October 16, 2009
Middle-income countries like China and Russia will account for 37 percent of the diagnostic imaging market by 2013 -- almost the same amount as the U.S. -- according to analysts.
Market researchers at Millennium Research Group reported this week on the voracious growth in health care spending in BRIC countries (Brazil, Russia, India and China), believed to top $500 billion this year.
The growth was fueled by increasing affluence, and by the comparatively lighter impact of the recession on these countries, according to the Toronto, Canada-based firm.
As just one example of the spending spree, MRG noted that Russia earmarked over $9 billion dollars on health care, mostly to fix its network of aging hospitals.
"They're replacing lots of old obsolete systems -- ultrasounds, X-rays," Ravindra Sharma, a senior analyst who specializes in imaging and health care IT at MRG, tells DOTmed News.
China spent almost half of the BRIC sum -- $210 billion -- although Sharma notes, as with most of the BRIC countries, expenditure per capita is quite low, at only $150 per person per year, compared with the U.S., where, according to the most recent estimates drawn from 2007 by the OECD, per capita spending exceeds $7,000.
Nonetheless, the growth is rapid: India's health care market grew at 15 percent per year in 2005 and 2006, and now accounts for 12 percent of the BRIC total.
As for where the funds are going, Sharma says while in Russia the spending is widespread, in India, China and Brazil much of the money is headed toward rural health centers or facilities in small towns sorely needing an infusion of cash.
"Brazil has these really nice developed urbanized centers," Sharma says, "but the other places [in the country] lack many features."
Demand for equipment varies widely, too. In India, Sharma says the fastest growth is in general radiographic systems.
"Traditionally in India, doctors have been using low-frequency X-ray machines. But image resolution is lower, and it also exposes patients to a lot of harmful radiation. Now money's available. People are more affluent and more health conscious, and there's a movement to replace older machines with newer ones."
Meanwhile, Russia and Brazil are choosing more high-tech options. Russia is installing MRI scanners, a market there that Sharma predicts will grow tremendously over the next four or five years, and Brazil shows a lot of growth in CT scanner sales.
"China is growing in all markets," adds Sharma. "The Chinese market is much bigger compared to the other three BRIC countries, although the growth rate is slightly smaller than in those other countries."
Major players dig in
This cash-flush market hasn't escaped the eyes of America's -- and Europe's -- big OEMs. GE Healthcare, Philips Healthcare and Siemens Healthcare are already established in BRIC countries.
One route is collaborating with the locals. "There are lots of tie-ups," Sharma says. "If you take GE Healthcare, they have been in collaborative ventures with the Chinese Society of Radiology, setting up a training center in China for radiologists." Siemens has taken a similar course and created a Rural Center of Medical Excellence in China, to increase corporate visibility, while Philips recently partnered with Neusoft Medical Systems, one of China's biggest diagnostic imaging companies and a potential global player, which has plans to market products in the U.S. and has already gotten FDA clearance for some of its equipment.
Another option is to buy. Philips has acquired Indian firms Meditronics and Alpha X-ray Technologies, while in Brazil they snagged VMI - Sistemas Medicos, an important local company, Sharma says.
And then there's opening factories -- not just for export, but domestic consumption, too. Responding to Brazil's appetite for CT scanners, Philips has started manufacturing both CT and MRI machines in that country, while GE intends to build an X-ray factory there. GE already has a solid designing and manufacturing presence in India.
The benefit of building locally, Sharma says, is that "they are much closer to the final consumer, so they can incorporate features into their products that the end user wants."
Diagnostic imaging outlook
In 2007, Sharma says, BRIC countries accounted for less than 30 percent of global sales. In 2013, it's expected to rise to 37 percent as noted.
Meanwhile, America's share declines steadily, from about half the total global market in 2007, to around 40 percent in 2013, Sharma predicts to put it almost on par with the BRIC countries' predicted chunk.
Still, economic turbulence hasn't left the BRIC countries totally unaffected. "Russia did move to buying more lower end systems in 2009 because of [the drop in] oil prices and the impact of that on its economy," Sharma says, though he thinks any setbacks now are probably temporary.
"There is such a huge latent demand in these countries," he says. "Look at the installed base of the scanners, how many scanners there are per capita. It's really small, and lags behind developed countries so much. As their economies have improved so much, and people are more health-conscious now, they want better services from the facilities. They will put pressure on governments for these services."
"I don't see any reason why there would be caveats in terms of demand slowing down," he adds.
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