EMDT_European Medical Device Technology

EMDT Sourcebook 2015-2016

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Market Report 6 The Source book | 2015 emdt.co.uk mitment to maintain a high-quality service despite pressures on costs. At the end of 2014, the Federal cabinet approved a law to implement changes to the statutory health insurance system guaranteeing easy access to high-quality medical care and to address the problem of doctor shortages in rural areas by encouraging innovative forms of healthcare delivery. A new statutory frame- work to implement reform of the hospital sector, which is scheduled to take effect on 1 January 2016, will tackle the problem of chronic hospital underinvestment. Impor- tantly, agreement has now been reached between the federal government and federal states on setting up a eur500 mil- lion (uSD602 million) hospital restructuring fund. Nevertheless, profit margins continue to be hit by sustained downward pressure on prices, particularly from co-operative purchasing and tenders. France Will Implement Additional Efficiency Measures France will also see above-average growth for the eurozone, although growth rates will be more modest compared to Ger- many. Weak economic growth over the past three years has put further pressure on the healthcare system, which remains in deficit, and this is likely to give further impetus to efforts to improve efficiency. having imple- mented measures to curtail spending on reimbursable devices in the ambulatory sec- tor, authorities have started to pay greater attention to spending in the hospital sector. Phase 4 of the PhAre hospital responsible purchasing programme was launched in September 2014. The first three phases of the programme have identified potential savings of eur2.2 billion (uSD2.7 billion), of which eur400 million (uSD482 million) relates to medical devices. In addition, the operating environment for medical device companies is set to become even more challenging follow- ing the announcement of a further reduction in the targets for health insurance spending growth over the next three years, which will entail additional efficiency measures. however, we believe that the bulk of the government's cost-containment programme will continue to hit pharmaceutical companies harder than medical device companies. This will benefit from measures to support public hospital investment and expand ambulatory care, par- ticularly ambulatory surgery and telemedicine, which should offer opportunities for manu- facturers of minimally invasive devices and remote-monitoring products. Southern European Markets Will Have Weakest Performance We expect a much weaker performance from other markets in the eurozone, partic- ularly in Southern europe, with Italy, Spain and Portugal set to continue as the slowest- growing markets. Despite some improve- ment, late payments by the public sector to the medical device industry remain a problem in these markets. In Spain, market growth will also be constrained by budgetary pressures and cost-containment measures in the National health System (SNS - Sistema Nacional de Salud); patchy health investment result- ing in regional inequalities; controlled introduction of new medical equipment in spite of increasingly obsolete equip- ment; and increased taxation on medical devices, effective in 2015. In Italy, while there have been efforts to reduce hospital debt in recent years, financial constraints in the National health Service (SSN - Servizio Sanitario Nazionale) will continue to ham- per market growth. We expect that medical device spending will be squeezed by sig- nificant reductions in health service fund- ing under legislation passed in July 2015. Industry association Assiobiomedica has expressed concerns that hospitals will not have the resources to invest in innovative technologies and will be forced to buy low- quality or outdated medical equipment. UK Market Will See Fastest Growth Boosted By Real Terms Spending Increase The fastest-growing medical device markets will be outside the eurozone, with the uk the star performer. We expect this market to see annual growth rates in sterling terms of between 3.3% and 4.0% over the next five years, with higher growth in uS dollar terms from 2016. The conservative government elected in May 2015 has promised a mini- mum real terms increase in National health Service (NhS) funding in england over the Eurozone Markets Register Higher 2009-2014 Import CAGRs Germany Belgium Netherlands France Austria Finland Ireland Portugal Spain Italy EUROZNE UK Norway Sweden Switzerland Denmark NON EUROZONE TOTAL 6.0 8.0 6.9 6.8 5.8 5.2 5.1 4.1 2.1 2.1 1.7 0.8 4.6 5.6 5.5 2.7 –1.4 –0.5 2.8 4.2 4.0 2.0 0.0 –2.0 –4.0 Eurozone Markets Record Higher 2009-2014 Export CAGRs Germany Belgium Netherlands France Austria Finland Ireland Portugal Spain Italy EUROZONE UK Norway Sweden Switzerland Denmark NON EUROZONE TOTAL 12.0 16.0 12.7 11.0 9.7 9.3 9.0 7.7 4.9 4.7 4.1 –0.7 –4.0 6.1 7.2 4.4 3.0 1.0 2.7 5.4 8.0 4.0 0.0 –4.0 –8.0

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