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For many years, Anaesthesia has served the function of enabling surgeons and clinicians to perform invasive procedures without letting the patient experience any pain. However, with the growing number of complex surgical procedures being performed worldwide, the vast field of anaesthesia is also observing sea changes, both in terms of emerging technologies and market dynamics.

 

The increased demand from surgeons, anaesthesiologists and clinicians for sophisticated equipment for their operating rooms (ORs) has also shaped the market dynamics of the European anaesthesia equipment market. As a result, the market in Europe now boasts over 30 active competitors and a vast range of technologies and products pertaining to anaesthesia delivery, management and monitoring.

Growth Forecasts for Europe
There exists a striking contrast between the anaesthesia equipment market in western Europe and eastern Europe. While the western European market is primarily a replacement one, eastern Europe is observing a significantly high market growth rate. Eastern Europe, comprising of Bulgaria, Czech Republic, Hungary, Poland and Romania, has a market size approximately one-tenth that of western Europe. However, with most governments investing in upgrading hospitals and medical technologies, eastern Europe is currently the most important destination for most anaesthesia equipment manufacturers. The market is expected to grow at a compounded annual growth rate (CAGR) of 7.2 per cent from 2007 to 2014. The market in Western Europe that consists of Germany, France, Italy, UK, Spain, Scandinavia and Benelux is already highly saturated and is expected to grow at a CAGR of 1.9 per cent.

Sluggish Growth in the Western European Markets
Most of the western European countries already have huge installed bases of anaesthesia equipment. The volume sale is largely dependent on the replacement of existing units. However, the long replacement period of the anaesthesia machines has ensured a market growth rate of 2.0 per cent in 2007. For clinical safety, anaesthesia equipment is recommended to be changed every eight years, however, most hospitals in Europe have been using the same equipment for over ten to twelve years. This has resulted in reduced volume sales of the systems, thereby prohibiting most market participants from spending enough on the research and development of newer technologies. This is causing stagnation in the technology development cycle of the market.

Furthermore, the market growth rate in western Europe is being severely hindered by the stringent cost cutting measures being adopted by the European governments. The implementation of Diagnostic Related Groups (DRGs) as a financial tool to control hospital expenditure is complete in several countries such as Belgium, Denmark, Italy and Spain. In certain other nations, such as Germany, France and UK, the homogenous implementation of the same across all hospitals shall be completed before 2012. The increasing use of DRGs across the western European countries is expected to affect the unit sales by squeezing the purchasing power of hospitals and hence add to the market stagnation.

Sustained Market Growth in Eastern Europe
With hospitals willing to invest in new technologies for their ORs, the eastern European market for anaesthesia equipment has observed a significant growth rate over the past few years. In 2007, the eastern European market had a revenue growth rate of 7.9 per cent. The market is still being driven by the demand for new systems in countries such as Romania where new emergency and county hospitals are being built. Also with most anaesthesia equipment in Poland and the Czech Republic reaching its replacement periods, volume sales of such units is expected to pick up in these countries as well. The accession of Romania and Bulgaria to the European Union (EU) has also allowed these countries to receive better funding, particularly for the improvement of hospitals and healthcare standards in general. This is expected to aid the volume sales of sophisticated high-end anaesthesia equipment in the eastern European nations. Also, with most eastern European governments encouraging private healthcare set-ups, the market growth is expected to be sustained in the coming years.

Price Sensitivity Affecting Market Dynamics
Price sensitivity is a common challenge for vendors operating in both eastern and western European markets. An Integrated workstation manufactured by GE (Datex-Ohmeda) or Drager costs in the range of $30,000 to $50,000 in the European markets whereas other mid-range or low end systems are priced in the range of $15,000 to $25,000. Although Drager and GE (Datex-Ohmeda), who manufacture high-end systems, are the market leaders in Europe, there is also a growing market for mid-range systems in the region. With the influx of low-cost manufacturers, especially from Asia, the demand for stand alone monitors used with anaesthesia equipment has risen in most eastern European nations. The price sensitive nature of the market has also allowed several medium-cost regional participants to gain significant market share in their respective native markets such as Italy, France and Romania. However, to tackle such challenges, most global companies have been making significant efforts in improving their technical support and service structures. Since this is critical equipment that requires regular preventive maintenance and troubleshooting, the global manufacturers have been developing strategies to earn extended revenues through after-sales service and annual maintenance contracts.

Fierce Competition amongst Existing Vendors
Despite the huge dominance of the Drager and GE (Datex-Ohmeda) over the European anaesthesia equipment market, there is intense competition in the mid-range and low-end market segments. Companies such as Spacelabs and Penlon have a fairly high market share for the mid-range segment, whereas Taema, Heyer Medical and Siare have strong regional presence in countries such as Italy, Germany and France. The low-end segment has several new market entrants such as Heinen-Lowenstein, Mindray and HealForce who also sell stand alone. While price sensitivity remains a major challenge, most hospitals still prefer the high-end integrated workstations as they offer a one-stop shopping solution. This gives the hospitals an opportunity to bargain for the price when several systems are procured at the same time. As a result, mergers and acquisitions as well as strategic partnerships are a common trend in the European markets for anaesthesia equipment.

