Market Insight

Automated Dispensing Cabinets – strong growth ahead

April 25, 2017

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According to IHS Markit, the global Automated Dispensing Cabinet market is projected to enjoy sustained growth over the next five years, despite some regional markets, namely that of the United States, nearing maturity. That said, in the United States the Institute for Safety Medication Practices estimated that over 20% of the healthcare practitioners reported adverse patient effects due to lack of proper monitoring of supply levels as well as inventory management. According to the December 2016 National Pharmacy report, delivery issues, errors with controlled drugs, and mismatching patients with medicines were among the most commonly cited errors. Furthermore, the World Health Organization estimated that medication errors cause at least one death every day and injure approximately 1.3 million people annually in the United States alone. Globally, the picture looks very similar with low and middle income countries estimated to have similar rates of medication-related errors as high income countries. With that in mind, the need for technological advances and investment into equipment in this market is set to continue over the next five years. 

IHS Markit estimated global revenues for automatic dispensing cabinets (including both anesthesia and medication cabinets), at just over $1 billion in 2016, with greenfield revenues (expressed as investment into new equipment) accounting for $370 million.  The acute care segment was by far the largest and accounted for over 95% of the market. Very little was sold globally to the alternative site segment, but IHS Markit expects this to change over the medium term, as more and more clinics adopt the technology. The change will be largely driven by the increasing need to reduce medication errors and monitor supply more closely. IHS Markit projects the total market revenues to grow at 5.3% CAGR from 2016 to 2020, with greenfield investments growing somewhat faster, with a 7.4% CAGR. 

Regional differences in the market penetration rate remain large. The US market is over 92% penetrated within the acute care segment. Despite the large number of existing installations, growth rates remain steady, as existing equipment is replaced with newer versions. The Asia Pacific and Western European markets are projected to grow the fastest from 2016 to 2020, with CAGRs of 23.2% and 23.9% respectively, as further investments in healthcare technology take place. The Latin American market has high potential in the long term; however, it is unlikely to grow much over the next five years since healthcare expenditure will remain relatively low and investment in new technology is currently not the priority.  Drivers of market growth vary somewhat by region. North America will focus more on medication safety and error prevention; the European markets will focus on improvements to the operational process.  The ageing population and an increase in the number of drug prescriptions will make the global market accelerate over the next five years. However, it is important to note that there are several growth inhibitors, namely high costs of implementation and the limited budgets of the healthcare organization, which may restrict the investment in automation. 

For more information, please contact: Dasha Lukiniha, Dasha.Lukiniha@ihsmarkit.com 

Research by Market
Healthcare Technology
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