Market Insight

Ready to launch? Ultrasound's growth prospects in emerging markets

June 12, 2019

Adam Davidson Adam Davidson Research Analyst II, Healthcare Technology
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The search for medical imaging’s next frontier

Following the rise to prominence of the Chinese medical imaging market, equipment vendors are seeking to stake early claims to the next frontier medical imaging market. There is strong potential for high-growth in emerging medical imaging markets like Latin America, the Middle East, Africa, and the Rest of Asia Pacific due to low market saturation and the need for improved healthcare infrastructure. Despite increased activity in these markets, recent ultrasound market performance in other developing geographies suggests that many of these emerging markets are not prepared to support major healthcare industry growth.

Optimism associated with emerging markets is not unfounded. Emerging markets have large, aging populations, increased occurrences of chronic illness, and lack the diagnostic equipment and staff necessary to combat these challenges. Several Eastern European nations have spent the past several decades building and reforming their healthcare systems and are now supporting sustained medical imaging market growth. In these nations, healthcare investment and public tenders are more prevalent than ever before, leading to high ultrasound revenue growth—the highest growth rate of any region in the world in 2018. Similarly, Mainland China and India continue to have high ultrasound market growth due to consistent government support and changing demographics that are driving demand for medical imaging equipment. Government policies like Healthy China 2020, 2030 and India’s National Health Mission have rapidly improved these nations’ healthcare infrastructures and driven their medical imaging markets to grow at world-leading rates. The quick rise to prominence of Mainland China’s healthcare system was accelerated by unprecedented government funding, but other emerging markets cannot invest the resources necessary to facilitate this rapid growth. Healthcare infrastructure development is a priority in these markets, but it will require significant time and resources.

Healthcare infrastructure is an important prerequisite to sustained growth

While purchasing ultrasound systems occurs early in the development of a strong healthcare system, it is far from the first step. Prior to the embrace of ultrasound, healthcare expenditure is allocated to build hospitals, train doctors and practitioners, and establish necessary technological networks and connectivity. Much of Latin America, the Middle East, Africa, and Rest of Asia Pacific lack the necessary infrastructure to support the growth of the ultrasound market. There might be years of high medical imaging market growth, but more infrastructure development is necessary to sustain this growth. Many governments have identified and addressed this issue, but solutions to support sustained growth take time and are often stalled by more pressing issues. For example, the Iranian medical imaging market floundered in 2018 because the United States re-imposed economic sanctions on Iran, spurring civil unrest due to the ailing economy, high unemployment rates, and political corruption. Faced with economic and social crises, the Iranian government delayed and cancelled numerous medical imaging tenders, creating a major setback to medical imaging market development.

Teleradiology enables ultrasound growth in understaffed nations

Emerging medical imaging markets are hindered by the severe lack of trained technicians and radiologists. To combat this issue, many developing nations have applied unconventional solutions to deliver medical care to their citizens. One of the most effective solutions is teleradiology. Teleradiology allows for a radiologist across the world to instruct an untrained technician to properly perform and interpret a scan using telecommunication. This tool relieves the burden placed on the small group of radiologists in emerging markets and provides access to healthcare for citizens in remote areas. Teleradiology is most frequently used with ultrasound due to its portability, affordability, versatility, and ease-of-use compared to other imaging modalities and ultrasound tenders often request teleradiology capabilities and services. Philips Healthcare’s Lumify, Fujifilm SonoSite’s M-Turbo POC, Butterfly Network’s Butterfly iQ are just a few examples of ultrasound systems that can be purchased with teleradiology functions. employing and training sufficient medical staff is a long-term process, but teleradiology has driven short-term medical imaging market growth by providing a low-cost method for delivering healthcare to underserved populations.

Not all emerging markets are prepared for growth

In 2018, Latin America and the Middle East served as precautionary tales for ultrasound manufacturers due to their poor market performances despite high levels of investment. Ultrasound revenues contracted in Latin America from 2017 to 2018 because of the region’s high economic and political volatility. Many Latin American countries suffered from major currency inflation, crumbling infrastructure, numerous political regime changes, and widespread corruption. These issues drew funding and attention away from healthcare reform and slowed the growth of the region’s ultrasound market. Similarly, the Middle East experienced political strife, economic sanctions, and military conflicts, which led to the delay and the cancellation of many public medical imaging tenders. Lackluster ultrasound shipments in these regions created uncertainty surrounding future business strategies and sales targets.

Diversification is crucial in volatile markets

Emerging markets can be intimidating to manufacturers, but properly navigating these markets can yield great results in the long term. To meet the needs of healthcare providers in emerging markets while mitigating risk, manufacturers should focus on diversification. First, manufacturers should ensure they offer a diverse product portfolio. Portfolios should contain ultrasound systems that perform several clinical applications and multiple modalities at affordable prices. Such a portfolio will appeal to a wide range of healthcare providers working with limited budgets. Winning large tenders is often a key pathway to high sales in emerging markets. Manufacturers should aim to establish relationships with healthcare providers by selling affordable equipment since these relationships could yield larger contracts in the future. Manufacturers should work with several less-traditional entities to help develop healthcare infrastructure and in turn grow the ultrasound market. Vendors can pursue opportunities to work with local governments and non-profit organizations to provide training, education, and aid in a nation’s areas of need. This is already a common practice in many African nations and should be applied to other emerging markets. Next, manufacturers can mitigate their risk to overall revenues by balancing their sales efforts between multiple emerging markets. This will ensure that volatility or calamity in one nation does not derail the business unit’s entire sales efforts in a region. Market diversification was especially important in Latin America in 2018, because markets like Mexico and Venezuela struggled and revenues declined while Brazil had strong revenue growth. Operating in numerous emerging markets may result in occasional short-term losses, but should yield substantial long-term growth since the region as a whole will likely grow.

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Healthcare Technology
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