Table of contents
Key takeaways
The medical consumables and disposables market comprises businesses that develop, manufacture and distribute single-use medical products used for patient treatment or aid. We have segmented the European market based on products and business activities of players into: (i) generalist, (ii) drug delivery & minimal intervention, (iii) surgery, (iv) hygiene & wound care and (v) distribution.
The European medical consumables and disposables industry is characterised by a high degree of consolidation driven by regulatory barriers (limiting organic growth potential), production economies of scale and the (limited) reach of distribution networks. The incremental costs from the EU Medical Device Regulation and growing pressure on production efficiencies are expected to contribute to further market consolidation in the foreseeable future.
Sponsor-led interest has been significant, with ~50% of identified assets being backed by financial sponsors (February 2023). Investor interest is equally dispersed across identified segments, with anti-cyclical demand, long-term revenue visibility, moderate CAPEX needs and acquisitive growth opportunities being the key investment rationales.
Relevant ESG topics mainly revolve around environmental and governmental challenges. The disposable nature of products implies a heavy impact on the environment in the form of masses of accumulated waste. This is traded off against appropriate healthcare hygiene and safety standards, which is highly prioritised by all involved stakeholders in the value chain. From a governmental perspective, COVID-19 provided incentives for fraudulent and illegal activities between stakeholders to boost profitability margins and personal gains, evidenced by multiple cases in Germany and the Netherlands.
Company benchmarking
Market growth
MedTech Europe (September 2022) valued the European MedTech industry at ~€150bn in 2021, with the medical consumables segment growing at a ~6.3% CAGR in 2017-2021
The global disposable medical supplies market was valued at ~$105bn in 2021 and is projected to surpass $150bn by 2026, demonstrating a CAGR of ~7.8% during the period (Technavio, September 2022)
Clairfield International (May 2020) anticipates the global wound care market to grow from ~$11.0bn in 2016 to ~$16.2bn in 2024, registering a CAGR of ~6.7%
Positive drivers
Ageing EU population with the percentage of people aged >60 expected to rise from ~26% in 2021 to ~36% in 2100, corresponding to an absolute increase of ~33m (World Economic Forum, September 2022). As a result, public expenditure on healthcare due to this demographic development is projected to increase by ~1.2pp of EU GDP over 2019-2070 (European Commission, May 2021)
Internationalisation of markets yields additional growth potential by uncovering new demand, particularly in emerging economies (Coloplast, November 2022). For instance, China’s healthcare spending has increased by >9% annually per capita (OECD, 2022). This effect is boosted by increasing medical knowledge over time, thereby creating significant demand for consumables
ESG is projected to contribute towards sustaining a competitive advantage in the medium term, with several KPIs already being affected by current initiatives (Coloplast, November 2022). The race towards sustainability is likely to yield margin improvements through cost reductions, as well as generate additional demand through green product development (HARTMANN Group, March 2022)
Negative drivers
Price pressure from increasing customer concentration and churn as hospitals consolidate procurement through large-sized purchasing associations. This risk will be further amplified by the low degree of diversification in the industry and market entry of low-cost Asian players, whose product quality is improving considerably (interview by Gain.pro)
Regulatory requirements are increasingly hard to meet and ever-changing (HARTMANN Group, March 2022). Even though medical consumables are not highly challenged through far-reaching frameworks such as the EU MDR introduced in 2021, governmental rules across the world have the potential to increase downward pressure on margins
COVID-19-induced risk aversion spilling over into other medical segments, illustrated by customers’ preference for established goods and brands over new product innovations. The overall market impact is estimated to be negative since new innovations are less likely to be explored and demanded (interview by Gain.pro)
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Medical consumables and disposables industry.
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