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Refurbished Medical Imaging Equipment – Growing Business During Lean Economy

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The European Market for Refurbished Medical Imaging Equipment is in a high growth stage. The market is growing vigorously, and if tapped properly, it is poised to become a strong market in most of the …

The European Market for Refurbished Medical Imaging Equipment is in a high growth stage. The market is growing vigorously, and if tapped properly, it is poised to become a strong market in most of the countries. After-sales service, coupled with providing warranty, plays a crucial role in attracting customers. View the presentation to find out more.

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  • 1. Refurbished Medical Imaging Equipment – Growing Business During Lean Economy Gideon Praveen Kumar, Senior Research Analyst Healthcare June 6, 2010
  • 2. Focus Points A Market Overview C 1. Segmentation and Scope 2. 2. Market Overview 2. 2. B Analysis of the Industry 1. Major Industry Challenges 2. Market Drivers Market Restraints 3. 3. 4. Strategic Recommendations 5. List of Major Market Participants Key Takeaways 6. 2
  • 3. Segmentation and Scope Modality Scope Geographic Scope X-Ray Mammography X-Ray Radiography X-Ray Angiography MRI CT PET Ultrasound EUROPE WESTERN EASTERN OTHERS Germany Czech France Slovakia Republic Greece Italy Poland Russia Spain Hungary The United Ukraine Romania Kazakhstan Kingdom Bulgaria Benelux Turkey Scandinavia 3
  • 4. Introduction and Overview The market for the European refurbished medical imaging equipment is at high growth stage. The refurbished medical imaging equipment market The refurbished medical imaging equipment market in Europe is growing vigorously, and ifif tapped in Europe is growing vigorously, and tapped Devices that are commonly properly, itit is poised to become a strong market in properly, is poised to become a strong market in refurbished have generally been most of the countries, with aa CAGR of 7.1 percent most of the countries, with CAGR of 7.1 percent designed to have extended longevity, from 2009 to 2016. from 2009 to 2016. many operating for thousands of cycles. There are two types of refurbishing - cosmetic and electromechanical. After-sales service, coupled with providing warranty, plays a crucial role in attracting customers. Thus, Examples include medical imaging the OEM refurbishers who provide equipment such as X-ray such services, have an edge over equipment, CT, PET, MRI and Very few third-party vendors the third-party vendors in this ultrasound scanners. perform complete market. electromechanical refurbishing. Refurbishment is done by OEMs, such as Philips Healthcare, Siemens Healthcare, GE There are many equipment that are sold in "as- Healthcare and Toshiba Medical is" form with or without cosmetic refurbishing, Systems Europe and some stand- without providing warranty. alone third-party refurbishers and used systems sellers. 4
  • 5. Industry Challenges * Private sector and small-sized hospitals being the major buyer * Regulatory challenges in different countries * Lack of awareness on the advantages of refurbished systems Industry Challenges * Need for consistent maintenance of the quality of products * Complex business interests of the OEM refurbishers Difficulty faced by third-party refurbishers in finding suitable * dealer/distribution network * Possible threat from low cost Asian manufacturers Source: Frost & Sullivan 5
  • 6. Market Drivers Government - funded cancer programs Increasing number of procedures Increasing Financial number of old recession systems providing a conducive platform Increase in the number of private healthcare institutions Source: Frost & Sullivan Note: Size of the bubble represents the driver’s level of impact during the forecast period 6
  • 7. Market Restraints Lack of availability of spare parts of the Government outdated tenders acting as equipment a barrier to the purchase of used systems Lack of proper reimbursement for used systems Source: Frost & Sullivan Note: Size of the bubble represents the restraint’s level of impact during the forecast period 7
