MARKET

Market

AddLife is a leading player in life sciences with a strong presence across Europe. With a decentralized business model focused on fast-growing and profitable niches, as well as a strong emphasis on customer proximity and value-driven offerings, AddLife's companies can effectively adapt to and capitalize on prevailing market trends.

AddLife is well-positioned to benefit from a market characterized by an increasing demand for healthcare services, growing patient waiting lists, and the adoption of new technologies. With a rise in surgical procedures and a shortage of healthcare personnel, demand for time- and resource-efficient products and services, advanced instruments, and consumables is growing. As part of its strategy, AddLife has identified prioritised growth segments expected to contribute to overall profit growth.

In 2024, the company strengthened its position through strong organic growth and increased market share, achieved by continuously developing offerings toward more profitable products and by maintaining a deep understanding of local customer needs.

The European Medtech market amounts to approximately 140 billion euros. This market is growing by 5 percent per year. The diagnostics market amounts to approximately 17 billion euros and is growing by 2–3 percent annually. Both markets are relatively insensitive to economic fluctuations. The market is fragmented and consists of about 37,000 companies, of which 90 percent are small and medium-sized enterprises. Germany, France, the United Kingdom, Italy, and Spain are the five largest regional markets. In Europe, an average of 11 percent of GDP is spent on healthcare, of which almost 8 percent goes to medical technology products (Medtech Europe).

A common factor in the markets where AddLife's companies operate is that a large part of healthcare is publicly funded, meaning that a significant share of business is conducted through procurement.
Tenders are becoming larger in scope and often have long contract durations. There is a trend towards moving away from purely price-based procurement to models that also evaluate sustainability, especially in Northern and Western Europe, as well as the quality of service and support.

The clinical requirements and healthcare products needs are relatively similar globally, but regulatory requirements, healthcare structures and payment systems, procurement, and patient preferences differ significantly between countries and regions. Moreover, service and clinical support are becoming increasingly important for advanced treatments. This means that customer proximity, flexibility, and a strong foothold in the local market are important priorities for healthcare suppliers.

AddLife's presence in 30 European markets has strengthened both new and existing supplier relationships, expanded the Group's network, and enabled the sale of both proprietary and distributed products in new markets. AddLife's sales are relatively evenly distributed across several European markets, reducing exposure to local market changes. Following major acquisitions in 2021 and 2022, Ireland, the United Kingdom, and Spain are among AddLife's largest and fastest-growing markets.

Prioritised segments for AddLife
AddLife has chosen in its strategy to select a few more prioritised segments in its portfolio based on a higher potential for both organic and acquisition-driven growth. The average growth in the selected segments is strong, with the Labtech segments growing by 9.5 percent and the Medtech segments growing by 7.5 percent, which exceeds the industry average.

Overall Trends and Drivers

Several trends and drivers affect the European life sciences market. These reflect long-term or recently emerging factors that impact the sector and its suppliers, requiring adaptability and flexibility. AddLife's decentralised business model makes it possible to quickly adapt to and take advantage of these trends.

Ageing population
The ageing population is a crucial factor; over the next 25 years, the proportion of the population in the EU that is 80 years or older is expected to increase sharply from the current 6 percent to 11 percent (Eurostat). This is an age group that is a major consumer of healthcare, care, and diagnostics. Healthcare costs per capita accelerate from ages 55–60, reaching the highest level around 80–85 years, maintaining a high-cost level thereafter.

At the same time, the incidence and prevalence of chronic diseases are increasing, meaning in general a growing elderly population is living longer with one or more chronic conditions. This creates a long-term demand for healthcare products, services, and solutions that support more efficient care for an ageing population.

Economic factors
Healthcare in Europe is largely tax-funded and has a continuously growing demand. Healthcare is a highly prioritised societal issue, which creates a certain degree of immunity to budget cuts, even in times of economic tightening.

This stable growth can be seen by analysing GDP growth in relation to healthcare expenditures over time in the markets where AddLife operates. This shows that AddLife operates in a market where demand is steadily growing and relatively independent of economic cycles (OECD, WHO, European Central Bank).

^{Graph includes AddLife's markets in Europe and Australia.}

Regulatory framework
The market is characterised by strict regulations covering all players, whether private or public. This contributes to caution and some inertia but also to stability and predictability.

Suppliers must meet high standards regarding product quality, certifications, procurement requirements, regulatory compliance, and monitoring, which creates high entry barriers for new players.
New planned EU regulations for medical devices (MDR) and for in vitro diagnostics (IVDR) are being implemented in the industry, although they have been postponed. The new regulations will in many cases require renewed and more complex assessments for CE certification.
Beyond this, new sustainability requirements are continuously being introduced, with some variation in implementation depending on the market. This is an expensive and burdensome process for small players with limited resources. It also leads to larger non-European suppliers looking for strong local partners who can support them in this work.

Global factors
The local market is highly dependent on international product development and manufacturing, making it susceptible to global disruptions. Protectionist trade agreements and new tariffs, pandemics, geopolitical tensions, and conflicts, such as Russia's invasion of Ukraine and unrest in the Middle East, can affect the availability and deliveries of raw materials and products to Europe.
AddLife is well positioned to manage developments in global trade, which is expected to be a source of uncertainty in 2025. Furthermore, AddLife has a strategy for regional procurement, diversified supplier relationships, and close collaborations with local customers, which helps minimize risks from global disruptions.

