欧洲医疗器械分销市场研究及启示.pdf

An Attractive Opportunity for InvestorsEUROPEAN MEDICAL TECHNOLOGY DISTRIBUTION LONDON/GREAT BRITAIN2European Medical Technology DistributionRoland Bergeredical Technology,or MedTech,is an attractive market both due to its underlying growth drivers,like the ageing population and the role of technology in constraining healthcare spend,as well as its relative resilience to economic cycles.However,delivering MedTech products to healthcare providers is challenging and involves serving complex patients needsfrom selecting the right combination of products to installation,integration,training and education,and maintenance.Whilst large markets such as the US,Germany,France,and the UK can support direct sales and servicing for original equipment manufacturers(OEMs),the diverse and nationally regulated European markets pose a greater challenge for comprehensive product delivery.This is where MedTech distributors play a crucial role.They cater to local regulations,offering tailored products and services for effective product delivery and mix-and-match solutions across multiple OEMs to best meet healthcare providers needs and budgets.In recent years,various MedTech distributors have achieved rapid value-creating growth.They have both expanded their portfolios through the onboarding of new suppliers and entered new countries and therapeutic areas to improve their ability to serve customers and OEMs.As such,MedTech distributors present an attractive market for investors and an opportunity for further consolidation given the relatively fragmented Pan-European competitive landscape.MANAGEMENT SUMMARYMCover photo sudok1/iStock3European Medical Technology DistributionRoland BergerFAST FACTS&CONTENTS 4 7 9 12 141/WHAT IS MEDTECH DISTRIBUTION AND WHAT MAKES EUROPEAN MEDTECH DISTRIBUTION AN ATTRACTIVE MARKET?2/KEY TRENDS IN EUROPEAN MEDTECH DISTRIBUTION 3/THE EUROPEAN MEDTECH DISTRIBUTION INVESTMENT LANDSCAPE 4/KEY VALUE CREATION MEASURES CONCLUSION162 deals over 10 years in the UK,DACH,and BeNeLux combinedOver 50%of medical consumables are sold via distributors4European Medical Technology DistributionRoland BergerMedTech,is a group of products,services,or solutions which are used in medical contexts,i.e.,to save lives,or improve quality of life.They are present through the full patient journey from diagnosis through to treatment,cure,and long-term care.Medical technologies can broadly be segmented into two categories:Medical Devices,which encompass all instruments,apparatus,machines,and implants used to carry out medical activities,and In Vitro Diagnostics(IVD),which are tests used on biological samples outside of the body to assess a patients physical condition.Despite being mature in terms of uptake of healthcare technology,the ageing European population is forecast to drive continued growth in the European MedTech market.This is because of the increasing prevalence of age-related conditions and comorbidities as the average age increases,as well as the fact that chronic diseases,which accumulate over the lifespan,require recurring or continuous treatment.Furthermore,the non-cyclical nature of the underlying healthcare market and its relative resilience to economic cycles makes MedTech even more appealing from an investor perspective.Medical technologies are predominantly sold to healthcare providers such as hospitals and clinics.The MedTech offering has two main routes to market:they are either sold directly by the OEM to the customer or are sold to a distributor who then sells the product to the customer.There is also a rarer route to market the agent modelwhere an agent identifies the sales opportunity and then links the OEM to the interested customer,but in this model the agent does not own stock or provide any adjacent services as the distributor does.There are numerous features of the European landscape(and MedTech landscape specifically)that make distributor sales appealing compared to OEM direct sales.Europe is an attractive market for MedTech distributors primarily because of how complex and costly it is to sell medical devices across the continent.A variety of languages are spoken,with the EU alone having 24 official languages,and most of the individual countries are small in terms of the volume of medical technologies they require.For a non-European OEM,tight and changing1)EU regulations of MedTech make the environment complex to sell into,hence,partnering with a distributor familiar with country-specific regulations makes the process of meeting compliance requirements simpler.This applies especially if the distributor has Contract Research Organisation(CRO)capabilities so can aid OEMs in the entire process from patent to post-market support,including medical devices regulatory affairs.There are also nuances of medical device regulation within EU countries,and more meaningful differences for some countries outside of the EU such as the UK,Switzerland,and Norway.Finally,customer key purchasing criteria