China to Account for One Fifth of Global Ultrasound Revenue by 2016
Following a period of vast investment in healthcare, the outlook for China’s ultrasound imaging equipment market remains very positive. A new report from InMedica, part of IHS Inc. (NYSE: IHS), The Chinese Ultrasound Equipment Market – 2012 cites recent public health investment from 2009 to 2011 as merely a stepping stone in China’s healthcare revolution. Consequently, revenues generated from Chinese sales of ultrasound are forecast to represent close to 20 percent of global revenues by 2016.
The three-year Chinese government healthcare reform drove rapid growth in unit shipments of ultrasound between 2009 and 2011. Growth was most evident in simple value and low-end ultrasound systems (average selling price less than $30,000), a combination of government targets to provide low-cost healthcare for rural regions, and increasing competition and influence of local Chinese suppliers. Combined with further growth in premium and high-end equipment in the top Tier 3 hospitals, China experienced revenue growth of 8-10 percent annually.
In 2012, there seems to be little evidence of the market hitting saturation; in fact, revenue growth is forecast to increase to a compound annual growth rate (CAGR) of 11 percent over the next five years. “While the volume of lower-value ultrasound equipment is forecast to decline significantly, a dramatic shift in demand for higher value colour equipment in Tier 1 and 2 hospitals will drive strong revenue growth,” commented Stephen Holloway, senior analyst at InMedica. “Public investment in Tier 2 county-based hospitals, to produce regional centres of excellence, will also increase demand for mid-range ultrasound equipment. Intriguingly, this market should experience stiff competition between local Chinese suppliers now producing higher specification systems, and multinational suppliers looking to expand into new markets.”
In contrast, growth of the ultrasound market in the rest of the world is forecast to remain below 5 percent over the next 5 years. One of the key factors curbing this growth is the on-going financial crisis in the Eurozone. This is particularly evident in Southern European countries such as Italy, Greece, Spain and Portugal, where the ultrasound market has been heavily impacted. “As economic instability continues and tight public austerity measures implemented, the replacement of ultrasound equipment is being cancelled or postponed,” added Carly Reed, analyst at InMedica.
However, new emerging ultrasound markets are counteracting the low growth seen in Europe. In countries such as India, Thailand and Indonesia, demand for increased access to healthcare services is driving strong growth in low-cost ultrasound equipment. Long-term, these emerging markets are predicted to experience similar development as China, albeit at a slower rate. “Many of the newer emerging markets remain in infancy,” continued Reed. “These regions have huge potential for further growth, yet currently do not have the economic or public firepower to implement wide-ranging healthcare initiatives in the short-term.”
In the next five years, InMedica predicts China to emerge as a dominant and insatiable consumer of ultrasound equipment, driving rapid growth. “The value of future market growth here is best reflected in the movements of the global market-leading suppliers; almost all have invested heavily in specific Chinese centres for research, manufacturing and sales,” concluded Holloway. “The future of the ultrasound in China looks to be very assured.”
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