Digitization Spurs Growth of European Imaging Market

Along with challenges such as price erosion, reduced hospital beds, lack of radiologists, and a trend towards multi-modality deals, innovative picture archiving and communication systems (PACS) and digitization initiatives are triggering growth in the European medical imaging market.

As this sets the groundwork for greater consolidation, uncertainty remains over whether conventionally strong participants will continue to dominate their smaller competitors. "Consolidation in the medical imaging industry in Europe will be driven by a continued movement towards complete digitization of the radiology department and workflow integration through PACS,” explained Karthik Arun B, a research analyst at Frost & Sullivan (Palo Alto, CA, USA), an international growth consultancy firm. "The need to reduce costs and, at the same time, maintain the high standards of quality expected from medical imaging equipment will further influence the trend towards consolidation.”

Alliances and acquisitions by various industry participants over the past three years indicate a clear-cut trend towards vertical integration. Most participants are looking to integrate or align themselves with independent PACS developers as well as sub-system producers. Based on the current scenario, this trend is set to continue for the next three to four years.

Given the prevalence of strict legislation and the presence of strong tier one participants, however, consolidation is unlikely to be an easy undertaking. Furthermore, concerns such as cultural integration, change management, as well as certain reimbursement rules could hinder potential consolidation in the medical imaging industry in Europe.

"The increasing trends towards price reduction is minimizing the bottom lines for companies,” observed Mr. Karthik. "In addition, regulatory policies such as reimbursement rules that restrict the use of certain modalities in favor of others also have a strong impact on consolidation.”

The challenge for market participants, therefore, will be to enter into mutually beneficial partnerships with other participants. Companies should look to acquire or form alliances with others that can help them widen their product range rather than increase their market share.

"By expanding their product portfolio, smaller companies can hope to actively compete with the larger multi-modality vendors,” elaborated Mr. Karthik. "With the growing trend towards institutions offering large multi-modality tenders, vertical integration will also help to reduce costs and provide a more efficient deliverable.”



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