complex and advanced products are still designed and manufactured in Germany. Another example is the syringe and needle industry, which is dominated by three mayor players who each have an area where they can operate without paying a high price for transportation and distribution. These companies are Becton & Dickinson USA, Terumo Japan and Braun medical in Germany. Since producing these products involves a lot of research and technology, these developments can only be successful if sufficient capital and human resources are available. It also requires a well-organized marketing organisation which will guarantee that once the product is ready for the market it can be sold on sufficient large scale to warrant the original investment. In addition, a number of manufacturers in the USA purchase products in developing countries and put them up for re-sale in the EU under their own brand. This is in particular the case with examination, veterinary and surgical gloves made of latex and plastic but also applies to diagnostic devices such as stethoscopes, blood pressure meters and revalidation equipment. The role of developing countries in such processes is limited, and usually develops after the brand has been well established in the international market. One such case is for example Smith & Nephew UK who buys bandages, gauze and similar products in developing countries because of the low wages. The quantities required are usually very large (bulk) and the profits marginal. Another reason to buy from developing countries is the local availability of cotton. Transportation is usually done by container. In other cases the EU company buys the complete company in the developing country in order to ensure continuous supply and to be able to monitor the quality of the products more closely. 19

22 5 IMPORTS The statistics presented in this chapter are official trade figures provided by Eurostat. After unification of the European Union in 1992, customs authorities stopped recording the intra-eu trade. Since then, import and export figures have been based on reports given by the companies themselves. In the case of intra-eu trade, statistical reporting is only compulsory for EU exporting and importing firms, whose trade exceeds (ECU 100,000). Companies, whose trade does not exceed this threshold value of ECU 100,000, are not obliged to report and are therefore excluded from the statistics provided by Eurostat. Imports from non-eu sources, however, are still registered by customs authorities. Moreover, CBS, which provides the Dutch trade figures to Eurostat, is not allowed to publish figures with respect to certain medical products for similar reasons as discussed in chapter 4. These figures are considered to be too sensitive, as in the case of dominant market participant they might lead to conclusions with regard to its specific performance. For these reasons, all statistics must be regarded with caution. The data are not complete, and are intended to give an indication of trends in the respective product groups and of the relative importance of European sub-markets. The statistics specify total imports, imports from non-eu countries (extra-eu) and imports from developing countries, both in volumes as well as in value. Developing countries, as defined by the OECD, are listed in Appendix 9. Appendix 1 lists import statistics of the EU and the selected markets within the EU and gives detailed breakdowns of the statistics by product group and supplying country. 5.1 Total imports In 1999, the EU imported 837,927 tonnes of medical devices and disposables, which represented a value of US$10,200 million or EUR 11,062 million. Germany is the largest EU importer of medical devices and medical disposables, as presented in figure 5.1. Germany s imports amount to almost US$2,126 million (150 thousand tonnes) in 1999, accounting for 20 percent of total EU imports of medical devices and medical disposables in France is the second largest importer of medical devices and medical disposables (14 percent of EU imports in 1999), followed by the United Kingdom and the Netherlands (both 11%), Belgium and Luxembourg (10%), Italy (9%), Spain (6%), Ireland and Austria (both 4%), and Sweden (3%). Between 1997 and 1999 total EU imports of medical devices and medical supplies increased with 14 percent in terms of value and volume. Table 5.1 presents the imports of medical devices and medical disposables by EU country for From the table it appears that, in terms of value, all EU member states except for Sweden registered an increase in imports from 1997 to 1999, please see the figure below. Ireland, Austria and Denmark, however, showed a decrease in Figure 5.1 EU imports of medical devices and medical disposables by major EU country, 1999, as percent of total value Sweden 3% Austria 4% Ireland 4% Spain 6% Other 8% Germany 20% Italy 9% 10,200 France 14% Source: Eurostat (2000) Belgium/Luxembourg 10% 11% United Kingdom 11% 20

