Market Insight

Breaking down the winners and losers of the 2016 global ultrasound market

May 24, 2017

Holley Lewis Holley Lewis Analyst, Healthcare Technology
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Global ultrasound revenues totaled $6.16 billion in 2016 and are forecast to grow at a CAGR of 3.6% from 2016 to 2021. The following table shows the total ultrasound revenues for Europe, Middle East, and Africa (EMEA), the Americas, and Asia Pacific in 2015 and 2016:

At first glance, the growth of the global ultrasound market appears to be slow and steady. A closer look reveals a market with many ups and downs. Strong revenue growth in some countries was counteracted by revenue freezes in other countries. No type of market was immune to the extreme growth and decline –emerging markets in Latin America contracted while similarly underdeveloped markets in Asia Pacific flourished. Mature country markets including Japan and the United States had strong growth, while the United Kingdom and Ireland suffered from declining revenues.

Countries that experienced the worst decline in ultrasound revenues were dealing with political instability, wars, economic crises, or a combination of the three during 2016. In general, revenue growth was seen in countries with stable economic environments and governments that promoted improvements to healthcare.

The countries that greatly contributed to the ups (the winners) and downs (the losers) of the 2016 ultrasound market are discussed below:

Loser: Saudi Arabia –The Saudi Arabian ultrasound market contracted substantially from 2015 to 2016. Conflicts in Yemen and Syria and plunging oil prices forced the government to shift funds away from the Ministry of Health and into the Ministry of Defense. This shift led to a freeze on healthcare tenders in 2016. For much of 2016, the private sector in Saudi Arabia continued purchasing ultrasound systems, but by the fourth quarter, private spending ceased because of increasing financial pressure and instability in the country. Healthcare spending resumed in early 2017 with higher-than-expected revenues and unit shipments. This high rate of market growth is a sign of recovery, and the market is forecast to grow and to reach pre-freeze levels during 2018.

Loser: The United Kingdom and Ireland –UK and Irish ultrasound revenues contracted from 2015 to 2016. The United Kingdom’s decision to leave the European Union in mid-2016 (Brexit) created uncertainty for the UK and Irish economies that will continue through the forecast period (from 2016 to 2021). Caution about investment will grow if the economy falters and as the United Kingdom goes through the process of leaving the European Union after triggering Article 50 on 29 March 2017. The early general election scheduled for 8 June 2017 may further inhibit this market’s ability to recover.

Winner: Japan –After a year of low-growth in 2015, the Japanese ultrasound market had a strong comeback in 2016, growing by nearly 7% year over year. Appreciation of the yen to the US dollar helped boost revenues despite the government’s high level of debt. Japan remains one the healthiest nations in the world, and it has one of the best healthcare infrastructures. The aging population will continue to drive investment in healthcare, and the National Healthcare Insurance’s (NHI) generous reimbursement scheme will encourage continued growth of the ultrasound market.

Loser: India –India’s ultrasound market contracted in 2016. Demonetization of Indian currency on 8 November 2016 canceled 86% of bank notes overnight and damaged the entire Indian economy. Recovery will occur during 2017 and continue to 2021, but the cost-sensitivity of the Indian ultrasound market will encourage further price erosion and lower the potential for revenue growth.

Winner: China –Chinese ultrasound revenues grew moderately from 2015 to 2016, which indicates the market is recovering after a slowdown in 2014 and 2015. The Chinese ultrasound market will not reach the high growth that occurred during the economic boom from 2009 to 2013, but revenues will continue to grow at a moderate CAGR of 4.7% from 2016 to 2021. ‘Healthy China 2020’ initiatives, including private hospital development and modernization of healthcare technologies, will be the main drivers of growth in the ultrasound market from 2017 to 2021.

 Winner: The United States –In 2016, the United States had the largest ultrasound market in the world in revenues and units. It also had the highest global ASPs for all product segments. The ultrasound market in the United States is quite advanced, and, despite a saturated installed base, the adoption-rate of new ultrasound technologies is high. Total health spending grew in 2016 and the economy performed well. Although the uncertain future of US healthcare reform poses a risk to the country’s ultrasound market, the United States is forecast to remain the largest global ultrasound market in 2017.

Loser: Brazil –Brazil remained the largest market for ultrasound in the Latin American region during 2016, but the market declined for the third subsequent year because of a deep economic recession. Millions of Brazilians are unemployed and have been forced to cancel insurance plans, thus reducing funds for healthcare spending. Depreciation of the Brazilian real against the US dollar has stalled purchases of ultrasound systems and strict import regulations are challenges for manufacturers. Brazil was a high growth ultrasound market before the recession, but revenues are forecast to continue to decline in 2017 and 2018.

Do not expect to find Saudi Arabia or India in the losers’ circle next year, since both countries’ markets have shown signs of recovery in 2017. The ultrasound markets in Brazil and the United Kingdom and Ireland will continue to decline in 2017. China, Japan, and the United States will undoubtedly remain amongst the most important ultrasound markets in the world during 2017, but these countries are not immune from the type of market contraction that can arise from political instability, wars, and economic difficulties. As the second quarter of the 2017 calendar year comes to a close in June, IHS Markit will begin evaluating if China, Japan, and the United States will be winners once again.

Although total market numbers are important when developing an ultrasound business strategy, valuable information is often hidden in the details of individual country markets. The IHS Markit Ultrasound Intelligence Service works with ultrasound manufacturers, distributors, and experts in every region of the world to uncover these details and provide unparalleled insight into the global ultrasound market. In the recently published Ultrasound Equipment Report, IHS Markit analyzed the 2016 ultrasound market for 32 sub-regions and identified the key trends that will influence these sub-regions’ markets to 2021.

For more information about how IHS Markit can advance your competitive position in the ultrasound market, please visit our website at https://technology.ihs.com.

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Healthcare Technology
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