Frost: After-Service Critical in Uptake of Disposable Electrosurgical Devices

March 17, 2006

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Heightened awareness among both electrosurgical device companies and consumers about the potential spread of communicable diseases during surgery is encouraging the use of disposable electrosurgical devices. But high customer expectations regarding the provision of after-sales and service support is putting market participants, particularly smaller companies, under tremendous pressure, according to Frost & Sullivan.

With single-use medical devices being recycled in up to one-fifth of the hospitals in some European countries, medical technology companies are pushing for changes to existing regulations on reprocessing these medical devices, analysts said. Rising awareness about communicable diseases and the need to ensure higher safety and health standards has triggered a review of the European Union's Medical Devices Directive. This will likely introduce regulatory changes that promote the adoption of disposable surgical devices, including electrosurgical devices.

Even though cost containment issues are causing several hospitals to continue investing in reusable devices, reusable accessories are much more expensive than their disposable counterparts when compared device to device. "However, considering their effect on price per surgical procedure, reusable devices are much more effective at containing costs," said Frost & Sullivan healthcare analyst Claire Staniforth. "It is usually necessary to purchase a new batch of electrosurgical reusable accessories only once a year or even less. This will impact market revenues."

Still, strong growth is anticipated for disposable electrosurgical accessories and for smoke evacuators. Unlike in the Netherlands, evacuators are not considered a compulsory piece of equipment across the rest of Europe. As hospitals become increasingly conscious of employee health and safety, sales of smoke evacuator units are set to rise. This trend will be bolstered by prospective legislation enforcing the use of smoke evacuators across Europe by 2007.

An initial boom in device sales is expected to follow the implementation of such legislation. At the same time, requiring one smoke machine - between $2,500 and $4,500 - per electrosurgical generator will cause a massive growth in market size in 2007. Novel technologies are also underlining renewed interest in electrosurgical devices. For example, the introduction of electrosurgical units and accessories specific to certain types of surgery is poised to boost the sales of specialist surgical packages.

The expansion of the European electrosurgical devices market from $171.6M in 2004 to $247.2M in 2011 will be reinforced by a number of complementary trends, including the increased adoption of minimally invasive surgical techniques and day surgeries. Simultaneously, an overall upsurge in surgical procedures related to a rapidly aging population, non-essential lifestyle surgical procedures with a purely cosmetic outcome and the rising incidence of lifestyle-related clinical conditions (obesity, gall bladder, pancreatic diseases) requiring surgical intervention are set to encourage continued growth in the electrosurgical devices market, analysts said.

Amidst this, a real challenge faced by electrosurgical device companies is that some surgeons have a low-level awareness about the effectiveness of electrosurgery as an alternative to traditional, cold-steel surgical techniques.

"This is where companies must introduce workshops in hospitals or ensure that they are involved with surgeons from the first day of their training," said Staniforth. "Otherwise, the next generation of surgeons will become reliant and therefore, comfortable with traditional surgical methods. If this is the case, companies will see a reduction in interest from the new generation of surgeons and sales will take a turn for the worse."

In addition, market participants are finding it increasingly hard to comply with high customer expectations of after-service support as it typically involves significant costs. Analysts said this makes survival particularly hard for smaller companies as they likely lack the geographic coverage or staffing capabilities required to adequately satisfy client needs.

"Companies that can offer a complete product portfolio, with high levels of after-sales and service support, can be expected to experience moderate growth in the maturing market," said Staniforth. "Participants that stay close to the end-user, and collect enough feedback related to what is desirable in terms of clinical application, will have the knowledge to lead market trends. In doing so, these companies will present partnership potential to surgical facilities that will offer sufficient strategic benefit and ensure continued revenue generation."

Source: Frost & Sullivan.