Digitisation and high costs driving consolidation in European medical
17 August 2006
London, UK. Novel picture archiving and communication systems (PACS) and
moves towards digitisation are spurring growth in the European medical
imaging market, but this is set against pressures from cost reduction,
reduced hospital beds, lack of radiologists and a trend towards
multi-modality deals. These factors are driving greater consolidation in the
industry, but there is uncertainty whether traditionally strong participants
will continue to dominate their smaller competitors.
"Consolidation in the medical imaging industry in Europe will be driven
by a continued movement towards complete digitisation of the radiology
department and workflow integration through PACS," explains Frost & Sullivan
Research Analyst Karthik Arun B. "The need to reduce costs and, at the same
time, maintain the high standards of quality expected from medical imaging
equipment will further influence the trend towards consolidation."
Alliances and acquisitions by various companies over the past three years
indicate a definite trend towards vertical integration. Most of these
companies are looking to integrate or align themselves with independent PACS
developers as well as sub-system producers. Based on the current scenario,
this trend is set to continue for the next three to four years.
Given the prevalence of strict legislation and the presence of strong
Tier 1 participants, however, consolidation is unlikely to be an easy task.
Moreover, issues such as cultural integration, change management as well as
certain reimbursement rules could hamper potential consolidation in the
medical imaging industry in Europe.
"The increasing trends towards price reduction is minimising the bottom
lines for companies," observes Mr. Karthik. "In addition, regulatory
policies such as reimbursement rules that restrict the use of certain
modalities in favour of others also have a strong impact on consolidation."
The challenge for suppliers, therefore, will be to enter into mutually
beneficial partnerships. Companies should look to acquire or form alliances
with others that can help them broaden their product portfolio rather than
increase their market share.
"By expanding their product portfolio, smaller companies can hope to
actively compete with the larger multi-modality vendors," elaborates Mr.
Karthik. "With the growing trend towards institutions offering large
multi-modality tenders, vertical integration will also help to reduce costs
and provide a more efficient deliverable."