Rapid technological advances and product innovation are transforming the European interventional cardiology market. At the same time, the rising number of percutaneous transluminal coronary angioplasty procedures is expected to accelerate market expansion. Revenues are poised to grow based on increased penetration of the newer technologies: drug-eluting stents (DES), intravascular ultrasound (IVUS) equipment and vascular closure devices.
The tremendous growth potential of these new technologies is, however, likely to be diluted by severe price attrition. Such price erosion is expected to be felt most acutely in the more mature product areas, such as angioplasty balloons and bare metal stents. Unit growth rates in IVUS and vascular closure devices are also expected to fall over the long term. As a result, overall market growth is expected to be relatively subdued, with a compound annual growth rate of 1.6% forecast for 2002–2009. In 2002, the European interventional cardiology market was estimated at $574m. The total market is projected to reach $648m in 2009.
Germany is the largest market for interventional cardiology products in Europe, due to the high number of angioplasty procedures carried out per capita. While the market has declined over the past few years, it is still the largest revenue generator in the European market, accounting for 22.7% of the market in 2002. The German market is forecast to stabilise and marginally increase its revenue contribution to 24.4% by 2009.
A spurt in the number of cardiac procedures carried out in other European countries has led to a growth in sales of interventional cardiology products. Interventional cardiology markets in France and the UK are now projected to increase at a faster rate than the European market as a whole.
Overall, the revenue share for interventional cardiology products in the Italian, Spanish, Benelux and Scandinavian markets is forecast to fall over the long term. The Italian market is likely to drop from second to third place (behind France) while the Spanish, Scandinavian and Benelux markets are expected to account for only a small portion of total revenues.
The interventional cardiology arena is currently undergoing rapid technological development. It is therefore critical for companies to keep pace with current and future treatment trends in cardiovascular disease and identify potentially profitable product solutions. This, in turn, requires high R&D investment.
Apart from supporting enhanced R&D allocations and developing new product area opportunities, mergers and acquisitions that will facilitate larger companies’ access to specialist product technologies will also need to be considered.
To ensure satisfactory returns on high investments, the price of new products will have to be maintained at high levels. While tight catheterisation lab budgets often compel companies to resort to price manipulation to strengthen market share, participants in emerging markets, such as the market for second-generation stents, are likely to avoid undercutting competitors. Instead, they will compete on clinical efficacy, ease of use and product range.
As end users increase their uptake of new and expensive technologies, they are likely to look for a single source that can offer them both basic and advanced products at more economical rates. Cardiologists and radiologists are more likely to consider buying interventional cardiology products as part of a bundled package, where basic devices are offered at a discount. This poses a problem for smaller companies that have niche or limited product offerings.
Smaller companies are expected to find it difficult to compete with larger ones in terms of pricing or building a broader product range. One possible survival strategy is to develop costlier second-generation products. However, this is likely to be difficult, due to the monetary constraints that these smaller companies operate under. As a result, the market is expected to coalesce around a handful of resource-rich larger companies.
The introduction of the euro in Europe has made the procurement and supply of medical devices easier. At the same time, the pricing transparency affected by the euro has caused revenue from interventional cardiology to tumble. There are also a number of national markets in which cost containment factors force product prices to be very low. This has caused increasing price erosion in the more highly priced national markets.
PICTURE OF GROWTH
The widespread acceptance of new technologies has led to the expansion of the interventional cardiology market. Even countries such as Italy and Spain, which have comparatively limited healthcare budgets, have new product uptake levels comparable with those in other European countries. This trend reflects the urgent need to treat cardiovascular disease, the incidence of which is growing throughout Europe. The willingness of European countries to embrace new technologies and products to combat this killer disease points to a healthy future for the interventional cardiology market.
Unit sales of interventional cardiology products are also set to receive a boost from the rising number of angiographies and angioplasties being performed. European percutaeneous coronary intervention (PCI) levels lag behind US per capita rates and are still relatively low. This has constrained the growth of the accessories market. However, the continued monitoring of procedure levels by healthcare services is expected to increase procedure rates and improve unit sales.
To a large extent, rising procedure numbers reflect the ‘greying’ of the European population. Nearly 20% of Europe’s population is currently over 60. This segment accounts for a large share of medical procedures. By 2020, the proportion of people over 60 is likely to climb to 25%. With the incidence of cardiovascular disease increasing with age, the continued growth of the elderly population is expected to increase PCI procedure numbers. This is likely to have a direct impact on the uptake of cardiovascular intervention products.
The DES segment is expected to be the key to sustaining market revenues. Investments in this promising new technology are likely to fend off price competition. At the same time, enhanced product choice is set to drive uptake levels. Over the long term, the DES is expected to expand stent use.
The DES is now preferred over the bare metal stent, due to its ability to reduce or eliminate restenosis. Drug coatings will enable manufacturers to charge high prices for these next-generation stents, and future advances may include gene delivery. Thus, its revenue-generating potential is considerable.
Price erosion due to limits on reimbursement and pressure from purchasers has caused a downturn in most product segments of the market. The angioplasty balloons segment has been the most severely affected, as larger companies have been able to transfer limited hospital allocations from this segment to the developing stents segment.
Price pressures are expected to continue for several years, although the situation is forecast to improve eventually. However, revenue growth is likely up until 2009 as unit growth rates offset falling prices. Unit growth is only expected to taper off once products attain high penetration levels by 2008–2009.
Unit growth is likely to be especially strong in the IVUS and vascular closure devices market. The most important market thrust will come from moderate growth in the market for larger stents. The drug-eluting coronary stents sub-segment is expected to be a major market driver due to modest pricing and high adoption levels. Coronary stents accounted for of 57.1% of overall market revenues in 2002 – the largest share – and this figure is expected to rise to 60.9% in 2009. The revenue contributions of vascular closure and IVUS devices over the same period are forecast to grow from 6.8% to 9.3% and from 2.8% to 3.2%, respectively.
A large increase in the number of angioplasty procedures after which closure devices can be used and deeper market penetration of these devices have underlined the significant revenue growth in the vascular closure devices market over the past few years, and this trend is expected to continue in the long term. However, slowing unit sales and price erosion are likely to result in a decline in revenue share in 2008.
The escalating use of the DES is expected to expand applications for IVUS use. The revenue share of IVUS equipment is, accordingly, on course for steady expansion. The revenue share of angioplasty balloons is likely to fall steadily from 21.4% to 15% over the 2002–2009 period. The revenue share of peripheral stents is also expected to decline from 11.9% to 10.8% during the same period.
STRATEGIES FOR THE FUTURE
A high degree of competition characterises the European interventional cardiology market. There are nearly 40 companies active in the market, most with small market shares. A quartet of companies dominate the market landscape. These companies have gained a competitive edge by focusing on a broad product range and by implementing pricing flexibility. The leading companies have attained their dominant market position through prudent mergers and acquisitions which have broadened their product ranges. Rapid technological innovation has highlighted the importance of speedily transforming new technologies into marketable products.
Strategies to lessen time to market, including the acquisition of smaller companies with promising new technology platforms, will become increasingly important. As medical devices that can deliver drugs are gaining more and more popularity, collaborations with major pharmaceutical companies will present another strategic opportunity. Traditional medical device companies, in particular, can gain through these strategic partnerships, as major pharmaceutical companies have a larger resource pool to invest in joint ventures. Also, the recruitment of skilled personnel from pharmaceuticals can enable medical device companies to better understand the effects of pharmaceutical market dynamics on the interventional cardiology market.