vary across countries,as some highly developed countries focus on product quality with little consideration for price,whilst other less developed countries have fewer financial means to invest in MedTech so are a lot more price sensitive.As a result,OEMs are typically more likely to focus their direct sales efforts on the three largest G3 markets:UK,France,and Germany.In these larger markets,OEMs market and sell the newer product ranges,services,and solutions What is MedTech distribution and what makes European MedTech distribution an attractive market?1/1)Due to the recently ratified EU“Medical Devices Regulation”and“In Vitro Diagnostics Regulation”which are still in the process of being rolled out5European Medical Technology DistributionRoland BergerSource:Roland Berger often directlythey focus on the latest technological and digital innovations,and distributors typically manage the OEMs portfolio of legacy products.Whilst Italy and Spain both comprise a significant market size,the structures(as well as historical reasons)of these two countries mean that OEM direct sales organisations are less prevalent.There are 17 autonomous regions and two autonomous cities in Spain,and 20 administrative regions in Italy,and each region has its distinctive characteristics making it relatively challenging for OEMs to operate in.Additionally,some local distributors have built such a strong understanding of the market and relationships that it would be hard for OEMs to replicate.A This results in the proportion of direct OEM sales versus distributor-mediated sales varying significantly across European markets.Larger countries such as France and the UK are strongly weighted in favour of OEMs(across both consumable devices and capital equipment)whilst at the other end of the spectrum we find countries like Switzerland,Serbia,and Slovenia where sales through distributors are favoured.Additionally,medical consumables are more often sold via distributors than capital equipment across the countries.This is mainly because the sales of consumables requires no technical services organisation and an upfront payment.Moreover,capital equipment contracts are typically much larger in value,making them appealing to OEMs.BA/OEMs typically focus on large strategic direct markets whilst distributors are more common in smaller peripheral markets Market types in EuropeLarge strategic marketsIntermediate marketsPeripheral markets6European Medical Technology DistributionRoland BergerSource:Expert interviews,Roland Berger European Medical Technology Distribution6Roland BergerB/Consumables at 55%are typically sold more often via a distributor than capital equipment at 35%Share of sale via distributor(vs.direct sale by OEM)for MedTech products1)1)In volume terms;2)Sweden,despite being a smaller market,is attractive for OEMs due to a high concentration of healthcare providers centered around its three main cities capital equipment35%consumables55%UK2535%Sweden2)3040%BeLux4555%Italy2343%Denmark4050%Germany2040%The Netherlands3545%Switzerland6070%France3040%Spain4555%The Balkans6070%7European Medical Technology DistributionRoland BergerKey trends in European MedTech distribution2/The most important trend in MedTech distribution is the increasing demand for Value-Adding Distributors(VADs).Typically,MedTech distributors buy products from suppliers,repackage it,and deliver it in smaller quantities to the customer whilst acting as sales representative for the OEM.However,as the needs of healthcare customers have become more complex to the point where more and more ancillary services became necessary and the industry shifted towards solutions,MedTech distributors started integrating value-added services and capabilities into their offerings.VADs provide both MedTech products and adjacent services bundled as a single package,making them total solution providers.These services range from curating the medical technologies offering and reliability of the supply chain to technical services and training and education,through to product know-how and customer relationships.Technical services are an offering for which the customer pays a periodic fee in exchange for the distributor managing both maintenance and repairs on a piece of medical equipment(typically also bundled with other services listed above,such as equipment training).OEMs,in comparison to distributors,typically do not offer these services directly,and prefer to outsource them to third party service providers,further providing an edge to the distributor when they can offer a total solution in a single package.One major benefit of ongoing MedTech value-added service is that they allow the distributor to retain a continuous relationship with the customer,and this continuous communication in turn makes it easier for the distributor to identify and correctly source new products the customer requires.Another trend is a shift towards broader distributor product portfolios,which in combination with the value-adding