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美国医疗工具和设备制造业
美国医疗工具和设备制造业包括约11000家公司，他们的年收入为750亿美元。其中的大公司包括强生、通用电气医疗集团,西门子医疗系统,美敦力公司。行业中主要集中的50个最大的公司占总收入的75%左右。下面分析的范围包括在医疗领域生产眼科、牙科、外科医疗用品和器械的供应和设备制造商。这一分析不包括公司生产和制造的x射线或电子医疗装置和设备。
这个市场已经由于政府参与和法律责任问题而出现了明显的影响,最终会影响一个组织的底线。医疗成本继续呈指数增加，导致私人保险公司和如老年医疗保险制度等政府计划开始限制支付一些需要医疗用品和设备的医学治疗。根据这一点,当市场试图提高医疗设备的价格，它看到了一个来自医生和医院的更大的阻力，反过来，就是为什么在过去的10年行业的手术和医疗器械只有百分之十五左右的增长率。除了这些限制,对监管机构的依赖已经使公司的成本越来越高。
The Us Medical Supplies And Devices Manufacturing Industry Economics Essay
The US medical supplies and devices manufacturing industry includes about 11,000 companies with combined annual income of $75 billion. Major companies include Johnson & Johnson, GE Healthcare, Siemens Medical Systems and Medtronic. The industry is highly concentrated with the 50 largest companies accounting for about 75 percent of revenue. The scope of the following analysis involves medical supply and device manufacturers that produce ophthalmic, surgical and dental instruments and supplies used in the medical field. This analysis does not include companies that produce and manufacture x-ray or electro-medical devices and equipment.
This market has seen significant effects due to government involvement and legal liability concerns that can have an ultimate impact on an organization’s bottom line. Healthcare costs are continuing to experience an exponential increase causing private insurers and government programs such as Medicare to limit payments for several medical treatments that require medical supplies or devices. In light of this, the market is seeing a greater resistance from doctors and hospitals when it tries to increase prices on medical devices, which in turn, is why the industry has only seen around a five percent increase in surgical and medical instruments in the last 10 years. In addition to these limitations, the dependence on regulators has come with a high cost to companies. Increased government regulation has increased overall compliance costs, thus reducing overall revenues. To add to these costs, new medical devices introduced in the United States also require approval from insurers, and if the insurers deem the devices to be too expensive, despite approval by the FDA, they can be unsuccessful and cost organizations a great deal. To offset these high costs, United States lawmakers are urging the Government Accountability Office to investigate why medical manufacturers do not receive incentives to develop products to treat rare diseases, similar to the incentives that drug companies receive. Overseas, products marketed in Europe require a CE mark of approval under the European Union Medical Device Directive to help maintenance quality excellence. Also, products often require an ISO 9000 certification of quality. As government policies continue to provide strict regulation on this market, organizations will continue to have to weigh the costs of doing business.
In addition to governmental policies, the market also experiences a high level of legal liability. Companies are at high risk of being held liable for injuries to be allegedly caused by their products. As a result of the lawsuits, investigations and recalls, the costs and availability of liability insurance are a major concern, despite the company’s questionable liability. Other legal costs are caused by litigations over patents, licenses and intellectual property (IP) rights due to the rapidly evolving medical industry technology. One study has shown that medical devices are a common cause of child visits to the ER, citing that approximately 70,000 children visit the ER each year due to medical device injuries. Recent research has discussed concerns that most medical device products are designed for adults, thus, there is safety risk among children. This risk has caused the FDA to begin reviewing the potential for device warnings on products, creating added expense for manufacturers.
Economic
It has been seen where many industries and markets have been affected by the global economic downturn; however, the growth of the medical devices and supplies industry has remained untouched due largely to its essential nature. Even those markets that are slowing in the US are seeing growth in other countries that are continuing to develop. The US, in particular, imports an equal amount of what it exports, with 45 percent of the imports being shipped from just three countries; Mexico, Ireland and China. Additionally, there are three states alone that account for 30 percent of the total US industry. This tight import and export market could create problems with the industry if just one state or country were to have issues. The US industry is also experiencing a move of several manufacturers to lower cost countries due to the small production runs that require a high level of labor-intensive production.
