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Current Market Developments in MedTech in Germany

February, 2020

Germany is known for its engineering excellence and the medical technologies market reflects that perfectly. For instance, Germany takes the third spot for market size of medical technologies globally just after the United States and Japan. It is well known that German MedTech companies are experts in their field and the manufacturers with over 20 employees accounted for some €30 Bn Euros of revenue in 2018 according to German Ministry of Commerce.

Not surprisingly, MedTech companies in Germany have a high export rate which accounts for 65 percent. As Europe’s economic stronghold, Germany’s MedTech market is two times larger than the one in France and three times as large relative to the British or Italian market. In addition, the local MedTech industry is also responsible for creating steady employment in Germany for approximately 200,000 people according to Universal Hires.

An Intro to MedTech in Germany

The MedTech industry plays an important role for the economy and the labor market in Germany:

  • Jobs and employment: The MedTech industry in Germany is composed of many small and medium sized companies also known as the Mittelstand as well as some larger players. There are approximately 11,000 small businesses employing around 60,000 people. Another 1,300 companies in the category of 20+ employees employ around 140,000 people in Germany.
  • Medium-sized companies or Mittelstand: Typically, a MedTech company in Germany will have fewer than 250 employees. Actually, this is the case for 93% of all companies in this sector. This is a good example how an industry in Germany is still dominated by smaller companies in the regions instead of a centralized cluster.
  • Revenue through exports: In Germany, MedTech companies are considered a great economic success. Their combined revenue for 2018 was almost €30 Bn. Alongside a high export rate of 65 percent, the industry created almost 2.5 percent of Germany’s total exports during the year.
  • Growth trajectory: MedTech is a booming industry in Germany. Innovation is a key driver and is supported by mega-trends such as the demographic development, general progress in technology and Life Science, and the dynamics of the emerging and developing markets. Expected annual growth rates for the near future are close to 5 percent providing a solid outlook to local companies.

Current Global Market Developments

On a global scale, the MedTech industry shows a decent growth projection of around 6%. Consequently, companies with international operations are growing significantly faster abroad than in Germany at a rate of around 4%. Despite existing price pressure within the industry, companies continue to invest more in production sites when doing business in Germany. Further market developments around MedTech include:

 

  1. The increased regulations and the rising costs caused by the new EU Medical Device Regulation (MDR) are a major obstacle for the industry. Furthermore, bottlenecks at the certifying Notified Bodies are expected to occur. With the MDR 65% of the companies fear withdrawal of devices from the market or delay of launch for economic reasons. Experts say that this is likely to negatively affect levels of care for patients.
  2. MedTech companies are also hoping for greater involvement in the assessment procedures, and faster evaluation processes. The industry also wishes for increased transparency during the processes of the G-BA committee, the highest decision-making body of the joint self-government of the healthcare system.
  3. The MedTech industry continues to be a job creator in Germany, despite increasing regulations. Only 9% of the companies had to cut jobs. Whereas 51% of the companies created additional jobs compared to the previous year.
  4. Surprisingly, only 41 percent of the German MedTech companies say that their business is significantly endangered by digitization. Changes will focus around increasingly professional medical apps as well as electronic invoicing.

Better Life Through Progress

It is well known that medical devices save lives. In addition, devices also restore lost body functions e.g. mobility while helping people to live a more self-determined life. Often, only complex medical technologies can help critically ill patients in late stages.

Over the past, the pace of progress in medical fields has increased. But this is just the beginning.

Firstly, miniaturization of devices will continue to a nano-level with more applications. Moreover, cell and tissue restoration technology will open new opportunities for millions of patients worldwide.

However, there is little doubt that it is digitization that will have the greatest impact on MedTech. New digital tools will help in all stages. From an earlier diagnosis to a better treatment of diseases. MedTech will continue to improve patients’ quality of life. Digitization will help to optimize processes for care, and it will lower the costs in the whole healthcare universe.

 

Technological advancements drive change in the healthcare system. However, traditional assessment and remuneration structures are usually not prepared for dynamic developments. The system needs new ways in the future especially regarding assessment and approval of innovative solutions.

How can we guarantee that medical progress will create value for patients? How can we bring research into reality even faster? How will digital medicine change the landscape?

These are deep-rooted questions that ask for a fresh start of a structured and cross-departmental healthcare strategy process. The Pharma dialog is just the kick-off. This is a current effort at state-secretary level in Germany to foster exchange between business, science, politics, and trade unions. The current government has promised to establish a more thorough medical-technology strategy process but failed to live up to this standard so far. But to grow and innovate, MedTech needs reliable political guidelines for all involved players in the healthcare sector.

 

Politics in Healthcare

Coalition Merkel IV and MedTech

Germany’s new government effectively started working in March 2018. The coalition agreement between conservatives and social democrats contains several important key messages regarding the MedTech industry:

  • The government planned to continue the MedTech strategy process in order to ensure that Germany stays competitive for the healthcare economy. For this endeavor close cooperation between the Federal Ministries of Health, of Research, and of Economics will be crucial to address important issues, e.g. the EU Medical Device Regulation (MDR), digitization, the acceleration of progress in MedTech research and the shortage of skilled labor
  • Following the coalition agreement, medical innovations should be accessible for regular care sooner. The agreement promotes the acceleration of the G-BA procedure and faster decision-making with regard to new treatment methods. The proposed regulations of the Medical Appointment Service and Supply Act, “Terminservice- und Versorgungsgesetz (TSVG),” will ensure that patients will be able to benefit from advanced medical technologies more quickly.

How Companies Deal with Labor Shortage

While advances in MedTech are moving with unrivalled speed, the human factor in healthcare seems to struggle. Technology requires human assistance and will continue to do so for many more decades. Still, especially the nursing-care industry working at the forefront of healthcare delivery, suffers from a severe shortage of skilled labor. Barely any other industry has such great difficulties in finding qualified staff. Fully 61 percent of nursing-care facilities have job vacancies, with an average of 4.3 unfilled places per firm. Research and high-tech engineering positions have a similar outlook in Germany.

Conclusion

All in all, the German MedTech market provides a sold market environment alongside potential growth in the years ahead. With the current challenges that the market is facing, it is recommended that German MedTech companies in specific, focus on global trends besides local market requirements and development.