Life Science market
Demand in the Life Science market continues to trend positively and is expected to remain high. Growth depends on the demographic trend with a growing and aging population, as well as technological developments that facilitate new treatment methods, personalised medicines and diagnostics, as well as new digital solutions.
The COVID-19 pandemic has impacted all of 2020. Demand primarily from health services and diagnostic laboratories has been consistently high throughout the year. The focus has been on caring for patients for COVID-19, so the hospitals have re-prioritized their operations and significantly fewer surgeries have been performed. This entails extensive care queues in our markets. As the population becomes vaccinated, the health service will again redistribute resources, in order to gradually reduce the care queues.
In recent years AddLife has developed from a Nordic into a European player. The Nordic region accounted for 65 percent of AddLife’s sales in 2020, while the rest of the world accounted for 35 percent, compared with 91 percent and 9 percent, respectively, in 2018.
Dynamisk graf: NET SALES BY MARKET 2018-2020
According to Medtech Europé, The European Medical Technology Industry in figures 2020, the European medtech market is worth about EUR 120 billion and in total has grown more than 4 percent per year over the past decade. The market is fragmented and of Europe’s 32,000 medical technology companies, 95 percent are small and medium-sized enterprises, the majority with fewer than 50 employees. Large international players and smaller niche companies usually sell products under their own brands and monitor the entire chain from production to distribution.
The market also has independent distributors who, like AddLife, offer products from both large international companies and smaller companies without their own sales channels.
In Europe, an average of about 10 percent of GDP per country is spent on health services, of which about 7.5 percent relates to medical device products. Common to all AddLife markets is that medical care and academic research are largely financed by public funding. This means that most transactions are carried out through public procurement procedures. In many markets, public procurement procedures are becoming larger in scope, often with long terms of contract. This situation may be a threat for smaller players, while also creating new opportunities. Currently, there is also a trend shifting from price-based evaluation towards models in which sustainability, quality of service and support are gaining in significance for the customer.
Increased product and market requirements
There are a number of entry barriers in the market, such as stringent demands for product safety, regulatory compliance and monitoring. In Europe, medical device products are regulated by EU directives and regulations. Products must be CE certified before they can be marketed in Europe.
New EU directives will be implemented in 2021 for medical devices, MDR and 2022 for in vitro diagnostics products, IVDR. For some products, this may require renewed testing for CE certification, which may be both expensive and challenging for small operators with limited resources and cause larger global players to opt out of smaller local markets.
Growing and aging population
Despite the fact that population growth in Europe is expected to slow down over the next ten years, and by 2050 decrease by just under 1%, the number of older people over the age of 65 will continue to increase. The proportion of people over the age of 65 in Europe is expected to amount to about 29 percent by 2050, compared with today's about 20 percent of the population. In the Nordic region, the population increase is expected to amount to 9 percent by 2050 and the proportion over 65 will then amount to 25%. One of the reasons for increased longevity is that many stay healthy in old age. At the same time, however, the proportion of multi- and chronically ill is increasing. Overall, a larger and older population is expected to increase the need for health care and nursing.
Dynamisk graf: POPULATION STRUCTURE OF EUROPEAN COUNTRIES (EU-27)
Source: Eurostat 2020
One effect of the increased need for elderly care is that the home care area will grow as health care providers streamline their operation. Home care can encompass areas such as medical care, diagnostics and treatment in the home, as well as various assistive technology, housing adaptation and monitoring. For the patient, home care provides the opportunity to live at home longer, which is expected to provide a higher quality of life for the individual.
Digitalisation enables new applications and business opportunities
There is a clear digitalisation trend in the market, including connected patient monitoring, connected laboratory instruments, web-based analysis services and development of new digital solutions. Digitalisation also provides new ways to gather, share and analyse data, driven by development in information and communication technology, as well as availability of smart phones, tablets and laptops. This means that patients can also be provided with the opportunity to personally play a role in their own treatment, thereby gaining a better understanding of their condition and relevant treatments. Digitalisation also affects procedures for purchasing and implementing services. Purchase-related service and services such as training, user support and product maintenance will therefore become increasingly important.
Growing application area for diagnostics
The diagnostics market is growing in several areas because of technological developments that have made testing methodology both less expensive and easier to use. During the COVID-19 pandemic we have seen strong interest in blood gas analysis and COVID-19 tests. Another example is the individual tests that identify a certain genetic marker to determine what medicine will be most effective for a cancer patient. We also see a need for advanced DNA analysis, where the trend is moving towards routine large-scale use in various types of cancer. Yet another example is the growing need for rapid tests to address issues related to increasingly widespread antibiotics resistance. In clinical chemistry, prices for standardised tests at central laboratories are subjected to strong pressures. Meanwhile, a decentralisation trend is shifting towards point-of-care analyses, which are often carried out on a hospital ward or at a health center. This decentralisation is expected to continue within an array of niches, where the need for rapid test results is crucial for continued patient treatment.