Technology
Increased international standardization and shortened clinical testing has also led to much shorter development cycles for medical devices compared to pharmaceutical and drug development. Through industry consolidation and movement to major conglomerates in the industry there is increasing homogeneity between companies and products. This rapid product life cycle drives continuous advancements and requires a higher percentage toward R&D to gain/retain market share. For many products there has been further blurring of industry sectors due to a move toward pharmaceutically coated implants and devices. Many new product developments are focused on quality of life enhancement rather than health maintenance and life saving products due to a higher return on investment for these products. Technology development can also be stifled by medical ethics and religious debate (stem cell research, in-vitro fertilization, cloning, and devices and procedures to otherwise artificially extend life, for example).
Social
Advanced in standards of living and aging demographics are causing an increased demand for all medical services and products. Globally, in the year 2000, the number of people over the age of 65 was estimated to be 420 million or 6.9% of the world population. In 2030, the population over 65 is projected to be 973 million or 12%. Ethically there are several increasing questions centering on medical devices. In many cases doctors and hospitals are paid for information and research by the medical companies potentially leading to a conflict of interest. The World Health Organization (WHO) has also created a special group to address medical devices. They have also asked if it is ethical to not provide products to emerging markets or to patients that cannot afford the product. It raises the ethical question as to how much profit is acceptable when people's health is at stake. These factors will undoubtedly cause an increased demand for medical products, but could severely impact the profitability of products. The issues facing the industry are summarized by the following quote by Dr. Ronald Hollis:
"Since most folks want to go to heaven, but no one is ready to go now, they are going to make choices with their money to buy whatever they need to extend life for another day. It’s a unique advantage of the medical device market."
Dr. Ronald L. Hollis, President & CEO, Quickparts.com, Inc
New Entrants
The medical device industry has a very competitive landscape which is being driven by population demographics and advances in medical knowledge and technology. Much attention must be given to company size in terms of financial ability to finance manufacturing and R&D as well as specialization ability -including technical innovation and market segment. The financial cost of products, operations, technology and bringing the medical device product to market can prove to be expensive. For example, the Medical Device User Fee and Modernization Act (MDUFMA), which was implemented on October 4, 2004, raised the fees for Premarket Approval Applications (PMAs) and PMA supplements rose over 34 percent. Original PMA fees increased from $154,000 to $206,811.
The medical device industry is such an industry that has a high barrier which denotes that it will have fewer firms entering it. There are strict medical device regulations for product approval by the FDA, which include establishment registration, medical device listing, PMA (501) K or premarket approval, investigational device exemption (IDE) for clinical studies, quality system (QS) regulation, labeling requirements and medical device reporting (MDR). Couple this with the need for copyrights and patents and the barrier rises even higher to enter this industry.
Another challenge posed to new entrants deals with the incentive program for device makers. In the third quarter of this year, US lawmakers asked the government to investigate the reasons why medical device makers don’t receive the same incentive to manufacture products for rare diseases given to drug companies. In addition, due to the large size of the competitors in this market, there is a barrier to entry for small companies as these large companies can utilize their economies of scale. There’s also a significant increase in the number of mergers and acquisitions within the medical device industry which has already proven to change the structure of firms and the delivery of medical technology to patients. (See )#p#分页标题#e#
Substitutes
Due to the strict guidelines for substitute medical device products with the FDA it poses a definite challenge to those entering the market. There are no substitutes to health care products; therefore, the threat of substitutes is correspondingly low.
There are many business challenges also associated with substitute products. For example, there is the competition from alternative products. Many device manufacturers are concerned that advances in biotechnology will make certain devices obsolete. These would include biotech treatments such as bone, organ and tissue replacements which might be more restorative than devices implanted into patients.
Rivalry
There are two major areas of competition in this field – conventional devices (low technology, low differentiation) and high-technology equipment which is very cutting-edge technology dependent. Because the market for the conventional devices seems to be very solid and it is a low-profit market where producers depend upon volume for profit, we will concentrate our analysis on the high-technology arena. A list of the devices in each category can be found in .
