In this article, we will highlight and investigate the size and potential, drivers and inhibitors, and the trends of refurbished medical device markets.
What makes the refurbished medical equipment market particularly interesting and worthwhile to explore, is its growth potential, low production cost, and contribution to containing hospital costs. As regulations are continuously adjusted to encompass and facilitate more financially viable procurement alternatives, and upcoming/developing economies are focusing more and more on healthcare provisions, -the market of potential buyers will expand to include more nations and more segments of the public and private care sectors in the near future.
To be on the wave of refurbished medical equipment supply will propel the optimization of trade regulation, as supply and demand are made evident to regulators, and open up new markets and revenue potential.
Size and Forecasts
By 2020, the global refurbished medical market is expected to reach €10.4 bn. In the next 5 years, it will grow at a CAGR of 12%. Of the total worldwide medtech market, it represents around 17%.
Currently the largest markets consuming refurbished equipment are North America, followed by Germany and other EU nations. However, the most significant growth in the coming years is expected to come from Asian markets. India is already one of the most receptive markets for used and refurbished goods, and will continue to provide opportunities for such products as its healthcare system grows.
In most nations, particularly secondary cities and regions show the greatest growth potential.
Biggest refurbished equipment market players
The USA is currently home to many of the largest refurbishing companies:
- GE Healthcare
- Block Imaging International
- Soma Technology
- DRE Medical
- Integrity Medical Systems
- Radiology Oncology Systems
- Master Medical Equipment
Others can be found in Europe:
- From the Netherlands – Philips
- Germany – Siemens
- Denmark – Agito Medical A/S
- From Australia – Everx
- India – Zigma Meditech
EverX and GE have strong supplier networks in India, which lend them an advantage over others seeking to penetrate the market. Yet India, due to its size and healthcare market fragmentation, is far from saturated and has sufficient opportunities remaining.
When the market first started several decades ago, it would not be atypical for untrained suppliers to look for medtech procurers in developing nations and unload obsolete sub-quality equipment from a more developed originator country. This has certainly not helped the image of the market, which to this day, often suffers from the perception that a brand new product is inevitably preferable to a used one. Only in the last two decades have stringent technical and quality controls become the norm when importing refurbished and used medical equipment.
The market trend now shows a clear growing interest in refurbished and used medical devices. This market is proving to be a great support and opportunity to many countries, as refurbished equipment is markedly cheaper than new medtech, and facilitates containing costs of healthcare systems across the globe.
Not only are consumers of refurbished medtech growing, so are refurbish-enterprises and distributors to supply this market.
Regulatory trends and private sector opportunities
A key factor to this entire discussion is the matter of regulation. Ironically, many of the lower income nations categorically inhibit the entry of refurbished or used products, through stringent or impeding regulations. Meanwhile, many high-income nations -who have the most advanced medical equipment already- are also setting forth regulatory frameworks to optimize the entry of refurbished products. Arguably, the lesser developed nations perhaps do not have the administrative and technical resources to ensure a quality control system and therefore avoid the market all together. Nonetheless, the fact that refurbished equipment can be 100% equivalent to its identical un-used version, yet at a price 20-60% lower than the original price, make it the optimal solution to underdeveloped, under-resourced national healthcare systems.
Governmental regulation often allows the entry of refurbished materials, yet prohibits their national healthcare providers, i.e. the public hospitals and clinics, to procure them. However, since the private market in fact dominates many national healthcare provisions across the globe, there remain many opportunities even within such parameters.
Particularly the private sector, small to mid-sized hospitals and clinical diagnostic laboratories are expected to be the largest markets for refurbished products.
Perception is changing
Perception is another key factor, in pushing a positive growth trend in this market. The previously held perception that refurbished equipment is inferior has been changing rapidly in recent years; cost pressures, resource shortages and great advances in technological quality-controls, strongly encourage procurers to seek alternative ways to supply our growing healthcare demands.
