China and the United States largely shaped the size and trends of the 2017 global Computed Tomography (CT) equipment market. GE Healthcare claimed the top market position, while Chinese companies United Imaging and Neusoft outpaced their Western cohorts. Combined, China and the US accounted for more than half of the world’s 2017 CT equipment revenues. Global revenues totaled just over $3,950 million, growing more than 3% year over year from 2016. The following table displays these findings and market forecasts from IHS Markit’s recently published 2018 CT Equipment Report:
The Chinese and US are the two largest countries in the world for CT sales but have little else in common. In 2017, the Chinese CT market was characterized by double-digit growth, first-time CT purchasers, affordable scanners, and emerging local equipment manufacturers. Meanwhile, the US CT market was defined by revenue contraction, purchasers replacing CT equipment, the latest technological advancements, and medical imaging giants.
From 2016 to 2017, global CT revenue growth was moderate, pulled up by China’s rapidly growing market and down by the United States’ contracting market. Chinese CT revenues grew faster than any other country in 2017 and were the primary driving force behind the positive global revenue growth. Excluding China’s CT revenues, the global CT market only grew a fraction of a percent Y/Y in 2017. Nonetheless, there were several countries that increased revenues in 2017, primarily in emerging CT markets in Asia Pacific (excluding Japan) and Latin America.
China’s growth was driven by government investment in upgrading healthcare infrastructure, which established new hospitals and encouraged first-time CT purchases. This class of novice CT end-users propelled the popularity of the performance and value products—composed of scanners with 64 or fewer slices*—in China due to their sufficient imaging capabilities and relatively low price points.
Like most mature CT markets, revenues in the US contracted slightly, primarily because of price erosion, despite unit shipment growth from 2016 to 2017. Price erosion in mature markets was driven by government implemented reimbursement models shifting from volume-based care, in which healthcare providers are paid based on the number of services they perform, to value-based care, where payments are derived from patient outcomes. Value-based care has resulted in hospital consolidation, where hospital chains are formed through mergers and acquisitions to cut out unnecessary costs and inefficiencies. These hospital chains order CT equipment in bulk, which drives down the average selling prices. Bulk orders paired with decreased reimbursements fostered intense competition among manufactures and caused major price erosion in 2017.
The United States is the global leader for cutting-edge technologies such as CT applications of artificial intelligence (AI), 3D printing, virtual reality (VR), augmented reality (AR), and ultralow radiation. Development of these technologies is vital for CT market growth because they could halt price erosion of high-end products by addressing key issues associated with an aging global population and rising occurrence of chronic diseases, medical imaging radiation, and radiologist burnout. For example, AI algorithms improve the speed and accuracy of diagnoses by using large databases of radiological images to interpret CT scans. Faster and more accurate diagnoses will help radiologists face an uptick in CT scans, while avoiding burnout by eliminating monotonous work and lowering patient radiation dose by reducing the number of scans required to obtain a diagnosis.
The United States is home to the top global CT supplier GE Healthcare, and its market was dominated by GE and other medical imaging giants, including Siemens Healthineers, Toshiba (now Canon) Medical, and Philips Healthcare. These companies also topped the global market rankings in 2017, as shown in the following chart, with Siemens Healthineers coming in a close second-position behind GE Healthcare.
In China, fast-growing local companies have piqued the interest of the healthcare industry. United Imaging and Neusoft have emerged as key players in the Chinese CT market, as each accounted for double-digit market share and grew faster than the Chinese market in 2017. Both companies have global aspirations and have opened subsidiaries around the world, including American offices for both companies in Houston, TX. While United Imaging and Neusoft both show great promise for continued growth, these companies face a major uphill battle to obtain share in a stable global market dominated by medical imaging giants.
Historically, the United States has been the most advanced and important CT market in the world; however, China has already overtaken the United States in size and represents a tide of change: rapidly growing, emerging markets and companies looking to shake up the global CT market. Although the CT market appears stable, medical imaging giants must not become complacent or risk being left behind by a changing CT environment. Top manufacturers must balance diversifying their product portfolios to claim a stake in emerging markets while advancing premium products to maintain their hold of mature markets. On the other hand, emerging Chinese players must find their niches, overcome a recent tide of nationalism, and key into the intricacies of mature markets while maintaining their strong ties to their home market to truly threaten medical imaging giants on a global scale.
A full assessment of the global market CT equipment is available from IHS Markit in the 2018 CT Equipment Report.
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Research Analyst II, Healthcare Technology
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*CT slices refer to the number of cross-sections of tissue that the CT equipment acquires (not including virtual slices). Higher slice counts result in more detail in the images a CT scanner produces.