The market share for the top companies is shown in . Because of the nature of the market, there is a unique opportunity for smaller companies to develop a niche and enter the market in that manner. Most of the competition is a US-based global company and are generally structured in a similar manner. The main competition in the high-technology segment is to become the first competitor to show the usefulness and necessity of a machine or test before the next competitor enters the market. This allows the first company to develop a piece of equipment the ability to function in an area with little competition and a high profit until the competition is ready to compete. Therefore, innovation is the key to the rivalries in this business.
The high-end technology aspect of these devices makes price almost irrelevant as the functionality is most important. In addition, this is a market where the customers are very much involved in the development of the device and will be willing to use the devices. The other component in this industry is that smaller companies have the ability to become the innovator in the industry and the larger companies have grown by mergers and acquisition.
Most companies in the high-technology are of this industry are investing 9 – 13% in R&D compared to virtually nothing for those in the other areas of the field. As a result of this expense, there is a large barrier to exit this market once a company enters because of the continuing investment. Lastly, as the healthcare bill becomes effective in the US, the potential for growth in this market is strong and leaving the market does not make sense.
Buyers’ Bargaining Power
As buyers of medical equipment and supplies are typically small in size, they can negotiate better prices using group purchasing which boosts buyer power. Several large healthcare GPOs (Group Purchasing Organizations) are totally owned by non-profit hospitals and health systems, which in effect pool their sourcing and contracting in a cooperative or other corporate form. The larger scale of their pooled volume attracts pricing and terms more favorable than a single buyer can attract alone. Large manufacturers may also sell directly to hospital chains or other major end-users. However, typical customers are GPOs who act as medical supply distributors and most large manufacturers sell heavily to GPOs. GPOs act as distributors for about half the nation's nonprofit hospitals and use their purchasing power as leverage to bargain for price reductions. Often, smaller medical device and supply companies can be shut out of sales to hospitals when a larger competitor has secured exclusive contracts with the purchasing group. Dependence on large customers constitutes a threat to the industry. The number of buyers within the medical equipment and supplies market is relatively low, and the cost-to producers of losing one is significant; as a result, leading incumbents are in competition with each other to assure purchases. Consequently buyers hold a certain degree of power over market players because of their high concentration.
Switching costs in this market are extremely low due to the undifferentiated nature of products. However, this is partially offset by the fact that buyers tend to seek high quality and reliability which reduces their power to some extent as market players exploit this to increase their prices in return of offering high-quality products.
In addition, as a result of the advancement of E-procurement systems, buyers are more knowledgeable about products and can compare prices; hence they can play off supplying companies against each other to force down prices. This increases competition between market players and serves to increase buyer power. The average receivables collection period is typically between 30 and 60 days after sales which is high because of manufacturer dependence on large buyers. The recent economic decline has made customers more demanding for over-the-counter products and more price sensitive, elevating the pressure on producers further. Overall, buyer bargaining power in the market is moderate.
Suppliers’ Bargaining Power:
The producers of raw materials constitute the main suppliers to the medical equipment and supplies industry. Major supplies for the industry include stainless steel, silicone, latex rubber, plastic, aluminum, polymers and natural fabrics. Electricity and natural gas typically provide the power for manufacturing. In most cases market players will source inputs from a variety of suppliers; however, in some cases players are dependent upon one company for their specific materials. Such suppliers are usually large in nature due to the inherent large-scale operation involved in production. This means that suppliers are able to exercise their bargaining power and negotiate on price. Raw materials are subject to fluctuations in price which can negatively affect a company’s profitability. Market players may purchase inputs on the open market, but in doing so they lose any control over prices. As a result, producers are dependent upon suppliers for inputs which increase supplier power further. However, there is little differentiation in supply materials, so consequently market players are more willing to switch suppliers on basis of price; hence they can bargain cheaper prices with different suppliers. On the other hand, contracts with suppliers usually stipulate penalties upon termination of a contract, increasing supplier power mildly. Overall, supplier bargaining power in this market is moderate.