Indecision amongst Anaesthesiologists towards Adoption of TIVA
Total Intra-venous Anaesthesia (TIVA) has been billed as a revolutionary technology in the field of modern anaesthesia, not only in terms of the clinical benefits it offers, but also with regards to the financial benefit that can be achieved through its usage. TIVA is a safe procedure as it reduces post operative nausea and vomiting, and it reduces the chance of awakening. It is also found to bring about faster recovery in children. As a result, it supports day-surgery and could prove to be a fitting solution for the cost reduction worries of the European governments. Besides, several anaesthesiologists find it very safe for the OR staff as it does not use inhalational anaesthesia which could spread inside the room thereby affecting the health of the OR personnel. However in the current context, TIVA is being sparingly used in the European hospitals. Most anaesthesiologists have been using it only for paediatric surgeries or during induction. For many anaesthesiologists, it is the lack of proper training of the technique that has hindered its adoption rate. A number of anesthesiologists also cite the lack of dedicated TIVA supporting equipment in their ORs as a reason for its slow uptake. Currently, very few companies such as Drager (in its Zeus® workstation) incorporate ergonomic designs for the use of TIVA in their product lines. For the technology to spread fast there need to be increased efforts from vendors to develop better solutions supporting TIVA.

Fast Growing Niche Market for Depth of Anaesthesia Monitors
With an increase in the number of advanced and complicated surgeries, clinicians are looking towards having improved solutions within their ORs to have a better control over the situation. Several companies have been quick to capitalise on this situation by developing new techniques for evaluating the depth of anaesthesia in the brain of the patient. Certain companies have been manufacturing the depth of anaesthesia modules based on the revolutionary Bispectral Index (BIS) technology, which was first developed by Aspect Medical Systems. Other companies such as Danmeter have developed their own neuro-monitoring techniques such as Cerebral Sate Index (CSI) to obtain a numeric value indicating the depth of anaesthesia in brain. The improved demand for such systems in western Europe ensured a market size of about $25 million for this niche segment in 2007, with a revenue growth rate of over 20 per cent. Although, large university hospitals have been the traditional market for such modules, the technology is also spreading to smaller hospitals with fewer numbers of ORs.

Growing Demand for Clinical Application Suites
One of the most significant developments in the market has been the increased awareness of the use of clinical application suites in the ORs. Such software packages help clinicians to make crucial decisions in critical situations during a surgery by analysing drug therapy information to estimate the effect of anaesthesia related drugs. This revolutionary innovation is supported by GE Healthcare’s Navigator Application Suite that incorporates the Navigator Therapy that is capable of predicting the effect of supported anesthesia-related drugs and drug interactions. Apart from this, Philips Medical Systems, although not a manufacturer of anaesthesia equipment, manufactures clinical decision support systems for anaesthesiology. With the anaesthesiologists and surgeons demanding sophisticated tools to aid in informed decision making, more manufacturers are expected to follow the steps of the global giants in the coming years.

Hospital-IT Integration Aiding Market Penetration of AIMS
The trend of hospital-IT integration began almost a decade ago in the western European hospitals. As a result, there has been considerable growth of Anaesthesia Information Management Systems (AIMS) in the European markets. The AIMS not only enable better and efficient management of the ORs of the hospitals for an entire year, but also offer an integrated tool to plan and document the entire anaesthesia procedure. The trend for IT integration and proper networking in the eastern European hospitals on the other hand, has been rather slow. However, most governments have made conscious initiatives towards the development of a proper IT infrastructure within hospitals. The Regional Operational Programme (2007-2013) for Slaskie Voivodeship in Poland focuses on developing integrated IT systems in hospitals. Furthermore, Romania, in its first edition of the Convergence Programme (2006-2009) to the European Commission, identified the need for building a sound hospital-IT infrastructure in the country. With most hospitals realising the need to upgrade their ORs with proper networking and documentation protocols, most vendors are looking to offer AIMS with their anaesthesia workstations or as separate (third party) solutions.

The Future
The overall market for anaesthesia equipment is expected to be driven by improvements in technology, especially with regards to electronic ventilators offering a greater choice of mode of ventilation as well as flowmeters and vaporizers. The need for ergonomic designs pertaining to height adjustable breathing circuits and better cable management shall provide a boost to the volume sales of the equipment in future. To compel hospitals replace their existing units with newer ones, vendors will have to make improved efforts towards addressing several end user needs such as automated syringe management for TIVA procedures, integrated breathing circuits and enhanced monitoring features. For eastern Europe, AIMS and depth of anaesthesia modules shall be the most important catalysts for market growth. However with language being a major barrier, most companies will have to form better distribution channels and efficient technical support structures in order to address the challenge from local manufacturers. The market in western Europe shall however continue to remain stagnant and observe a negative growth rate until most hospitals decide to replace their existing systems.