Frost: Digitization, Price Erosion, Multi-modality Deals Drive Consolidation in Euro Medical Imaging Market
October 25, 2006 // Published as a news service by IHS
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Amidst challenges such as price erosion, reduced hospital beds, lack of radiologists and a trend toward multi-modality deals, novel picture archiving and communication systems (PACS) and digitization initiatives are spurring growth in the European medical imaging market.
According to Frost & Sullivan, as this scenario sets the stage for greater consolidation, uncertainty remains over 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 toward complete digitization of the radiology department and workflow integration through PACS," said 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 toward consolidation."
Analysts said alliances and acquisitions by various industry participants over the past three years indicate a definite trend toward vertical integration. Most participants 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 one participants, analysts said consolidation is unlikely to be an easy task. Issues such as cultural integration, change management and certain reimbursement rules could also hamper potential consolidation in Europe's medical imaging industry.
The increasing trends toward price reduction is minimizing the bottom lines for companies, said analysts. In addition, regulatory policies such as reimbursement rules that restrict the use of certain modalities in favor of others also have a strong impact on consolidation.
The challenge for market participants will be to enter into mutually beneficial partnerships with other participants. Analysts said 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, analysts said smaller companies can hope to actively compete with the larger multi-modality vendors. Vertical integration will also help to reduce costs and provide a more efficient deliverable.
Source: Frost & Sullivan.