The European Congress of Radiology (ECR) convened in Vienna on March 1–5 2017. ECR provided an opportunity for leaders in the ultrasound industry to meet and discuss the future of the region’s ultrasound market. The EMEA ultrasound market will face several barriers to growth in 2017. The upcoming presidential elections in Germany, France, and the Netherlands are already creating a lull in ultrasound system sales as these large governments prepare for transition. Shrinking budgets in both the public and private sectors are forcing healthcare providers to delay purchases of ultrasound systems, and increased competition from Asian-based manufacturers is causing additional disruption in the market.
Political instability created major market fluctuations last year. The United Kingdom’s vote last summer to leave the European Union led to high single-digit contraction of its ultrasound market. Similarly, last year’s military coup in Turkey resulted in a complete freeze of Turkish ultrasound purchases. The ultrasound market is particularly susceptible to political unrest because most ultrasound tenders are controlled by state governments, and even the private sector cannot escape the governmental budget squeeze. For example, although a substantial portion of the Turkish ultrasound market is private, the government kept purchases low last year by imposing stricter regulations on hospitals and healthcare providers.
Budget shortages, not political unrest, were perhaps the greatest contributing factors to the EMEA ultrasound market slowdown in 2016, and there is reason to believe this issue will only become worse in 2017. Ultrasound budgets are shrinking in countries including France, Germany, and the United Kingdom. In order to cut costs, replacement rates for ultrasound systems in these countries have steadily increased and the percentage of hospitals using a shared-service model has grown. Election years traditionally create a market slowdown, so tightening budgets will be exacerbated by lowered overall spending in France, Germany, and the Netherlands. France and Germany represent the largest European ultrasound markets, so stagnation in these countries will damage the market in the entire region.
Despite this widespread budget challenge, some European and Middle-Eastern markets are predicted to grow in 2017. In Saudi Arabia, the Ministry of Health froze all ultrasound tenders in 2016 because of budgetary restraints caused by falling oil prices and lower-than-expected construction revenues. However, the freeze has since been lifted and Saudi Arabia’s ultrasound market began 2017 with strong growth and manufacturers are maintaining a positive outlook for the rest of the year. The Italian ultrasound market has struggled to grow in recent years, yet it too is recovering, and public market revenues grew strongly during the first two months of 2017. Russia’s ultrasound market is also predicted to expand in 2017. The Russian government released public tenders for women’s health this year and this funding will promote large revenue growth in the Russian obstetrical and gynecological (OB/GYN) ultrasound market.
The European and Middle-Eastern ultrasound budget crisis has led to a shift in the competitive landscape that is driving revenues downward. Asian manufacturers including Toshiba, Samsung, and Mindray have tried to capitalize on the situation by aggressively undercutting traditional ultrasound suppliers including GE, Philips, and Siemens. The traditionally dominant ultrasound market shareholders remain well-established and trusted by healthcare providers, but these manufacturers are being forced to lower prices for premium and high-end systems. As the market becomes more competitive during 2017, average sales prices (ASP) of all ultrasound systems are forecast to drop. The general radiology and OB/GYN ultrasound markets will be most affected by falling ASPs because of the numerous products competing in these clinical applications segments.
Expect 2017 to be a challenging year for the EMEA ultrasound market because of political changes, budget restrictions, and new pricing trends.