European Medical Device Industry
The EU medical device
industry is highly fragmented consisting of numerous niche product lines most of relatively modest market size (Commission
1996). The European medical device industry employs approximately 350,000 people and there are approximately 7,000 European
medical device companies (Eucomed 2004). Around 94% of European medical device companies are small with less than 250 employees
and 70% of them have less than 50 employees (Atun 2002). The majority of European medical device companies have an annual
turnover of less than 7 million euros. Production of medical devices in Europe is growing at annual rate of around 5-8% (Eucomed
2004). There are as many as 400,000 products and 10,000 product types that could be defined as medical devices (COM 2003,
Review 2003). The UK has the most companies, however, Germany has the largest medical device industry (Eucomed 2004).
manufacturers of medical devices enjoy a much better market share in Europe than they do in the US. European manufacturers
enjoy more than 75% market share in parts of Europe, but only about 7% share of the US market according to a study conducted
by the LEK Conseil at the request of the European Commission (Sparrow 1997). The LEK Conseil study entitled, “The Global
Competitiveness of the European Medical Device Industry,” evaluated the global competitiveness of the European medical device
industry. Another finding of the study was that at the time of the study the EU average spending on medical device R&D was
only 5% of sales. The study identified the shortage of venture capital as being a significant reason for less R&D and subsequently
less innovation in the European medical device sector. Another observation of the study was that while the EU has many public
funding programs to encourage innovation these programs are often focused on research, not development. It is often difficult
to secure development funding in Europe. The study also noted that many EU based medical device companies are ultimately
acquired by US based medical device companies which further widens the gap between the US and EU medical device industries.
European vs US Medical Device Industries
The US and European medical device industries have similar levels of employment
both employing over 300,000 people, the EU medical device industry is focused on lower tech, lower margin products that are
less likely to have reimbursement. The US medical device industry tends to be focused on innovative, high margin therapeutic
devices which are much more likely to have reimbursement. The United States has venture capital firms specializing in medical
device investing, a risk culture, entrepreneurial physicians, efficient industry concentration in four main areas with high
concentration of labor with industry specific skills, large investment in R&D, immediate access to the world’s largest market
and market with some of the highest reimbursement rates all contribute to the success of US based medical device companies.
The EU member states lack the above and in addition many of the medical device innovations which are developed in Europe are
developed in universities many of which are strong in research, but not development and consequently few of the technologies
reach the market. In addition to lack of capital, lack of management and engineering expertise are also often quoted as reason
stifling the development of a venture financed medical device industry which is capable of producing leading edge technologies.
US also has the advantage of a large domestic market with some of the world’s best reimbursement, while EU countries have
very limited domestic market opportunity and exporting is critical. US exports only around 25% of its production (Commission
Europe’s lack of a medical device industry which develops high end medical devices for life critical therapies
leaves many opportunities for US based venture capital financed medical device companies which focus on developing these types
of technologies. The EU’s member state specific reimbursement and healthcare systems makes this a challenging endeavour for
US based medical device companies.
Copyright © 2004 Kirk Zeller, All rights reserved