German medical technology industry grows with lower earnings
6/5/2023 Transformation News

German medical technology industry grows with lower earnings

According to the industry association Spectaris, the German medical technology industry achieved a nominal increase in sales of 5.4 percent last year. Overall, the industry generated 38.4 billion euros. However, earnings developed unfavorably in many cases: "Although sales are rising, the earnings situation of many medical technology companies is falling, particularly due to increased costs in all areas," emphasizes Dr. Martin Leonhard, Chairman of Medical Technology at Spectaris.

Symbolic image for sales growth in the German medical technology industry
According to figures from the German Federal Statistical Office, domestic sales totaled 12.6 billion euros (up 3.2 percent compared to 2021). Foreign sales increased by 6.5 percent year-on-year, reaching 25.8 billion euros. EU countries accounted for 37 percent of exports, the rest of Europe for 14 percent, North America for 20 percent and Asia for 18 percent. More than two thirds of total sales were thus generated in international business. With 160,000 employees, the number of employees in the approximately 1,470 companies with more than 20 employees rose by 3.3 percent.
Development of total sales of German medical technology (2020 to 2022) Development of total sales of German medical technology (2020 to 2022) | Source: Destatis, SPECTARIS
According to Spectaris, the industry is looking ahead to 2023 with cautious optimism, but not without concern. According to the ifo business climate index, the mood in the industry has brightened somewhat in the first three months. However, this positive assessment is based almost exclusively on the evaluation of the current business situation. Expectations for the next six months are rather weak.
"Many companies report massive cost increases that will now be felt in full in the current year, an increasing shortage of skilled workers, and continuing production hindrances due to supply bottlenecks, especially in the area of electronic components," reports Leonhard. In the German market, the financial woes of many German hospitals pose a further challenge. At the beginning of the year, the German Hospital Federation (DKG) warned of a wave of insolvencies in the inpatient sector in the second half of 2023, which could affect up to 20 percent of hospitals. The picture is no different for care facilities: In 2022, 142 nursing facilities went into insolvency. A trend that will continue in 2023.

"Despite the numerous challenges, we expect the German medical technology industry to increase its sales again in 2023 – at least in nominal terms. The order books of many manufacturers were well filled at the beginning of the year, also due to delivery delays. The potential is still there," says Leonhard, summarizing the situation in the industry. "But the situation is becoming increasingly critical: there is a lack of personnel, whether in production or development, and in many cases products cannot be delivered on time due to the shortage of electronic components or even have to be redesigned and then re-approved. Bureaucracy has taken on worrying proportions, not only due to the new European Medical Devices Regulation, causing high costs and tying up urgently needed personnel capacity." In addition, there are further massive cost increases from all directions, which can only be inadequately passed on domestically due to the special features of the German healthcare system. And: With the planned ban on PFAS chemicals and other high-performance materials, numerous medical devices threaten to disappear from the market if no exceptions are granted for such essential areas of application.

Spectaris compiles the industry figures on the basis of data from the German Federal Statistical Office on German manufacturers of medical technology with more than 20 employees. The sales of homecare companies, suppliers, sales companies without a production site in Germany, and component manufacturers are not included.
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