  • 8. Demand Analysis Customers of Refurbished Medical Imaging Modalities MRI, mammography and PET are the modalities that are 15% hugely sought after by small- and medium-sized hospitals and private clinics in Europe. 5% Growth of the X-ray angiography and mammography Small & medium sized hospitals modalities is due to increasing incidence of cardiovascular Private practitioners ailments and breast cancer. 50% Universities Large hospitals Ultrasound modality’s short life cycle making replacement optional, coupled with competition from the lost cost Chinese 30% manufacturers, keeps the growth of this segment at bay. Germany has traditionally been a strong market and accounts for nearly half of the total refurbished market in Europe. Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan Percentage Composition of Demand in Europe European Share for Refurbished Medical Imaging Modalities 3% 1%1%1% 2% 4% Germany 5% France Mammography 3% Italy 12% 8% 42% MRI Spain 11% UK 25% CT Benelux US 12% Scandinavia 6% Poland PET Hungary 12% Angiography Czech Rep 26% 18% Radiography 8% Bulgaria Romania Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 8
  • 9. Revenue Forecasts 700.0 8.8 8.6 600.0 Refurbished 8.4 medical imaging 500.0 Revenues ($ Million) 8.2 Growth Rate (%) equipment market 8.0 400.0 is a high growth 7.8 300.0 market. 7.6 200.0 7.4 7.2 100.0 7.0 0.0 6.8 2009 2010 2011 2012 2013 2014 2015 2016 $ Million % Note: All figures are rounded. Source: Frost & Sullivan • The total European refurbished medical imaging equipment market generated a revenue of $358.5 million in 2009. • This market grew at a healthy rate of 7.5 percent in 2009 and is expected to grow at a compound annual growth rate of 7.1 percent from 2009 to 2016. • This healthy growth is attributed to increasing demand for refurbished systems in countries where private practice is profound. 9
  • 10. Geographic Analysis Country Growth Rate [%] Future Market Potential Germany 8.5 Increasing France 7.9 Increasing Spain 7.7 Increasing Italy 7.6 Increasing The United Kingdom 4.0 Decreasing Benelux 8.1 Increasing Scandinavia 8.2 Increasing Poland 8.5 Increasing The Czech Republic 5.1 Decreasing Bulgaria 7.5 Increasing Romania 7.6 Increasing Hungary 8.4 Increasing Turkey Increasing Greece Increasing Khazakhstan Increasing Russia Increasing Slovakia Increasing Ukraine Increasing 10
  • 11. Key Takeaways • The refurbished market in Europe is a growth market, and if tapped properly, it is poised to become a strong market in most of the countries with a CAGR of 7.1 from 2009 to 2016. • Refurbishment is done by OEMs such as, Philips, Siemens and GE and some stand-alone third-party refurbishers and used systems sellers. • After-sales service, coupled with warranty, plays a crucial role in attracting customers. This way, the OEM refurbishers have an edge over the 3rd party vendors. • Very few third-party vendors perform complete electromechanical refurbishing. Incidentally, these vendors have collaborative alliances with the OEM refurbishers. • As-is sales is done with or without cosmetic refurbishing without providing warranty. • The Average Selling Price of OEM-refurbished equipment is 30 to 40 percent less than that of a respective new equipment. The ASP of a third-party refurbished equipment varies from 2.5 to 8 times lesser than that of OEM’s price. • The ASP is expected to depreciate at the rate of 8 percent per annum to maintain competitive pricing and check the entry of low-cost Asian manufacturers. • There is always more demand for cosmetic refurbishment over electromechanical refurbishment because of the cost involved. This trend is stable across all modalities and stands at 70:30. However, there is likely to be a shift towards electromechanical refurbishment at affordable cost. 11
  • 12. Strategic Recommendations Carry out complete electromechanical refurbishing B Target countries having more private A C End-user education practice Market Growth Collaborative alliances E D Establish recognised between third-party refurbishing divisions refurbishers Source: Frost & Sullivan 12
  • 13. Next Steps Request a strategic approach document for a Growth Partnership Service or Growth Consulting Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com) +44 (0)20 7343 8383 Join us at our annual Growth, Innovation and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth London, United Kingdom (www.gil-global.com) Register for the next Chairman’s Series on Growth: Accelerating Growth Through Vertical Market Expansion: A How-To Primer 16 June 2010 10:00 AM BST (www.frost.com/growthEU) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 13
  • 14. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by taking our survey. 14
  • 15. Frost & Sullivan on Twitter and Facebook Find us @Frost_Sullivan on Twitter Become a fan of Frost & Sullivan on Facebook 15
  • 16. For Additional Information Katja Feick Noel Anderson Corporate Communications European Vice President Healthcare New Business Development 0049 (0) 69 7703343 +44 (0)207 343 8389 katja.feick@frost.com noel.anderson@frost.com Siddharth Saha Director of Research Healthcare + 44 (0) 207 343 8374 siddharth.saha@frost.com 16