Frankfurt The medical technology industry as an industry is not a winner from the corona pandemic – even if individual companies have repeatedly reported rapidly increasing demand for their products in recent months.
Incoming orders in the industry have fallen by a total of seven percent this year, and sales will be around four percent below the previous year. This is shown by a study by the Spectaris industry association and the management consultancy Roland Berger, which is based on expert discussions and a survey of around 500 companies in the industry.
According to this, 69 percent of the companies surveyed expect a decline in sales this year, while only 18 percent expect rising revenues. The Drägerwerk Group, for example, which has come into the public eye this year due to the demand for ventilators and protective masks, expects sales growth of 14 to 22 percent for the year as a whole. This means that the Lübeck-based company belongs to a minority of just seven percent of the medical technology companies that are expecting sales growth of more than 15 percent this year.
A survey by the medical technology association BVMed among its members in October came to a similar picture as the study by Spectaris and Roland Berger: The companies surveyed by BVMed even expect an average of almost five percent in sales in 2020, mainly because of the many operations and treatments due to the pandemic have been moved.
The medical technology industry in Germany is a fragmented branch. In 2019, according to the Federal Statistical Office, the around 1400 companies achieved total sales of 33.3 billion euros. The Spectaris association attributes the growth of ten percent compared to 2018 mainly to purchases brought forward because of the impending Brexit. The industry is characterized by medium-sized companies: 93 percent of the companies employ fewer than 250 people.
Small companies in particular are particularly badly affected by the consequences of the corona pandemic because they are less diversified: They expect a decline in sales of around ten percent in 2020. The large manufacturers, on the other hand, assume on average that their revenues will decrease by around one percent. They benefited from their broader positioning, such as the quarterly figures of listed companies such as Siemens Healthineers or Fresenius last showed.
The pandemic caused sales declines in certain areas because operations that were not urgently needed were postponed, but on the other hand the need for diagnostics and certain intensive care products increased.
Overall, the respondents expect the pandemic to change the industry massively. As in almost all industries, medical technology companies will work more digitally and use more home offices and video conferences. The vast majority of respondents also expect that digital sales and service concepts will play a greater role.
“Digitization, which has made slow progress in recent years, has rapidly gained momentum. This can be seen, for example, in the increasing acceptance of telemedicine and digital outpatient care concepts as well as in the accelerated process digitization in medical technology and in hospitals, ”explains Dr. Thilo Kaltenbach, Senior Partner at Roland Berger.
Many reserves have already been used up
For many smaller companies, however, it could be difficult to survive in the market in the future: More than 80 percent of those surveyed assume that the pace of market consolidation has accelerated – this is primarily at the expense of smaller companies.
Because they were already under great pressure in the run-up to the pandemic because they had to make high investments to prepare for the new approval processes of the planned European Medical Device Directive. Many reserves have already been used up.
In the opinion of around two-thirds of those surveyed, this is compounded by the fact that the price pressure in the market will continue to rise because the income of health insurers will fall and they will be more restrictive in reimbursement.
“The crisis set a process in motion that is irreversible,” says Spectaris managing director Jörg Mayer. It should be positive for the industry that the corona crisis allowed it to sharpen its image as a systemically important industry and thus possibly find it easier to win engineers and digital experts in the battle for talent than before.
More: Fresenius comes through the crisis better – shares are up