23 Table 5.1 EU Imports of medical devices and medical disposables by EU country, , US$ 1,000/ EUR 1,000/Tonnes value USD volume value USD volume value USD value EUR volume EU Total 8,977, ,163 9,551, ,363 10,199,656 11,061, ,927 Germany 1,925, ,944 2,127, ,914 2,125,949 2,305, ,521 France 1,360, ,072 1,402, ,422 1,440,870 1,562, ,879 Netherlands 1,004,945 74, ,814 76,553 1,138,211 1,234,430 85,921 United Kingdom 1,007,964 78,429 1,065,531 83,307 1,140,451 1,236,858 90,272 Belgium/Luxembourg 675,765 68, ,088 73,579 1,057,629 1,147,035 83,678 Italy 833,262 54, ,023 60, , ,129 56,071 Spain 460,217 26, ,410 41, , ,516 43,280 Ireland 247,694 19, ,995 14, , ,965 13,055 Sweden 371,729 33, ,453 33, , ,045 35,161 Austria 360,162 45, ,426 31, , ,699 34,378 Denmark 238,659 20, ,746 19, , ,420 19,575 Portugal 157,989 30, ,212 32, , ,765 30,918 Greece 181,259 23, ,053 24, , ,585 29,217 Finland 152,109 13, ,629 12, , ,101 14,001 the import volume (in tonnes). The strongest growers in 1999 were Belgium, France and Netherlands, each showing more than 10% increase in their imported volumes of medical devices and medical disposables. Germany showed only a slight decrease in value of imports, but more than 5 percent increase in the volume of the imports. Countries showing declining import volumes in 1999 include Italy, Denmark, Ireland and Portugal. Figure 5.2 shows that EU imports of medical disposables are substantial larger than imports of medical devices. Most imports originate from other EU countries. Though, 35 percent of medical disposables imports are from outside the EU, while 44 percent of medical devices are imported from outside the EU. Developing countries are relatively more active in the supply of medical disposables, amounting to 6 percent of EU imports of medical disposables, then in the supply of medical devices, accounting for 3 percent of the EU imports of medical devices. In 1999, 62 percent of EU imports of medical devices and medical disposables was supplied by other EU countries, and 5 percent of total imports by developing countries. The leading supplier of medical devices and medical disposables from outside the EU is the United States of America, please see figure 5.3. The USA exported 37 thousand tonnes, which was valued at 1,991 million US$, to the EU. During the period exports from the USA to the EU grew in line with overall increase in EU imports (14 percent) and kept its share stable around 20 percent of EU imports. Figure 5.2 Total EU imports, EU imports from extra-eu countries and EU imports from developing countries, , US$ million EU total Extra EU Developing countries Medical devices Medical disposables Source: Eurostat (2000) 21

24 Compared to the USA, Germany contributed almost six times as much in volume to EU imports. These 210 thousand tonnes from Germany were only valued at 1,700 million US$, which put Germany second after the USA. The next five main sources of EU exports in 1999 were all EU countries, which also emerge in the top of the importing countries. They contributed between 500 and 750 million US$ each. All of the exports of these countries increased in the period described, although in 1999 the Netherlands and the United Kingdom exported less to the other EU countries compared to Switzerland, Japan and Sweden finish in the top ten of suppliers of EU imports of medical devices and medical disposables. In the same period Switzerland exports remained more or less stable, Japan increased its exports to the EU by 14 percent and Sweden by 47 percent. Germany is the largest EU importer of Wadding, gauze and bandages in Germany imported 21 thousand tonnes of wadding, gauze and bandages, which was worth US$ 351 million and represented 25 percent of total value of EU imports. France imported 17 percent, the United Kingdom 12 percent, the Netherlands and Belgium/Luxembourg 7 percent each, which leaves 32 percent which was imported by the other EU countries. The United Kingdom imported US$ 73 million of Surgical gloves, which makes the UK the largest importer in this product group. The United Kingdom is closely followed by Germany, which also had a share of approximately 22 percent. Next in line are France (10 percent), Belgium/Luxembourg (9 percent) and the Netherlands (8 percent). Belgium and Luxembourg were the largest importers of Syringes, needles and catheters. They accounted for 18 percent of total EU imports. are the second largest importer in 1999, with imports worth US$ 532 million. Germany imported slightly less: 528 million