Medical Devices In Europe

1
Medical Devices In Europe

• Market Overview
• MassMEDIC
• October 19, 2007
• N. Gerard Zapiain
• U.S. Department of Commerce

2
Topics for Presentation

• What is the European Union?
• Issues on entering the European Union.
• Larger regional markets.
• Emerging markets.

3
What is the European Union?

• A political and economic community composed of 27
  member states
  
• Goal to create a single market to guarantee
  freedom of movement of people goods, services,
  and capital between member states
  
• With over 492 million citizens the EU will
  generate an estimated GDP of15.7 trillion in 2007

4
What is the European Union?

• Older members
• Belgium, France, Italy, Luxembourg, Netherlands,
  Germany, Demark, Ireland, United Kingdom, Greece,
  Portugal, Spain, Austria, Finland, Sweden
  
• Newer members
• Cyprus, Czech Republic, Hungary, Latvia,
  Lithuania, Malta, Poland, Slovakia, Slovenia,
  Romania, Croatia
  
• In accession or candidate countries
• Croatia, Turkey, Macedonia, Albania, Bosnia and
  Herzegovina, Montenegro, Serbia
  

5
What is the European Union?
Typical S-Curve of Expenditures

• Developing Markets
• Hungary
• Czech Republic
• Poland

• Mature Markets
• United Kingdom
• Germany
• France
• Italy

• Raw Markets
• Croatia
• Serbia
• Albania

• Growing Markets
• Portugal
• Ireland
• Greece

6
What is the European Union?

• Essentially
• A great disparity of economic development among
  members of the European Union
  
• This contrast will continue into the foreseeable
  future
  
• This divergence presents challenges and great
  opportunities for U.S. exporters of medical
  devices to the European Union

7
Issues Upon Entering the European Union

• Competing goals of cost containment and improve
  healthcare lead to increased consideration of
  cost and value of technology
  
• Customer service increasingly important for sales
  of higher-technology products
  
• U.S. exporters must research partners with whom
  they choose to do business
  
• Electronic commerce an increasingly important
  factor in sales
  
• The number of people 65 years of age and older in
  Europe is projected to triple in the next
  generation

8
Issues Upon Entering the European Union

• The market for medical devices in France,
  Germany, Italy, Spain, and the United Kingdom
  estimated at 51 billion
  
• Market in these countries growing at 9 annually
• Leading market segments
• Cardiovascular
• General surgery
• Imaging
• In vitro diagnostics
• Ophthalmology

9
Issues Upon Entering the European Union

• Leading market segments (contd)
• Orthopedics
• Neurology
• Urology
• Respiratory

10
Issues Upon Entering the European Union

• Factors driving powerful European Union markets
• Vigorous economy
• High level of healthcare spending as a proportion
  of GDP
  
• A large population
• An aging population
• High healthcare standards and demand for the
  latest healthcare technology

11
Issues Upon Entering the European Union

• Competitive pressures The cost and value of
  technology
  
• Understanding the value of technology allows full
  economic and health cost benefits for the medical
  device to be considered
  
• Enables competing products to be reviewed on the
  basis of total cost including purchase price and
  long-term health costs and benefits
  
• Ultimately improves the quality of medical care
  for patients

12
Issues Upon Entering the European Union

• Understanding the value of technology
• Includes more than purchase price, and evaluates
  long term health costs and benefits
  
• A more expensive purchase price, is often more
  than offset, by long-term benefits
  
• Considers the value of long-term health benefits

13
Issues Upon Entering the European Union

• Understanding the value of technology through
  Health Technology Assessment (HTA)
  
• HTA evaluates the cost and benefits of a medical
  technology
  
• Cost impact and benefit cannot always be
  evaluated in a pre-market setting
  
• Data must be collected using real market
  experience
  
• The value of technology takes into account
  long-term health benefits
  
• In most cases, once the true value of long-term
  health benefits are considered a higher
  technology medical device with a higher purchase
  price, will actually have a lower total cost

14
Issues Upon Entering the European Union
Common benefits of using higher medical technology
15
Issues Upon Entering the European Union

• The United States Commercial Service Your
  foothold in the European Union
  
• Introductions to qualified buyers and
  distributors
  
• Counseling and advocacy through every step of the
  export process
  
• World class market research
• Trade events that promote your product or service
  to qualified buyers
  

16
U.S. Medical Device Exports to EU 27
U.S. Exports in Thousands of Dollars, 2006
Source U.S. ITC
17
U.S. Medical Device Exports to EasternEurope
U.S. Exports in Thousands of Dollars, 2006
Source U.S. ITC
18
Comparative Growth of Shipments of U.S. Medical
Devices to EU 27 and Eastern Europe