Growth drivers and advantages
The following are key factors and drivers shaping the refurbished medical market:
- Population growth, greying societies, and the increased demand upon healthcare systems; increase of morbidities and chronic conditions
- Hospital budget constraints, forcing care providers to seek alternative and more financially viable and sustainable procurement options
- Immense price-quality value; 20-60% cheaper than new equipment
- Greater focus and prioritization of developing nations on their healthcare delivery, and a rising demand for medtech accordingly
- Difficulties in reimbursing medical care; inefficiencies in reimbursement mechanisms
- Growth of privatization across nations all over the world
- Activities being undertaken by refurbishing companies to expand production facilities and supply networks in various country markets, both developed and developing
- Increase of joint ventures and partnerships across the sector
- Changing perception of resource utilization
- Growing popularity of recycling practices, awareness of ecological damages to the planet
- Quicker return on investment for hospitals, which allows for more regular updates of equipment
- Advances in technological skills in refurbishing, to guarantee quality and safety in cost-effective ways
- Increases of warranty and post-sale services being offered with refurbished products/sales contracts, boosting the positive perception/consumer confidence and reliability of the supplier
- Interconnectivity and easier access through online marketing and sales
- “Older” refurbished equipment is more likely to be known by the users, which saves costs and resources to train personnel and avoids error, increasing patient safety
- No unexpected inherent product malfunctions, as the product has already been on the market for a while
Challenges and market inhibitors
As mentioned before, there are also certain challenges to the prevalence and global growth of refurbished medtech markets, fore mostly due to the negative perception in regards to quality, and due to regulatory barriers.
Challenges and inhibitors include:
- A lack of international standards and harmonization of protocols in regards to quality, technological, marketing and sale controls
- Inadequate reimbursement mechanisms
- Unsupportive import laws and regulations
- Potential lack of sale/servicing support and availability of spare parts when necessary
- Reliability of suppliers and product quality, which again closely ties in with perception, and the previous point of being able to offer warrantees and post-sale services
Key success factors
Having listed both the challenges/inhibitors as well as all the benefits and growth drivers, let us quickly highlight the decisive success factors when handling and marketing refurbished goods:
- Sale services – Procurers need to have confidence in the supplier, trust they will be accountable and available to resolve any potential issues with the product after buying, and that the product has been thoroughly reviewed for quality, functionality and safety.
- Warranty contracts of 2-5 years, quality certificates, transparency on technical evaluations and controls, etc., should be provided by the supplier/manufacturer to meet regulatory demands, create consumer confidence and provide added-value.
- Regulatory understanding – Suppliers/importers should have an excellent understanding of the national regulatory framework.
- Ideally, through repeated positive contact with national regulators, the frameworks will develop in favor of the refurbished market and commence to open the market to the public sector also, reduce/eliminate tax and import duties, etc.
- Local presence – Suppliers/importers should seek partnerships with local entities, as often regulations allow for local/domestic refurbishing, though limit readily refurbished product imports.
- Particularly in developing nations, a local representative is often mandatory for many business transactions anyway.
- Local presence could also enhance consumer confidence and the supply chain.
The best part of the refurbished medical equipment market: It is sustainable
In a world confronted with resource scarcity and financial constraints to provide healthcare to a continuously growing and more demanding patient population, it is essential to think of sustainable solutions/opportunities for all our healthcare demands. Without sustainability, per definition, we cannot maintain -let alone improve- the situation.
The production costs of refurbished goods are lower; the product can be sold at a much lower price, which allows for a larger potential consumer base.
It allows lesser-developed nations, typically those with smaller healthcare budgets, to upgrade and expand their HC service offer, as they are more likely to afford refurbished products rather than newest-on-the-market equipment that is still in its payback-pricing stage.
From the point of view of the hospitals, it allows them to counter mounting cost constraints, update equipment more frequently, and procure more equipment to tend to a larger patient population.
Refurbished medical equipment requires little to no raw resources. It is a first generation recycling process that is human resource intensive rather than consuming production-intensive unrenewable energies and precious rare materials.
The product life cycle is extended.
Encourages transparent practices, since success is largely dependent upon the credibility and reliability of the supplier.
Pushes for an international standards system to harmonize market and simplify, through benchmarks and validating certifications, the import and marketing of refurbished goods.
If such a standardization system can be established, national HC systems would be more likely to allow the public sector to benefit from the refurbished market product range, expanding the entire market potential.
An overview of current national markets and regulations for refurbished product importation
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About Laura Weynants
Performs primary and secondary market research to create country reports at TforG. Interviews KOLs and medical sector professionals to build on TforG’s healthcare market expertise and competence networks. Complementing five years of sustainability policy and CSR communication, she now focuses on grasping key medical market trends, structures and opportunities in medical sectors worldwide. Coming from an international background of living in Germany, Spain, USA, UK and Belgium, she has gained a keen insight in international organizations and language skills to perform first hand investigations. She graduated from Sussex University Brighton, UK with a BA English Literature and Sociology and achieved a Master Degree in Sustainability and Corporate Social Responsibility in EOI Business School in Madrid, Spain.