Medical Device Link.

MARKETS

The health economy is at the top of the political agenda in Germany. It is increasingly appreciated as being the country’s growth market and it is a significant employer. Indeed, the coalition agreement of the new government states: “Health care is a dynamic economic sector with a high degree of innovation capability and considerable economic significance for Germany as an investment and industrial location.”

The health economy is becoming increasingly aware of medical technologies, which can, in part, be attributed to studies conducted by the Federal Ministries of Economics and Research and the European Commission.¹ This is an encouraging development for medical technology companies because it will lead to a stronger appreciation of the significance of their products in high-quality patient care and an efficient and future-proof health-care system. Most of the German political parties also underscored the industrial–political impact of this sector by explicitly mentioning medical technology in their election programmes.

Industry profile

Health-care spending in the medical device sector in Germany amounted to more than E20 billion in 2003. The medical device industry employs more than 108000 people in approximately 1100 companies (of companies employing more than 20 people); this represents 2% of all employees in Germany’s manufacturing sector. This figure is even higher according to a recent European study, “Medical Devices Competitiveness and Impact on Public Health Expenditure,” which indicates 145000 jobs.²

Market advantages

With its large number of well-educated and well-trained doctors, researchers and engineers and the high standard of clinical research, Germany has excellent prospects to bring new products and procedures to the marketing stage. With leading university hospitals and numerous competence centres in medical technology, its knowledge base is substantial. Germany’s advantages also lie in shorter approval times and in its cost-effective clinical research. The cost of bringing a new idea to marketability is on average approximately E8–10 million. These costs are considerably higher in the United States (US) at approximately US$80 million (E67 million).

Market hurdles

There are, however, considerable challenges when it comes to introducing innovations into the reimbursement system and thereby to patients without delay. That is why market growth in Germany is not as dynamic as it is elsewhere. The drug-eluting stent, which is employed to keep narrow or blocked vessels permanently open, is one example of this. This device is an established standard treatment in the US and in most European countries. It has market penetration of currently 75% in the US, 60% in the United Kingdom and 76% in Switzerland. Germany, with market usage of only 20%, is lagging far behind the rest of the western industrial nations.

Slow business growth

In 2005, BVMed’s member companies, manufacturers of medical products, reported an increase in turnover of 2%. In 2004, turnover had increased by 1.5%; in the preceding years turnover growth was significantly stronger with 3.9% in 2003 and 6.5% in 2002. Thus, Germany is lagging far behind world market growth, which is approximately 7% per annum.

Development in subsectors, and in particular the medical technical aids sector, has been negligible. In 2005, ostomy and incontinence aids stagnated with a slight growth in turnover of 0.2% compared with 2004, which was a particularly bad year for the medtech aids sector. In 2005, dressing materials reported a
decrease of 0.1% on the previous year. Development in other subsectors was slightly more positive. Single-use surgical equipment increased by 2.8%; and growth in turnover of the single-use devices, intensive care medicine and nursing items was 4%; however, this rise is mainly based on turnover growth, that is, more hospital cases, rather than the devices costing more.

How to realise the potential

From BVMED’s perspective, a long-term reorientation of health policy is called for, including increased competition; more freedom of choice for the medically insured; and less regulation for the companies, doctors and hospitals. It is important to bridge the gap between competition on the one side and personal contributions (according to salary and not the treatment) paid into the system on the other. The general conditions for research and development must be improved and above all, more health-care research is needed. An altogether more innovation-oriented climate needs to exist so that innovative medical technology treatment methods and procedures get to patients in good time. BVMed recommends the following changes:

• The reimbursement catalogues covering medical technology services and products and their reimbursement prices must be updated at an accelerated pace to encourage a more efficient application of medical technology.
• The hospital reimbursement system must be open to new treatment methods and flexible with nonbureaucratic solutions between contracting partners at a local level.
• The Joint Federal Committee’s Health Technology Assessment procedures must be transparent and concluded in a more timely fashion.
• More health-care research is required to comprehensively portray the overall cost of a therapy as well as its benefits to patients and economy.

The medical technology companies can then further improve the health-care of patients with their products and procedures, be an important driving force in the health economy and contribute to establishing Germany as a “competence centre for health.”

Joachim M. Schmitt is Director General and Member of the Board of BVMed and Manfred Beeres is Communication Director of BVMed, the German medical technology trade association, Reinhardtstrasse 29 b, D-10117 Berlin, Germany, tel. +49 30 246 255-20, e-mail: beeres@bvmed.de, www.bvmed.de.

BVMed represents more than 200 manufacturers and trade companies.