Comparing Purchasing Processes for Surgical Devices and Medical Equipment in the US, Japan and Germany

The US, Japan and Germany are the world’s largest medtech markets. Together they account for around €210 bn, or almost half of the global market. Each nation has a slightly (or vastly) individualized approach to procuring the medtech used in their healthcare system; i.e. there are varying weights granted to the participating stakeholders and decision makers,  different negotiation and procurement processes, and different levels of contact/collaboration with distributors, GPOs and manufacturers.

11-13% of healthcare expenditures go to medical equipment and devices. Another 4-6% of healthcare expenditure goes to consumables and supplies.

IV-diagnostics remains the largest segment, representing over 12% of the medtech market.  Cardiology is the second- and diagnostic imaging is the third largest segment.

The 3 fastest growing segments are endoscopy (+6.5%), cardiology (+6.0%) and ophthalmology (+5.8%).


In order to match the needs of local purchasing processes, sales and distribution strategies of medtech companies differ substantially. Below you’ll find the highlights of the respective markets of the US, Japan and Germany.



  • GPOs are the most common approach to procuring hospital supplies in the USA.
    • There are around 600 GPOs across the USA.
  • 97% of all US hospitals use GPO’s; they account for 75% of hospital purchases.
  • A single hospital may use 1 to 4 different GPOs.
  • Except for a few nation-wide GPOs, most are focused on regional vendor contracts.
  • Some GPOs offer all types of products, whereas others are highly or relatively specialized and sector specific.
  • GPOs earn their incomes from commission charges from the procurer, as well as covering administrative fees from the suppliers/vendors when their products are selected by the procuring party.
  • At a federal level, the General Services Administration, Department of Defense, and Department of Veterans Affairs centrally procure for public HC facilities.

Purchasing Process

  • On average, a purchasing cycle takes 6 to 12 months.
  • Typically, medical professionals are closely engaged with the decision making and selection process of hospital medtech.
  • In 70% of the cases, the hospitals fully rely on information provided by the GPOs to make their final selection.
  • 70% of the purchases concern product replacement.
  • In 60% of the cases, an improvement of clinical outcomes is one of the key objectives of the purchase.
  • 50% of purchases clearly aim to reduce overall hospital spending.
  • The importance of medtech congresses and trade shows is declining due to time/resource restraints. Respectively, online market and product research is widely popular, growing more prevalent and relied upon for product selection.



  • Capital equipment is typically procured by medical facilities directly from the importer or manufacturer.
  • Other medtech products (i.e. devices, consumables, etc.) are procured by hospitals and clinics via a well-established Japanese network of distributors


  • The Japanese market is characterized by a vast and complex network of distributors, who liaise between the importers or manufacturers and the hospitals and clinics.
    • The network consists of national distributors, sub-distributors and local dealers.
    • Currently there are around 2,400 distributors in Japan (a reduction by 65% over the last 30 years).
  • The distributors are in direct contact with clinical and non-clinical decision makers in the hospitals.
  • Within the network of distributors, one supplier may trade laterally with another Japanese supplier in order to complete his product offering.
  • Manufacturers passing their products through distributors are not allowed to set end-user prices. A resale price maintenance (RPM) regulation prohibits this. Accordingly, manufacturers/importers must collaborate closely with distributors to influence the buyer.

Purchase Process and Decision Drivers


  • Public hospitals are obliged to purchase goods and services via public tendering.
    • This includes all medtech needs of the hospitals belonging to the Ministry of Health, Labor and Welfare and the National Hospital Organization.
  • Open and selective tenders are published in the central government gazette (kanpo) and/or regional authorities’ publications.
  • Most (foreign) companies tend to depend on distributors to participate in these tenders.
    • The Japan Tax and Public Procurement (JTPP) Helpdesk offers various free services to facilitate entering this market, by providing market information and concrete support services during a tender.
  • Each public hospital must publish an annual forecast of the volumes and or values of the top 10 products and services it intends to procure.
  • Purchase decision are based on a consensus among stakeholders.
    • In practice, many different stakeholders and decision-makers must concur with the price and volumes, and co-sign a purchase contract/document. It can take several rounds of amending and passing around such a document before the purchase is finalized.

Decision makers

  • There is a clear correlation between the complexity and the cost of a product and the hierarchy/authority/knowhow-level of the decision making party.
    • e. expensive equipment is selected by hospital management; very complex devices/techniques are chosen by clinical specialists; clinical disposable items by nurses; commodity supplies by administrative staff.

Decision drivers

  • Quality standards are extremely high in Japan. Even the appearance of a product’s packaging is part of the perception of quality.
  • Matching the needs and aspects of Japanese business culture is essential.
  • Due to Japan’s difficult economic context, the government has reduced the hospital budgets.
    • This resulted in a slowdown in equipment replacement and in hospitals deferring the procurement of non-priority equipment and devices.
  • Public tenders have a price-ceiling effect, but also a declining ASP effect.
    • Hospitals are not inclined to pay more than a public tender offering. The tight hospital budgets have forced companies to use more aggressive price offers in tenders, causing a general ASP reduction.



Group purchasing

  • There is a strong trend within the secondary care sector to procure medical supplies, both pharmaceutical and apparatus, through group purchasing organizations exterior to the hospitals, or through a centralized procurement department within a hospital network.
  • There are over 25 hospital chains/groups conducting central purchasing and more than 10 independent GPOs procuring on behalf of hospitals and clinics.
    • This has led to a substantial drop in ASPs over the last 5 years. It is estimated that since 2012, products have become 15-20% less expensive, resulting in substantial pressure on the margins of most medtech suppliers.
    • Another outcome of this trend is a reduction by 2/3 of the number of product types/brands used by individual hospitals.
  • German university hospitals have grouped their central purchasing into the EK-Unico GPO. One or two hospitals then get a mandate to act as the principle decision-makers for a particular product on behalf of the whole group.
    • Individual university hospitals have the right to opt out if the product is not suited or desired.

Purchase Process and Decision Drivers

Capital investments

  • When a hospital wishes to make a larger investment for a long-term asset (capital equipment), it must follow a case-by-case grant application procedure.
  • The corresponding Land health-authority will decide whether the request fits in the hospital planning/strategy of the period and in their regional budget.
    • In this situation, the decision makers are the hospital strategic management, and the Land health-authority.


  • The decision makers in the German GPO-run procurement process are a mix of clinical and non-clinical procurement administrators, specialists, heads of departments, and other medical professionals who use/apply the procured products.
  • In the case of exterior GPOs, these will negotiate a set of tariffs and prices with suppliers, and all those hospitals enlisted with the GPO can benefit from these agreed prices.
    • Although these GPOs act independently from their hospital-clients, the individual hospitals may still choose to use another product.
  • Specialized equipment/techniques are most likely ordered as requested by the specialist physicians using them.

In summary

Due to the various approaches to procurement in each national market, it is important for product marketing-strategies to be familiar with the most common and most popular purchasing processes within a given country.

Each procuring party also has a slightly different way of obtaining information on new (and existing) products, and of handling pricing and negotiations with distributors or directly with manufacturers.

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About Bart Van den Mooter

Bart is the founder of TforG and works closely together with over 50 global companies such as Abbott, Baxter, GE, J&J, Medtronic, Philips, Stryker and Covidien. In this function, he spends a lot time with Key Opinion Leaders and Health Policy makers in Europe and in Emerging Markets. He graduated at the Polytechnic University of Leuven with a Master of Engineering and has an MBA (Flanders Business School).