2011-04: Medical Technologys Industry Report 2010/11

Source: Annual Report 2010/11 by the German Medical Technology Association

Providing Perspectives for MedTech Innovations

In the past months, political decision-makers have increasingly come to realize and acknowledge the important contributions made by medtech companies to innovation and increased efficiency in the German health system. Numerous events concerning the health economy with Dr. Angela Merkel or Ministers Dr. Philipp Roesler and Rainer Bruederle bore witness to this positive development in 2010.

Medtech companies now expect clear perspectives for innovations in medical technology.

The general economic conditions in Germany for innovation and the development and introduction of modern medical technologies that help patients and make the health system more efficient must be continually analyzed and further adapted where necessary.

Desired improvements from the point of view of BVMed include clear stipulations on time periods as well as stronger participation rights in the Joint Federal Committee, the introduction of “innovation pools” in the Statutory Health Insurance, and the establishment of agreed processes for the assessment of benefits of medical technologies.

The issue “assessment of benefit” is currently high on the political agenda. The Institute for Quality and Efficiency in Healthcare (IQWiG), acting as service provider to the JFC, currently only evaluates benefits for patients. It remains to be resolved which institutions will be able to assess not only the benefits for patients, but also the benefits for the users and the benefits for the system. A correct decision as to which medtech innovations constitute medical and economic progress will only be possible after taking all these different kinds of benefits into account.

One important core demand of medtech companies remains retaining the principle of “permission with the reservation of prohibition” in the inpatient sector, and extending this innovation-friendly principle to the outpatient sector wherever structural preconditions are the same.

We offer clear perspectives with these positions: on ideas for innovations, on medical-technological and economic progress, and on the introduction of new products and methods.

There is a need for a common strategic positioning of industry, science, and politics on research, development, and innovation in medical technology in Germany. The “Medtech Strategy Process” jointly introduced by the Federal Ministries of Economics, Research and Health is an important step towards implementing concrete legislative action.

Growth Market Health Economy

The health economy is one of the industries with the greatest growth potential and the highest number of job opportunities for qualified skilled employees in Germany. A total of 5.4 million people are currently employed in healthcare, making the industry Germany’s largest employer, meaning that about every seventh job is based in the health economy. Since 2000, employment in the health sector has risen by a total of 500,000 (more than 12 percent). According to the forecast of a 2010 study commissioned by the Federal Ministry of Economics, another two million employees will have joined the health economy by the year 2030.

Employment in the Medtech Industry

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 work in the retail trade for medical and orthopedic products. Approximately 15 percent are employed in research and development, 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.

Expenditure for Medical Devices in Germany

Healthcare spending in the medical devices sector (without capital goods and prosthetic dentistry) amounted to about 25 billion euros. Of this amount, medical technical aids (all financing sources) account for about 12.8 billion euros, and other medical supplies for almost 11 billion euros. Medical dressings, which are listed in the “pharmaceuticals” category, account for another 1 billion euros. The amount of Statutory Health Insurance expenditure in the total expenditure amounted to some 16.5 billion euros.

Production and Export

The total business volume of manufacturing medical technology companies in Germany decreased by 4.3 percent to 18.3 billion euros in 2009, due to the economic crisis.

The loss resulted mainly from a downturn in export business of about nine percent to a value of 11.4 billion euros. Domestic sales were up 4.5 percent compared to the previous year, to nearly 6.9 billion euros. The most important target region of medtech exports in 2009 was the European Union, taking about 43 percent of the industry’s exports. Together with exports to other European countries (11.3 percent), more than half of all exported medtech goods were headed for other European countries. The North American region took 20 percent of the exports, while the Asian share was 15.3 percent.

Worldwide Growth Market of Medical Technologies

The medical technology industry is a growth market worldwide. Advances in medical technology, demographic development with always more older people, and the expanded idea of health will ensure that this remains the case. 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. Germany is the third largest market worldwide, and by far the largest market in Europe, after the USA and Japan. It is about twice as large as the French and three times as large as the Italian, British, or Spanish markets.

Outstanding Innovative Capability

The medical technology industry is dynamic and highly innovative. The German medical technology manufacturers achieve approximately a third of their business volume with products which are less than three years old. Medtech companies involved in research 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 medtech companies.
Further evidence of the industry’s high innovation capability, according to the European Patent Office in Munich, is that medical technology heads the list of registered inventions with over 16,400 patents (as of 2009). This is 10.2 percent of all patent applications.