services,allow the distributor to offer a comprehensive one-stop-shop experience,maximising customer convenience.Where OEMs will inevitably be limited to their own product range,the distributor can mix and match products from different brands and offer the customer an optimal combination of products without them having to source from numerous OEMs.This dynamic makes differentiation challenging as a distributor,hence,distributors aim to develop relationships with OEMs to the point where they can sign exclusive distribution contracts to be the sole supplier for an OEMs products in a given market.This broadening of product portfolios impacts both generalist and specialist distributors.Specialists,who focus on a single therapeutic area,are being driven to stock products covering the entire subcategory,for example,the entire endoscopy set-up from gas to cameras to light sources.For generalists,it is a race to expand stock to cover a broader range of therapeutic areas to suit both clinic and hospital demands.One way distributors are further expanding their offerings is through the addition of a private labelthese private label products are developed in collaboration with customers and tailored to meet specific needs.Driven by the COVID-19-induced supply chain disruption,customers are increasingly focused on supply chain resiliencethis is particularly important due to regulations limiting the volumes of consumable medical devices which can 8European Medical Technology DistributionRoland BergerSource:Expert interviews,Roland Berger 8Roland BergerC/Total solution providers offer enriched services over and above both OEMs and traditional distributors Service offering by distribution model European Medical Technology Distribution1)Contract research organisationsDirect sale by OEMSale via traditional distributorSale via total solution providerBreadth of offeringWeaker offering of products due to focus on niche therapeutic areas Combination of low-,mid-and high-end across both capital equipment and consumables products Ability to bundle these products to meet customer needsOffering limited to OEM productsTechnical servicesTypically not able to provide Strong integration/installation capabilities Proactive approach on repair,done both in-house and on the spot,with reporting capabilitiesTypically outsourcedProduct know-howLimited product know-how as focus on volume and price Clinical approach to selling and high product know-how Ownership of product design via own brand offer,and sourcing of products to meet customer needsStrong product know-howReliability of supplyAbility to offer alternative solutions Supply chain management via own branded products Dedicated sourcing partner able to offer alternative solutionsNo alternative solutionsTraining and educationNone Strong focus on training and education of healthcare personnel and distributor employees at key opinion leaders,suppliers,and associationsTraining&education offered to customersCustomer relationshipLimited customer interaction Long and unique key opinion leader relationships e.g.,via CRO1)servicesLimited customer interactionScores for key purchasing criteriaStrong sales modelWeak sales modelLimited/no sales model9European Medical Technology DistributionRoland BergerThe European MedTech distribution investment landscape3/The number of European MedTech distribution deals has been growing over the past 10 years,driven recently by the COVID-19 pandemic growing demand for medical devices whilst drawing attention to the broader healthcare industry,and the 202122 M&A boom.As a non-cyclical industry,MedTech is forecast to remain a reliable investment route for strategic players as well as even in the face of future macroeconomic uncertainty.Over the past 10 years the space has been consolidating,with four players in particular leading the effort.Mediq made 12 acquisitions,including Bunzl Retail be stored on-site.Timely access to medical supplies is not only important for ensuring good patient outcomes but also facilitates leaner,more cost-effective operations for the healthcare provider.This also highlights another structural advantage of the flexibility of distributors over OEMsthe OEM cannot re-source in the event of supply chain issues,but a distributor can do so via another supplier.For a distributor,greater resilience can be achieved both through diversification of OEM suppliers as well as nearshoring,though the latter option may come with increased costs.A successful distributor will have a mix of products from lower reliability manufacturers(which they buy at a lower cost)than some high-reliabilitytypically nearshoredmanufacturers(which they buy at a higher cost)to hedge against supply chain disruption.The final major trend in the space,and one which is expected to play out over the long-term,is distributors developing CRO capabilities and integrating them into their VAD offerings.CRO capabilities can cover both the pre-clinical and clinical trials required for OEMs