American hospitals and medical device imports have strong potential.
medical device manufacturers have long relied on their core home markets for
revenue and profits. The United States and European markets, with approximately
5,700 and 8,000 hospitals respectively, have been the traditional focus of the
world’s leading medical device manufacturers. These advanced markets are highly
competitive and well served; future growth will either be organic or rely on
technological advancement. Both of these factors make it difficult to quickly
boost sales or profit margins.
potential of international markets is often overlooked. While it is true that
hospital spending and healthcare expenditures in emerging markets lag behind
those of the U.S. and Europe, the size of the opportunity warrants a closer
Latin America is home to
over 16,000 hospitals. Brazil has over 40 percent of the region’s establishments
and has more institutions than the US. Meanwhile, Mexico is the world’s 7th largest
hospital market with over 3,900 hospitals, 60 percent of which are private.
hospital demographics can uncover a wealth of opportunities. Factors such as
geographic concentration, size of institutions and degree of specialization are
key to developing a successful growth strategy.
example, half of all Brazilian hospitals are located in just six states, and
one-in-five hospitals have more than 100 beds. In other words, companies
selling sophisticated medical devices, hospital services, and technology
solutions can learn to target hospitals that fall within their typical client
base with a smart and focused regional in-country strategy. Specifically,
recent data on hospital infrastructure in Brazil suggests there is room for
growth in outsourced medical services, notably in managing hospitals’ pharmacy,
medical and patient records, sterilization of materials and laundry services.
over one quarter of Mexican hospitals are located in just three states, and 10
percent of hospital physicians are pediatricians. This means that companies
introducing a treatment or device aimed at the pediatric market have a
potential audience of nearly 20,000 doctors with a targeted approach.
the opportunities, few global medical device manufacturers have taken the lead
on making Latin America a priority. As such, the market is generally highly
concentrated with a few players holding a cornerstone to the industry. Local
R&D is weak and manufacturing is generally limited to second-generation
products, by fear of piracy or intellectual property infringement.
Consequently, the region remains largely dependent on imports for more
Making the right investment is the first step in establishing a market presence
with long-term growth prospects in the region. A fast mover wanting to disrupt
the current state of affairs could do so with a few thoughtful bets on
concentrated markets such as Brazil, Mexico, Colombia, Chile or Peru.
2014, exports of medical devices to Latin America were expected to top $10
billion. Mexico, Brazil, Argentina and Colombia together accounted for more
than 75 percent of imported devices. Mexico is the largest importer of the
region with over $2.5 billion in 2014; spurred primarily by its proximity to
the U.S., the North American Free Trade Agreement (NAFTA) and relatively low
degree of local manufacturing. Brazil and Argentina are also large import
countries, with ~$2 billion each.
devices stand out because demand for innovative, high-tech solutions is largely
driven by the private sector — in contrast to other types of healthcare
expenditures, which are more evenly balanced between the private and public
sector. With over 16,000 hospitals in the region, Latin America is an
attractive market for many foreign manufacturers.
The weakening of currencies across the region will result in an overall drop in
demand for imported, dollar-denominated devices and technologies; favoring
locally manufactured equipment which may be less exposed to currency
fluctuations. Foreign manufacturers and their local distributors will have to
promote creative financing options in order to stay on top of the market and
not lose share to less expensive products.
IMPORTS TRUMP LOCAL PRODUCTION
With the exception of Brazil, most countries in Latin America have little-to-no
local manufacturing of medical devices or medical technology. Relatively small
domestic markets have kept local players at bay, while weak intellectual
property rights, questionable regulatory frameworks and a dearth of trained
talent have held back foreign manufacturers from investing in the region. As a
result, most countries rely almost exclusively on imports, especially for
high-end, complex devices.
A smart regional strategy will account for differences and clusters among local
• Brazil is the region’s largest market for
medical devices: the country accounts for 50 percent of the U.S. exports of
medical devices to Latin America and has a strong domestic manufacturing
industry of its own. It has evolved into a mature market for medical devices,
complete with a more developed regulatory system than in neighboring countries.
While Brazil represents a vast opportunity, importing into Brazil and local
regulation are complex and costly to manage. Local competition should not be
underestimated. A proper market assessment can help navigate some of these
challenges, helping make the right decisions.
• Though Mexico’s market is second to Brazil
in term of local demand for medical devices, it is in fact the region’s largest
importer. Its proximity to the U.S., highly developed road systems, integration
into the NAFTA, and robust export manufacturing
(“maquila”) industry make Mexico a natural expansion when looking outside the
US. Additionally, the state of Jalisco (Guadalajara region) has developed
important capabilities in the healthcare space, primarily pharma and to a
lesser degree devices.
Beyond the top four markets — Brazil, Mexico, Argentina and Colombia — a second
tier stands out, including Chile, Peru and Costa Rica. Each of these markets
benefit from the right conditions to make them attractive to medical device
suppliers and manufacturers, including respect for the rule of law, favorable
customs and import regulations and higher levels of per capita spending on
healthcare compared to regional standards. These can become lucrative, albeit
niche export markets alongside the bigger regional players.
Guillaume Corpart is the Managing Director of
Global Health Intelligence and a veteran of market intelligence and strategy
consulting in emerging markets. firstname.lastname@example.org | www.globalhealthintelligence.com