Healthcare spending (as a % of GDP) is globally increasing at an accelerated rate. Latin America is forecast to see an 11.5% gain in 2017 following a 6.5% decline in 2016. The growth in healthcare spending in Asia Pacific and in the Middle East and Africa will accelerate in the near future to close to 10% a year from 2019 onwards. With healthcare spending on the rise, investment in medical technology is following suit. As a result, the medical dispensing market is one area set to grow strongly over the next five years.
What is driving this growth?
The ageing population is expected to increase significantly over the next 10 years. IHS Markit forecasts a 30% increase in the 65+ population between 2017 and 2025, with the total number of people in that age category projected to reach 815 million people globally. With an ageing population, the number of chronic diseases is increasing, resulting in investments in technology across the board, from acute care through to alternate care and pharmacies. This is further driving up healthcare expenditure as a consequence. The number of drug prescriptions is also on the increase, driving the need for adopting more efficient and faster medication dispensing technologies. Regulations, the push towards reducing medication errors and improving workflows, in addition to the need to reduce costs, are among the other major drivers of the market.
Where lies the largest opportunity?
The medical dispensing market* is projected to grow from $3.6 billion in annual revenues in 2016 to almost $6 billion in 2020, a CAGR of 10.8%. Of the seven segments included in the market, automated dispensing cabinets, inventory management and retail dispensing accounted for the largest share of the market. Looking forward, controlled substance management, medication inventory management and retail dispensing are forecast to have strong growth rates from 2015 to 2020: CAGRs of 16.4%, 13.9% and 15.1%, respectively. Acute care was the largest market in 2015; IHS Markit forecasts strong growth to continue in this segment.
The greenfield opportunity (as expressed by the investment into new equipment) remains very large – with most markets currently having less than 50% realization rate. Almost 44,000 new sites will be added between 2015 and 2020 across the entire market, with Asia Pacific remaining one of the most attractive regions for investment. China alone will see 12.6% CAGR in medical dispensing from 2015 to 2020.
*The medical dispensing market includes 1) automated dispensing cabinets 2) IV workflow solutions 3) medication inventory management 4) controlled substance management 5) packagers 6)retail dispensing 7) supply management
For more information, please contact Dasha Lukiniha, Dasha.Lukiniha@ihsmarkit.com