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2009-05: Medical Technology in Germany – Industry Report 2009

by BVMed – German Medical Technology Association, May 2009

The health economy is already one of the most important and biggest market segments of the German economy today. A total of 4.4 million people are employed in healthcare. Thus, about every tenth job in Germany is based in the health economy. 252 billion euros in total are spent on health. This represents a share of 10.4 percent of the gross domestic product, thus making healthcare an even more significant sector than, for instance, the automotive industry (9.7 percent of GDP).

Expenditure for Medical Devices in Germany

In Germany healthcare spending in the medical devices sector (without capital goods) amounted to more than 23 billion euros. Of this amount, about 11.3 billion euros account for medical technical aids, 10.5 billion euros for other medical supplies and about 1 billion euros for the sector of medical dressings, which is listed in the category “pharmaceuticals“. The share of Statutory Health Insurance in the total expenditure incurred amounted to over 14 billion euros.

Jobs in MedTech

The medical technology industry employs 95,000 people in nearly 1,250 companies (with more than 20 employees per company). In addition there are roughly 10,000 small businesses working in the sector with about 75,000 employees. The core industry thus employs some 170,000 people in Germany in more than 11,000 companies. Another 29,000 people are employed in the retail trade for medical and orthopedic products.

Approximately 15 percent of the employees work in Research and Development (R&D), with a trend toward continued increase. Apart from a few large companies, the industry is strongly dominated by medium-sized firms. 95 percent of the companies employ fewer than 250 people.

Production and Export

The total business volume of manufacturing medical technology companies increased in Germany by 6.9 percent to 17.3 billion euros in 2007. The domestic sales volume rose by 7.3 percent to 6.2 billion euros, the export sales by 6.7 percent to 11.1 billion euros. About 41 percent of exports went to countries of the European Union, 22 percent to North America and 14 percent to Asia in 2007.

In export, Germany ranked second worldwide, with a world trade share of 14.6 percent, behind the USA (30.9 percent) but distinctly ahead of Japan (5.5 percent).

Worldwide Growth Market of Medical Technologies

The medical technology industry is a worldwide growth market. Advances in medical technology, demographic development with more and more older people and the expanded idea of health will ensure that this remains so.

The demand for healthcare services will continue to rise. Patients are increasingly prepared to invest in their health.

The world market for medical technologies amounts to about 220 billion euros. After the USA at 90 billion euros, the European market at 65 billion euros is the second largest market in the world. Besides the USA and Japan (25 billion euros), Germany is the third biggest market worldwide at 22 billion euros and by far the largest market in Europe. It is about twice as large as the French and three times as large as the Italian and the British markets.

BVMed survey reveals a robust medtech sector

To what extent do medtech companies feel the consequences of the economic and financial crisis? To answer this question, BVMed conducted an online survey in early March 2009, which yielded a response from 120 member companies. The results confirm that on the whole the Medtech sector is well-placed in the German market landscape:

• One fourth of the companies currently feel no consequences of the economic and financial crisis on their business operations.

• Only one third of the companies report drops in sales in the first months of 2009 compared to the good previous year.

• Actual measures such as calling a stop to hiring were initiated by 32 percent of the companies. Only 4 percent of the companies participating in the survey have had to reduce jobs in connection with the economic crisis so far.

• More drastic consequences, such as problems gaining credit for financial requirements, withdrawal of investors, shutdown of production capacities or reduced working hours play no or only a very slight role for the Medtech companies.

• Rather, companies primarily perceive general problems of the industry which have been observed for years, independent of the economic crisis: for instance a stronger downward pressure on prices cited by 57 percent of the companies, as well as a generally more strained financial situation mentioned by 43 percent.

Outstanding Innovative Capability

The medical technology industry is dynamic and highly innovative. Germany ranks second place behind the USA in its share of patents and worldwide commerce. The German medical technology manufacturers achieve approximately a third of their business volume with products which are less than three years old. The researching companies in the medtech sector invest an average of about nine percent of their sales revenues in research and development. Germany as a venue for innovation and research thus plays a particularly important role for the medtech companies.
Another proof of the industry‘s high innovation capability: according to the European Patent Office in Munich, medical technology heads the list of registered inventions with over 15,700 patents. 11.4 percent of patent applications thus originate from the medtech field, which is followed by telecommunications (10 percent) and IT (6.7 percent).

From the idea to application: Three steps to medical-technical progress

How can Germany‘s leading market position in medical technology be preserved and expanded in the long-term? How can general conditions be shaped to promote the medtech industry? The BVMed‘s policy concerns can be portrayed on the basis of three stages towards medical progress:

First step: Ideas for medical-technical progress
Physicians are often the source of ideas for innovations or advanced developments. The prevailing conditions for new ideas are outstanding in Germany. We have well-trained doctors, researchers and engineers and a high standard of clinical research. These are the best prerequisites for developing new products and processes.

Second step: From the idea to the finished product
The idea for a product or process is taken up and developed by physicians, technicians, and engineers in the companies. The development of the technology itself is geared to maximum safety requirements. The process is accompanied by a risk analysis and assessment prescribed by law which compares the possible potential dangers of the respective method to its possible benefits.
Owing to the detailed risk assessment, the CE marking stands for comprehensive safety. Furthermore – and this applies only for medical devices – it also stands for performance capability. Because the law prescribes that a clinical trial is conducted for every medical device. This regulatory framework for medical devices with graduated risk requirements has proven reliable and should be retained.

Third step: The new product in application
The market authorization, however, does not yet ensure that the new product or process will also be reimbursed by the health insurance funds. But due to the dynamism and speed of innovation in the medtech sector, it is important that new products and processes can be rapidly introduced. From the viewpoint of BVMed, among other things the following points are important:

• We advocate retaining the principle of „permission with the reservation of prohibition“ in the hospital sector. This principle is important for the innovative abilities of hospitals and the medtech sector. Many innovations are initially applied in hospitals. Medical technological innovations in hospitals are subject to reimbursement by Statutory Health Insurance, unless there has been a negative decision of the Joint Federal Committee (JFC). This principle must be adhered to in the inpatient sector, so that innovative medical technologies can be made available to all patients who require them without delay.

• Medtech companies need unambiguous, but also objective directives on the evaluating criteria in the technological assessment procedures (HTA). Then it will also be possible to conclude the procedure of the JFC more rapidly.

• We advocate greater flexibilization of the reimbursement schemes. We support stronger own responsibility of the insured. We are for limited-term financing models in selected sectors of medical technology. Adequate accompanying investigations can document the benefits of innovations and provide patients faster access to them. If we open up the system here, then the health insurance funds will compete for the rapid introduction of innovations in the future.

In summary: If we promote innovations and proceed in a more coordinated manner, while taking greater consideration of quality aspects, then the medtech companies will also remain a growth engine of the health economy for the benefit of patients in 2009.


Contact:
BVMed -German Medical Technology Association
Reinhardtstr. 29 b, D -10117 Berlin
Internet: http://www.bvmed.de


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