Driving Forces Analysis
Growth in levels of demand as a result of favorable demographic changes and aging population
Most industrialized nations are experiencing the aging of their populations as a consequence of falling birth and death rates and the aging of the baby-boom generation. In the US (which currently constitutes 40.9% of the global healthcare equipment and supplies market value) , changing population demographics favor the medical device industry ,as US population is getting larger and older than it today. The percentage of US population over age sixty-five is expected to rise from 12.7% in 2010 to 20.8% in 2050 (See ). From 2010 to 2020, the number of Americans 65 and older is forecasted to increase by more than 35 percent while the total US population is forecast to increase by 10 percent. The US population is projected to increase to 392 million by 2050 --more than a 30% increase from 2009 and American life expectancy is projected to increase from 76.0 years in 1993 to 82.6 years in 2050. The demographic concentration of baby boomers at the top of the population pyramid, backed by their vast reservoirs of disposable income represents a vast opportunity for the industry.#p#分页标题#e#
Specialization
Medical device manufacturers are increasingly specializing in one area of medicine and sometimes in just one type of treatment. AtriCure, for example, makes only devices that treat atrial fibrillation. The high degree of specialization in a field of rapid innovation allows small companies to compete successfully, but also greatly increases the risk of technological obsolescence for any individual company.
Consolidation
Increased consolidation of manufacturers and distributors has been driven partly by customer consolidation: hospitals, doctors groups, clinics and purchasing groups. To buy in bulk at lower costs, customers form large buying groups and sellers are more likely to get contracts with these groups if they can offer a wide product assortment. Other factors driving consolidation are shorter product life cycles and the high cost of new technology development. It is no coincidence that the largest players in the medical devices sector are comprised of large international conglomerates (GE, Siemens, Boston Scientific, Johnson and Abbott Laboratories). These companies have the associated R&D and M&A budgets and diverse divisions that can create synergy as well as derivative consumer products.
Growing worldwide healthcare spending per capita
The worldwide healthcare market is influenced by the increasing expectations for improved healthcare in both developed and developing countries. Healthcare spending per capita has grown significantly across the world. In the US, it has increased from $144 per capita in 1960 to almost $4,400 by 2008. Equipment suppliers understand that in order to be successful in the medical market they have to be focused and successful in the US. The US per capita spending is projected to grow by an average of 6.1 percent per year over the period (2009-2019). The health care portion of GDP was projected to reach 17.3 percent in 2009 and 19.3 percent by 2019 while Medicare spending was projected to grow 8.1% in 2009 and average 6.9% per year over the same period. Private spending was projected to grow 3.0% in 2009 and average 5.2% per year over the projection period and spending on hospital services was projected to grow 5.9% in 2009 to $761 billion. Average spending growth of 6.1% per year is expected for the entire projection period.
Technology advances fuel healthcare productivity
In the next 10 years, the healthcare market will focus on early diagnosis, digitized patient information that can be accessed from numerous locations, and “total solution” selling that contributes to healthcare productivity gains. Early diagnosis and prevention is enabled by emerging diagnostic technologies. For example, positron emission tomography (PET) is used to detect many kinds of cancer with great accuracy. A “paperless” hospital is another emerging trend. Digital patient records enable doctors to access patients’ records wherever the doctor is and at whatever time of the day is necessary. The introduction of this in the US was a key component of the US Healthcare Reform bill. In a digitized hospital, healthcare providers do not have to wait days for an x-ray to “come back from the lab” because the x-ray machine is digital and the image is instantly available.
Manufacturers of implantable medical devices and diagnostic equipment are rapidly adopting wireless capabilities into their designs. With wireless technology, doctors and patients have better access to real-time data from medical devices. For example, wireless technology in hearing aids allows patients and doctors to remotely adjust volume and balance. Technology is giving rise to new clinical therapies, which in turn are addressing more and more medical ailments and aiding in earlier diagnosis and prevention of diseases.
Driving Forces impact on the industry future profitability
While many industries are affected by economic downturns, the growth of medical technology remains largely undeterred due to its indispensable nature. Industry demand is driven by population demographics and advances in medical knowledge and technology. Virtually all of aforementioned changes should increase the level of demand for the industry and hence make a positive impact on the industry future profitability. The projected compound annual growth rate of the healthcare equipment & supplies global market from 2009-2014 is 4.4% which indicates a healthy future growth for the industry (See ).
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