• Fact Growth of shipments from 2005 2006 of
  U.S. medical devices to EU 27 countries 7.2
  
• Fact Growth in shipments from 2005 2006 of
  U.S. medical devices to Eastern Europe 28.7
  

Source U.S. ITC
19
Larger Regional Markets for U.S. Exporters
Germany

• Decentralized healthcare system
• German states operate within a loose federal
  system
  
• One quarter of the Western European market
• Faces increasing financial challenges potential
  health reforms coming
  
• Highly-competitive market well-educated
  healthcare professionals demand latest
  technology
  
• Looking at reuse of medical devices

20
Larger Regional Markets For U.S. Exporters
Netherlands

• Long history of accessible healthcare
• A mandatory health insurance system
• Sneler, Beter program to improve efficiency in
  hospitals
  
• Hopes that this system will bring downward
  pressure on costs
  
• Hospitals given grants to develop examples of
  good practice
  
• Demand for devices for minimally-invasive surgery
  should increase

21
Larger Regional Markets For U.S. Exporters
United Kingdom

• Expectation to increase healthcare expenditures
• A focus on improving efficiency
• Medical devices that reduce time and overall
  cost, technologically-advanced or offer overall
  value of great interest
  
• Lack of specialists private organizations coming
  to manage new independent treatment centers
  
• Bottom line receptive to new technology if
  overall savings are possible

22
Larger Regional Markets For U.S. Exporters France

• Health insurance funds facing deficits, leading
  to cost pressures on manufacturers
  
• Rigid control system regulating number of
  high-cost devices
  
• Result number of high-cost devices restricted
  across the country
  
• Lengthy bureaucratic procedures and low
  reimbursement levels
  
• Reuse of medical devices banned

23
Emerging European Markets For U.S. Exporters In
General

• CE Marking the requirement upon accession to
  European Union
  
• EU Medical Device Directive transposed into
  national law
  
• Streamlining of device registration makes new
  members of EU appealing markets
  
• Increased decentralization of healthcare systems
  replacing aging facilities and equipment
  
• Continued economic development should support
  continued demand for imports of higher medical
  technology
  
• Greatest U.S. competitor in region Germany

24
Emerging European Markets For U.S. Exporters
Poland

• Among worlds top twenty markets
• Imports a vast majority of its medical devices
• Local production cannot meet demand
• Remarkable growth in imports
• Medical supplies, dental instruments, orthopedics
  prosthetics show greatest potential
  

25
Emerging European Markets For U.S. Exporters
Czech Republic

• One of the more developed former Soviet Bloc
  nations to join the EU
  
• Normalized regulations (CE Marking) with the rest
  of EU remarkably quickly
  
• On a mission to catch up to Germany and
  Austria
  
• Some domestic production, but not nearly enough
  to meet demand
  
• GDP growth expected to fuel continued demand for
  imports of higher medical technology

26
Emerging European Markets For U.S. Exporters
Hungary

• Largest proportion of citizens over 60 years of
  age in the region
  
• Domestic production of low-end medical products,
  much of which is exported
  
• On uphill mission to privatize healthcare
  facilities
  
• Private investment should lead to greater demand
  for improved medical equipment
  
• Continued economic development should support
  continued demand for imports of higher medical
  technology

27
Emerging European Markets For U.S. Exporters
Romania

• Small private health sector, but growing
• Market size comparable to much larger countries,
  such as Russia or Ukraine
  
• Some minor production of medical consumables
• Its failed attempt to accede to the EU in 2004
  has spurred Romania to redouble development
  efforts in the healthcare sector
  
• Private investment should lead to greater demand
  for improved medical equipment

28
In Conclusion

• The European Union provides a unique patchwork of
  markets and therefore challenges and
  possibilities for U.S. exporters of medical
  devices
• Use of CE Marking in newly-acceded countries
  simplify regional regulatory requirements
  
• Different conditions across the region make local
  intelligence of market factors key to success
  
• Aging population indicates direction of future
  medical devices market
  
• Vibrant economies with high levels of healthcare
  spending and large populations are fertile ground
  for medical device producers
  

29
N. Gerard Zapiain

• International Trade Specialist
• U.S. Department of Commerce
• International Trade Administration

Telephone [phone] Fax [phone] Email
gerry.zapiain_at_mail.doc.gov Website http//www
.ita.doc.gov/td/health