Technological developments
AddLife benefits from three rapidly growing technological areas:

• Next Generation Sequencing (NGS) has long been established in research and is now rapidly expanding into the diagnostics sector. AddLife has a competitive offering in NGS and has collaborated with several leading suppliers for a long time. The market is expected to grow by approximately 20 percent per year (Horizon Grand View Research), enabling AddLife to further strengthen its position by expanding its supplier network or through strategic acquisitions.

• Robotic surgery is a dynamic and fast-growing segment with an annual growth rate of 15–20 percent (Roland Berger, Marketsandata.com), driven by technological advancements that improve clinical outcomes and reduce the need for healthcare staff. AddLife is developing a strong offering in this area through active dialogues with several leading suppliers of robotic systems. The company is well-positioned to deliver this advanced technology to its customers and meet the increasing demand for innovative surgical solutions.

• Artificial intelligence has significant potential across the entire healthcare sector, where it contributes to improved diagnostic accuracy and increased efficiency. AddLife already offers several AI-based solutions, including digital pathology and safety monitoring services. Through strong customer relationships, deep understanding of procurement processes, and a unique combination of software, products, and services, AddLife is well-positioned to further expand its AI offering.

Competitive landscape creating opportunities
AddLife operates in a dynamic market with entities that may be competitors, suppliers, or potential acquisition targets, often with overlapping roles.

The market is undergoing changes, including restructuring of global manufacturers, shifts in market strategies, and ownership changes within multinational distribution groups. These developments have, in various ways, created favourable conditions for AddLife’s future organic and aquired growth.

HEALTHCARE STAFF SHORTAGE

• There is a significant staffing shortage in the healthcare sector across Europe. The demand is expected to increase due to the ageing population and the higher prevalence of chronic diseases. This challenge is further exacerbated by an ageing workforce, while skill requirements in digital competencies are rising. These factors contribute to capacity issues in healthcare, increasing the demand for process and resource efficiency.

• AddLife offers a wide range of products that meet the needs of healthcare for more efficient patient care. The shortage of personnel has led to greater demand for our resource-efficient and advanced technological solutions, such as minimally invasive surgery, strengthening our market position.

Trends in Labtech

GROWING APPLICATION AREA FOR DIAGNOSTICS

• Market expansion is being driven by technological advances that facilitate the development of more cost-effective testing methods. One example is precision medicine, where genetic tests identify specific genetic markers to determine the most effective treatment for an individual patient. Another example is rapid tests to address the growing issue of antibiotic resistance.

• AddLife actively contributes to this development by offering products, advice, and services in advanced diagnostics. Additionally, AddLife can play an important role in transitioning new technologies from research to clinical diagnostics. In recent years, collaborations with several existing suppliers have been expanded to new markets, such as in Next Generation Sequencing (NGS) within genetic engineering and sepsis diagnostics.

DECENTRALISATION IN DIAGNOSTICS

• The pandemic years have accelerated the development of smaller, more user-friendly diagnostic instruments that maintain laboratory-quality results at lower costs and with greater accessibility. These instruments, often used in Point-of-Care (POC) settings, are now reaching new customer groups such as hospital departments and pharmacies. The demand for multiparameter instruments, which allow multiple tests from a single sample, has also increased.

• AddLife has established itself as an expert in this field, with successful collaborations in Sweden, Norway, and Finland, and continues to explore new opportunities to meet customer needs.

OUTSOURCING IN BIOTECH AND PHARMA

• The growing expansion of drug development has led to an increased demand for outsourcing, particularly among smaller, innovative biotech companies that rely on external services and analytical capabilities. This has resulted in the expansion of both existing and new service offerings in this area.

• AddLife currently provides extensive application support and analytical method development for this customer segment and is exploring opportunities to develop its service portfolio further.

DIGITAL SALES CHANNELS IN RESEARCH

• The proportion of non-European suppliers in research offering non-exclusive distribution agreements is increasing. This has led to a rise in digital sales, both from manufacturers directly to customers and from distributors selling across multiple geographical markets.

• AddLife has several companies with offerings in this area, where the majority of sales occur digitally. Additional companies within the Group are assessing the potential for expanding these services within their customer segments.

Trends in Medtech

ELECTIVE SURGERY

• The long-term effects of the pandemic are still evident in Europe, where waiting lists have continued to grow, and recovery is progressing slowly. Some countries have implemented measures such as increased funding and staff to reduce the patient waiting lists of care, including expanded use of private healthcare and digital consultations.

• An increased number of surgical procedures will be needed over an extended period. AddLife, through its broad product portfolio and strong service offering in planned surgery, has actively contributed to reducing the patient waiting lists. With new technology, surgical procedures can be performed in less time, with reduced personnel requirements and shorter post-operative care. AddLife´s decentralised business model and close customer relationships have enabled flexibility in sales, allowing us to gain market share over competitors.

CIRCULAR BUSINESS MODELS

• Interest in circular business models is growing, particularly in the assistive devices sector, where products that can be refurbished and reused are becoming increasingly desirable. This reduces some demand but also opens the door to new business models.

• AddLife is responding to and driving this trend by providing services such as maintenance, refurbishment, and sterilisation of assistive devices in Ireland, as well as leasing equipment to hospitals and private residences. The company is actively exploring opportunities to expand its range with reusable products and develop new business models.

HOME CARE

• Demographic trends, rising healthcare costs, staff shortages, and individual preferences are driving the trend of keeping elderly people with care needs in their homes for longer. To facilitate this, adjustments to housing, assistive devices, and digital solutions are required.

• AddLife contributes by offering welfare technology in several Nordic markets, including innovative solutions such as Hepro's “Nattugla” service, a digital supervision system that utilises anonymisation features and AI for continuous learning.