With the economic turmoil affecting the European countries, it seems natural that the medtech industry would suffer the consequences. But how exactly are each of the big five European countries feeling the effects of economic instability? Are recent health care reforms substantially changing anything?
Let's start with the obvious: Spain and Italy are not looking so good. Both countries operate on a regionalized system, resulting in significantly better health care in some areas of the country compared to others. In Italy in particular, political turmoil and soaring debt levels have resulted in cuts to an already underfunded health care system, which in turn impacts which (and how many) procedures are performed. Additionally, both countries face a situation where medtech companies are owed hundreds of millions to billions of dollars by health care facilities that are slow to pay up. Historically, this has contributed to the average selling prices of medical devices being generally higher than in the other European countries further exacerbated by the regionalized systems although prices are also typically declining the fastest because of unstable financial conditions and resulting budget cuts for facilities. For more elective procedures (that are accordingly paid out-of-pocket), such as facial injectable treatments, these countries will experience a notable dip in growth in 2012 before recovering to the growth rates noted in the other European markets.
France has also been attracting attention because of recent taxes that add to the steps that manufacturers have to go through to receive device reimbursement, which is generally accepted as critical to adoption. These new taxes are relatively minor; however, manufacturers are worried that the impact of multiple minor inconveniences, including increased scrutiny of devices at the preapproval stage, will become an increasingly expensive burden.
The UK is an interesting market because it already embodies many of the processes that the US is attempting to emulate. Namely, the UK National Institute for Health and Clinical Excellence (NICE) has been focused on innovations that emphasize long-term cost savings and overall efficiency for years now, and NICE also has programs in place to examine comparative effectiveness. It is especially interesting to note that UK manufacturers generally accept further improvements to this process as favorable, while in the US changes in this direction have created an uproar we've heard over and over again how many societies, manufacturers, and physicians fear that increased emphasis on comparative effectiveness and cost efficiencies over entire episodes of care will stifle innovation.
Finally, Germany the European powerhouse. As expected, both economically and medtech-wise, Germany has fared relatively well. Although some cuts to funding have been inevitable, generally, the medtech industry in Germany is experiencing growth between 5 and 10%. There has been an influx, however, in the amount patients are required to pay out-of-pocket for procedures, which will affect elective procedure volumes to some extent until financial situations and unemployment levels stabilize.
Although health care reforms and economic situations vary in each of the countries, one thing is for certain: budget-consciousness across Europe will continue to affect medtech companies, particularly in the form of pricing pressures and squeezed profit margins.
A good resource for more info on European health care reform can be found here.