Table of contents
Key takeaways
The medical electronic devices market comprises businesses involved in developing, manufacturing, assembling and distributing medical electronic devices used to prevent, diagnose, monitor, treat or remediate diseases. As such, we segmented the market based on medical application area into: (i) generalists, (ii) respiratory, cardio & emergency, (iii) intervention, (iv) radio, optical & imaging, (v) dental & oral, (vi) decontamination & sterilisation and (vii) measurement & diagnosis.
The European landscape is characterised by a high degree of consolidation, with the global top 10 (e.g. Medtronic, Abbott Laboratories, Boston Scientific) dominating all segments. The remainder of the market consists of SMEs focusing on market leadership in niche subsegments. Incumbents frequently take over smaller players primarily to acquire R&D capabilities and fill gaps in their product and service portfolio.
Sponsor-led interest has been limited, with ~29% of identified assets being backed by financial sponsors (March 2023). Private equity investors are primarily detracted due to strict and varying regulatory regimes across end markets as well as continuous R&D and CAPEX requirements limiting cash generation. Nevertheless, high entry barriers, international customer bases, industry organic growth and resilience as well as niche leadership dynamics serve as interesting characteristics for investors.
ESG topics relate to potential social, environmental and governance issues. The primary social topics relate to the safety of patients who are treated using medical electronic devices. Environmental factors mainly centre around the extent of sustainable practices in manufacturing and distribution processes. As such, increasing supply chain information transparency has become ever more important for incumbents. Governance issues arise from potential engagements in illegal bribes and kickbacks to healthcare clients, thereby boosting the competitiveness of a player’s product offerings.
Company benchmarking
Market growth
MedTech Europe (September 2022) sizes the European MedTech market at ~€150bn in 2021, accounting for ~27.3% of global revenues. The European market ranks second-largest after the US, which generated ~43.5% of sales globally
Statista (December 2022) estimates the European medical device market generated ~€105.3bn in revenues in 2021 and expects this to reach ~€155.5bn in sales by 2027 (+6.7% CAGR 2021-2027)
An industry expert interviewed by Gain.pro expects the European dental and oral segment to grow at 3-4% YoY in the medium-term driven by the increased awareness about dental hygiene
Positive drivers
Two-fold demand push on the back of an ageing population resulting in growing per capita healthcare spending in the EU, which increased from ~5.9% of GDP to ~8.1% from 1995 to 2021 (European Commission, February 2023) combined with structural shortages of healthcare personnel driving the demand for MedTech-led efficiency gains (EPSU, January 2022)
Developing countries yield massive opportunities due to their sheer size and expected long-term growth outlook in terms of healthcare spending (e.g. India is expected to reach ~3.5% of GDP by 2030; BIB, January 2022). European players are well-positioned to penetrate overseas markets and benefit from their high-quality reputation (interview by Gain.pro)
Healthcare digitalisation and increased usage of artificial intelligence allow for interoperability of MedTech devices, leading to higher healthcare efficiency by enabling healthcare providers to automate workflows, analyse large sets of data and support practitioners' diagnosis predictions (interview by Gain.pro)
Negative drivers
Changing and increasing regulatory requirements (e.g. EU MDR) disrupts operations and requires substantial adjustments to development and manufacturing processes, thereby favouring large and international players while forcing smaller and less profitable players out of the market (interviews by Gain.pro)
Significant dependency on overseas manufacturing is likely to lead to supply chain issues in the current volatile geopolitical climate, with COVID-19 and the Russia-Ukraine war serving as prime examples, showcasing the vulnerability of global supply chains due to single-sourcing strategies (interview by Gain.pro)
Persisting global chip shortages continue to cap the manufacturing capacity of medical electronic devices, significantly delaying corresponding sales trajectories. For example, Baxter International (US; August 2022) estimated that global production levels were reduced by ~20-80% at multiple points in 2022, depending on the product
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Medical electronic devices Industry industry.
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