US$ (16%). France accounted for 11 percent of EU imports of syringes, needles and catheters, the United Kingdom for 10 percent and other EU countries for 29 percent. The main EU importers of Wound closure products are France, Germany, the United Kingdom, the Netherlands and Belgium, accounting for respectively, 20, 14, 12, 7 and 4 percent of EU imports in The largest EU importer of Nappies and similar hygiene products is France (20 percent of total EU imports), followed by Germany (14 percent), the Netherlands and the United Kingdom (both 11 percent) and Belgium/Luxembourg (8 percent). Major EU importers of Preparations for X-ray examinations in 1999 include Germany (22 percent of total EU imports), France (14 percent), the United Kingdom (12 percent) and Belgium/Luxembourg (10 percent). only had a share of 4 percent of total EU imports. Almost two fifth of imported Surgical instruments and appliances by the EU in 1999 are imported by Germany (US$ 462 million of imports). In 1999 the Netherlands are the second largest importer, with imports amounting to US$ 135 million, making up for 11 percent of total EU imports. Imports by the United Kingdom equalled 10 percent of total EU imports, while 8 percent for both France and Belgium/Luxembourg results. Figure 5.3 Main suppliers of medical devices and medical disposables to the EU, , value in US$ million Sweden Japan Switzerland Ireland United Kingdom Belgium/Luxembourg France Netherlands Germany United States Source: Eurostat (2000) 22

25 Germany accounted for 22 percent of total EU imports of Electro-diagnostic apparatus, France 14 percent, the United Kingdom 13 percent, the Netherlands 9 percent and Belgium/Luxembourg 5 percent. France imported most Dental instruments: 104 million US$ or 17 percent of total EU imports. France is followed by Germany (15 percent), the United Kingdom (10 percent), the Netherlands (6 percent) and Belgium (4 percent). 5.2 Imports by product group Table 5.2 gives a breakdown of EU imports of medical devices and medical disposables by product group. For each product group total imports are given and divided by origin, which means imports obtained from outside the EU and the imports supplied by developing countries. This table thus gives insight in the opportunities per product group for developing country exporters. In 1999 EU imports of medical disposables were almost twice as much as EU imports of medical devices. The largest product group described is Syringes, needles and catheters, with total imports valued at US$ 3,201 million. Other medical disposables that the EU imports in large amounts are Nappies and similar hygiene products and Wadding, gauze and bandages, both of which were valued just above US$ 1.5 billion in With respect to medical devices, Surgical instruments and appliances (US$1,128 million) and Electro-diagnostic apparatus (US$ 1,152 million) are the most important product groups imported by the EU. Table 5.2 EU imports of medical disposables and medical devices by product group, , US$ 1,000/ EUR 1,000/Tonnes value US$ volume value US$ volume value US$ value EUR volume Medical disposables 5,999, ,552 6,335, ,044 6,835,703 7,413, ,758 Wadding, gauze and bandages 1,313,548 76,739 1,358,619 78,952 1,396,406 1,514,451 88,912 Extra-EU 589,499 26, ,425 27, , ,525 30,114 Developing countries 75,673 9,992 92,472 11,446 95, ,984 11,831 Surgical gloves 334,378 56, ,543 65, , ,042 69,002 Extra-EU 261,503 47, ,398 52, , ,352 54,398 Developing countries 217,420 42, ,113 47, , ,393 49,977 Syringes, needles and catheters 2,657,356 78,011 2,736,179 79,333 3,201,478 3,472,114 92,041 Extra-EU 1,064,911 20, ,418 20, , ,042 25,111 Developing countries 87,787 4,242 98,223 4, , ,256 5,023 Wound closure products 394,510 2, ,045 2, , ,884 3,191 Extra-EU 82, , , , Developing countries 16, , ,036 3, Nappies and similar hygiene products 1,300, ,035 1,389, ,301 1,429,246 1,550, ,612 Extra-EU 127,031 37,752 75,240 24, , ,989 33,059 Developing countries ,688 2,899 12,616 13,682 3,866 Medical devices 2,977,156 40,611 3,215,537 46,319 3,354,953 3,648,323 51,169 Preparations for x-ray examinations 425,055 5, ,231 5, , ,487 6,809 Extra-EU 152,906 2, ,493 2, , ,833 2,481 Developing countries , ,009 4 Surgical instruments and appliances 999,398 20,667 1,144,237 24,099 1,181,548 1,281,430 27,374 Extra-EU 434,403 7, ,303 8, , ,566 9,835 Developing countries 75,527 3,023 85,896 3,247 89,491 97,057 3,466 Electro-diagnostic apparatus 972,307 5,662 1,024,948 7,847 1,062,844 1,152,691 7,756 Extra-EU 518,799 2, ,381 2, , ,671 3,436 Developing countries 13, , ,689 15, Dental instruments 580,396 8, ,121 8, , ,715 9,230 Extra-EU 235,521 1, ,252 1, , ,289 2,066 Developing countries 10, , ,563 13, Source: Eurostat (2000) 23