Expectations of the Decision-Makers

The health economy and especially the medtech industry have been the focus of keen political attention in the past twelve months. Politicians have come to recognize the important contribution made by companies in the medtech sector to increasing innovation and efficiency in the German healthcare system.

In April 2010, the Federal Ministry of Health held a large conference in Berlin on the future of the German health economy. Chancellor Dr. Angela Merkel and Health Minister Dr. Phillip Roesler emphasized the high value of Germany’s innovative medtech industry, which is dominated by medium-sized businesses, for the future and for economic strength. The keyword was “hidden champions”.
On October 4, 2010, another conference on the health economy took place at the Federal Ministry of Economics. Minister Rainer Bruederle emphasized the importance of medical technology for innovation and the job market.
On October 28, 2010, the Medtech Innovation Forum was held under the patronage of the Federal Ministry of Research and Technology, with the participation of BVMed.

The health economy has been called a “beacon of light” by Chancellor Merkel. The medtech companies expect these words by politicians to be followed by deeds.
For 2011, we need clear perspectives for medtech innovations. In the light of increasingly rigorous competition in a globalized world, the domestic conditions for the innovation, development, and marketing of modern medical technologies must be continually monitored, analyzed, and further adapted as required.

1. From the perspective of BVMed, one opportunity for improvement is the introduction of an innovation pool to enable the independent assessment of benefits. The health insurance companies also demand such a pool. It was suggested that three percent of the SHI expenses should be used for it. An argument for using this figure can be based on Germany’s aim of reaching three percent expenditure for research. The inclusion of further funds, for example the research funding sector, should also be considered.

2. The Joint Federal Committee should be further developed in 2011 with the planned “Healthcare Provision Act” by making its organization more transparent and rendering more participation rights to all parties involved. As a major player in the healthcare system, the medtech industry must be enabled to participate actively in the process. A higher acceptance of the JFC’s decisions could also be achieved by creating a clearer environment such as streamlined application procedures, deadlines, auditable decision processes, and legal processes and structures.

3. A few remarks on the discussion about the assessment of benefit: The IQWiG is currently only evaluating benefits for patients, as a service to the JFC. Beyond this scope it remains to be resolved which institutions will be able to assess not only the benefits for patients, but also the benefits for the user and benefits for the system. The JFC will only be able to decide correctly on which medtech innovations constitute medical and economic progress when it will be able to take all these different kinds of benefits into account.

From the point of view of the medtech companies, it is important that the requirements for benefit assessment of medical technologies are developed and determined in a joint process. It is also necessary to address questions such as which data shall be collected, published, and taken into account, and when.

4. One central goal for medtech companies has been to secure the principle of “reservation of prohibition” in the inpatient sector, and to extend this innovation-friendly principle to the outpatient sector where structural preconditions are the same. There is also a need to cut red tape on the approval procedures for new examination and treatment methods (NUB) and to speed up processes. Remuneration agreements must be made binding.

We can provide a clear perspective by setting forth these points on ideas for innovations, progress in medical technology and the economy, and in introducing new products and methods.

Better Interaction between Ministries

Good news is the growing interaction and coordinated cooperation between ministries dealing with subjects related to medical technology. In fall 2010, the State Secretaries of the Federal Ministries of Health (BMG), Economy and Technology (BMWi), and Education and Research (BMBF) initiated a joint Medtech Strategy Process, which shall be further advanced in 2011.

Health Research

Early in 2011, the Federal Ministries of Health and Education and Research decided upon a joint framework program on health research at a volume of 5.5 billion euros until 2014. The realignment of medical research funding is geared towards greater focus on researching widespread diseases and networking between research and practice. The guiding concept is to bring research results faster into standard medical care and thus to the patients who need them.

Political Summary

For the companies in the health economy, a strong domestic market is key. It involves a Statutory Health Insurance with functioning competition and a rapid introduction of medical innovations. We need a common strategic positioning of industry, research, and politics towards innovation in medical technology. The Ministries of Economics, Research, and Health must coordinate their efforts better and open up opportunities for innovations.
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