Market Insight

Competitive environment shakeup - What's ahead for ultrasound companies in 2018?

January 30, 2018

Holley Lewis Holley Lewis Senior Analyst, Healthcare Technology
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IHS Markit discusses the biggest mergers, acquisitions, and initial public offerings of the year and analyzes the implications for the global ultrasound market.

  • Under Canon Medical Systems Corporation, Toshiba Medical’s ultrasound portfolio should find new life and new opportunities.
  • Siemens Healthineers’ upcoming initial public offering (IPO) could cause the company to shift its ultrasound strategy.
  • Mindray’s entrance into the Chinese stock exchange will place even more pressure on foreign competitors, if the company finally receives the necessary approvals to list.
  • Esaote’s acquisition by a Chinese consortium will grant the company access to the rapidly growing Chinese ultrasound market.

1 – Toshiba Medical is officially Canon Medical Systems Corporation

Company Profile

Headquarters: Tokyo, Japan

Global ultrasound rank (2016 revenue): 3

Ultrasound portfolio: Canon gained an ultrasound portfolio when it acquired Toshiba Medical. Toshiba Medical’s ultrasound products included multiple cart-based systems ranging from low-end to premium.

Canon acquired Toshiba Medical in 2016, but the official debut of the newly formed Canon Medical System Corporation occurred early this month and marked the symbolic end of the transition to one united company.

Canon did not have an ultrasound business before the acquisition, but under its new name, Toshiba Medical can find new support for its expanding ultrasound portfolio. Last year, the company launched a premium product line, the Aplio-i series, to compete with GE, Philips, and Siemens in the advanced ultrasound markets of the United States and Western Europe. The company’s recent release of a software package to support shear-wave liver assessment and ultra-high-resolution probes for musculoskeletal imaging should also bolster Canon Medical’s appeal in these markets. Leveraging a newly expanded business portfolio and network, Canon Medical’s ultrasound revenue should be strong in 2018, but the inevitable pains of an acquisition this size could dampen ultrasound revenue growth in the short-term. Expect increased pricing pressure on GE, Philips, and Siemens as Canon pushes to expand its ultrasound business in premium markets, and expect the acquisition to give Canon Medical an even tighter grip on the Japanese market.

2 – Siemens Healthineers to be listed on the German stock exchange

Company profile

Headquarters: Erlangen, Germany

Global ultrasound rank (2016 revenue): 5

Ultrasound portfolio: Siemens Healthineers’ ultrasound business is carried by several cart-based systems with an emphasis on the high-end and premium segments. A handheld system utilizing wireless transducers was introduced in 2012.

The highest profile shakeup of the year will come when Siemens publicly lists its Healthineers business in Frankfurt, Germany as a standalone company. The IPO is expected to occur during the first half of 2018. Healthineers is expected to be valued at around 40 billion euros ($49 billion) and 15-25% of Healthineers will be available to investors, making this IPO the biggest listing in Germany since 1996.

Healthineers is one of the largest global suppliers of x-ray, MRI, and CT equipment, but the company had just the fifth-largest market share for ultrasound, accounting for 8% of the total market in 2016. As a dominant player in the medical imaging market, will Healthineers use this opportunity to pull its ultrasound portfolio up to the level of its other imaging products? Siemens Healthineers could use the influx of capital from the IPO to invest in ultrasound product development and marketing. The IPO would also enable Healthineers to acquire an ultrasound company to expand its share of the market. On the other hand, Healthineers could take this opportunity to move away from ultrasound and lean into other parts of its imaging portfolio. Only time will tell how the Healthineers’ IPO will affect its ultrasound business, but expect to see fundamental changes in the company’s ultrasound strategy and product development during the next few years.

3 – Mindray still waiting for an initial public offering in China

Company Profile

Headquarters: Shenzhen, China

Global ultrasound rank (2016 revenue): 6

Ultrasound portfolio: Mindray grew its ultrasound business by selling low-end and mid-range cart and compact systems, but more recently, the company has released high-end and premium cart systems.

Mindray Medical, China’s largest medical equipment manufacturer, is still preparing for an IPO in China. In 2015, the company struck a $3.3 billion deal with Excelsior Union to exit the New York Stock Exchange (NYSE) with the intention of re-listing in China. The Chinese stock market was extremely appealing to Mindray because valuations were much higher in China than in the United States. Nearly three years later, however, Mindray is still waiting to list in China. The company is waiting with hundreds of other Chinese firms that remain in limbo due to long lines and a slow approval process controlled by the China Securities Regulatory Commission.

If Mindray successfully lists in China during 2018, the company will be positioned to further expand its rapidly growing ultrasound business. China is forecast to remain the most appealing market for ultrasound manufacturers during the next five years, and incentives for local manufacturers provide Mindray with a competitive advantage over foreign competitors GE, Philips, and Siemens. An IPO will help generate the capital needed to advance the company’s position in China and other developing regions. No matter the timeline, Mindray’s eventual listing will have a serious impact on the Chinese ultrasound market.

4 – Esaote acquired by a Chinese consortium

Company Profile

Headquarters: Genoa, Italy

Global ultrasound rank (2016 revenue): 9

Ultrasound portfolio: Esaote sells a variety of cart systems ranging from low-end to premium. The company also offers mid-range and high-end compact systems.

In a deal expected to close early this year, Italian ultrasound manufacturer Esaote was acquired by a group of Chinese investors in December 2017. The Chinese consortium includes Beijing Wandong Medical Technology, a medical imaging equipment manufacturer, and Shanghai Kangda Medical Equipment Group, a manufacturer and distributor of medical imaging equipment. Esaote will continue to operate as an independent medical company and maintain its headquarters in Italy.

This acquisition could lead to a major disruption of the rapidly growing Chinese ultrasound market in the coming years. The deal will grant Esaote access to Chinese distribution networks, manufacturers, and an abundance of regional expertise. Esaote’s ultrasound market share in China will surely increase due to the acquisition, which will intensify the competition amongst other foreign ultrasound equipment manufacturers operating in China.

 

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. 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.

Geography
Global
Organization
Canon Siemens Toshiba
Research by Market
Healthcare Technology
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