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17 Jun 2002
Last year, Europe's medical-lasers market saw much consolidation. It also avoided being hit by the global downturn and kept growing in 2001. John Wheeler finds out why.
From Opto & Laser Europe February 2002
Europe was the only region in the worldwide medical-lasers market to see growth last year, according to research from the US-based analyst Spectrum Consulting, which specializes in this market.
Irving
Arons, the founder of Spectrum Consulting, said: "After nearly a decade of double-digit growth, the global
market for laser-based medical equipment has shrunk by 9% from its high point in 2000 to a total worth of
EURO 2.3bn."
"This year's fall-off was led by the aesthetic and vision-correction market sectors. These depend
primarily on the availability of discretionary income, because most insurance plans do not cover such
treatments," Arons told
The US led the decline, owing to a sagging economy that officially dipped into recession in the fourth quarter of last year. Asia likewise saw declines in new equipment sales, reflecting that region's continuing economic weakness. European sales, however, bucked the overall trend to grow by an estimated 5% in 2001. This figure is significantly less than the 12-15% growth seen in 2000, but is quite robust by comparison with the rest of the world.
The global market is divided into several sectors, each of which has its own market trends. The surgical, aesthetic, and ophthalmic instrument markets combine to make up a total share of EURO 1.3bn, of which Europe's contribution is about EURO 300m. Diagnostic and therapeutic instrumentation make up approximately 15% of the world and European market.Royalties generated by basic refractive-surgery patents total nearly EURO 200 million, but they apply mostly to the US, where each LASIK procedure generates a $130 (EURO 148) royalty payment. "At the present time, ophthalmologists in Europe are not required to pay the per procedure fee, although this may change in the future," said Arons.
European sales of medical-laser systems in 2001 were estimated to total EURO 533m. This is a significant increase from the EURO 507m of sales seen in 2000, and increases Europe's share of the world market from 20% to 23%.
Applications for medical lasers can be split into two categories: procedures that are paid for primarily by private or public medical insurance (for example, stone removal or diabetic retinopathy) and procedures that are not (such as hair removal or vision correction). The former category is essentially recession-proof - not only because the money is not coming directly out of the pocket of the consumer, but also because in many cases the procedure cannot be postponed without consequence.Arons said: "Over the last few years, aesthetic applications, including vision correction, have driven medical-laser market growth. Some applications have more than doubled year-on-year." In 2001, so-called vanity applications, which are closely tied to the general economy and consumer confidence levels, led the downturn.
In
the US, where the impact of the economic downturn and recession was felt quickly by consumers, aesthetic
procedures decreased significantly. This resulted in a sharp drop in instrument sales. By contrast, in Europe -
where the economic downturn was not so pronounced - such procedures appear to have increased, albeit not
at their previous double-digit rates.
The recession-proof sectors remained flat, reflecting overall market saturation. The bulk of sales were in product replacement. Declines in the surgical market sector were compensated for by increases in the non-refractive ophthalmic sector, as new procedures for age-related macular degeneration were introduced.
Two of the industry's largest players led a trend for consolidation in 2001. In April, ESC Medical Systems in Israel bought the assets and liabilities of Coherent Medical in the US, forming Lumenis. The new firm has estimated combined annual sales of about EURO 426m, more than twice the income of VISX (the largest refractive-surgery company in the US) and six times that of US-based Candela, its largest competitor in the aesthetic and surgical markets. In early December, Lumenis expanded by purchasing HGM Medical Laser Systems, a US-based manufacturer of argon and diode- pumped solid-state laser photocoagulators.
In Germany, WaveLight acquired the medical-laser division of Rofin-Sinar, expanding its product offering for the aesthetics market, and Asclepion-Meditec and Carl Zeiss announced plans to merge the Zeiss ophthalmologic group with Asclepion to form a new publicly traded company, Carl Zeiss Meditec. The new operation will combine Asclepion's refractive-surgery systems with Zeiss' diagnostic products.
Two factors are driving this desire to
merge. First, the medical-laser market has reached maturity. Unless new consumer-driven applications
emerge, generating strong growth with high margins (like the LASIK and aesthetics sectors), the major
players in the industry face brutal competition for sales in a slow-growth market with high
product-development costs. This places downward pressure on margins and greater emphasis on market
share and cost control.
The cumulative potential for this strategy is significant, but it relies on developing accessories and products for a large number of niche procedures (for example, tonsil ablation). From this point of view, the resources and cross-pollination of ideas available to larger companies give them a distinct advantage. As in many mature industries, the market is likely to be dominated by a combination of large companies and small, innovative start-ups. Medium-sized firms will have trouble competing.
This year, the global medical-laser market is expected to grow by 8-10%. A 6% growth rate is predicted for Europe, which is a slight increase on last year's figures (see figure 4). Growth will be fuelled by a hoped-for economic recovery in the US and the new procedures that debuted last year.
The surgical market is divided into several major sectors. In gynaecology - a huge market, but one without many new procedures - Lumenis hopes that its Gynelase technology, a diode-laser system designed to treat excessive vaginal bleeding, will have a significant impact. Urology will see an increased use of holmium lasers for enlarged prostate resectioning, and laser shockwave procedures should make headway against the traditional extracorporeal shockwave lithotripsy (ESWL) treatment for the removal of kidney stones. Although the laser procedure is more invasive than ESWL, it removes 100% of stones compared with about 70% for ESWL.
The aesthetic market is expected to resume its growth, but at a slower rate than in previous years. Emerging applications include acne treatments and a procedure for treating pigmented and vascular lesions on the face and neck.
The ophthalmology market sector will also keep growing. Competition will continue to force down the cost of procedures and standard refractive surgery systems, but new life will be breathed into the sector from other sources: for example, eye-tracking systems and customized LASIK with integrated wavefront analysis will provide more precise correction, reducing the problem of night-time glare. Visudyne therapy systems and diode-laser based photodynamic therapy for the treatment of age-related macular degeneration will show strong growth. Another application to watch is selective laser trabeculoplasty, a novel technique for the treatment of open-angle glaucoma.
Two niche markets are also worthy of note. Dentistry, which saw sales totalling EURO 25m in
2001, could be the next high-growth market, using erbium and diode lasers for painless soft- and hard-tissue
applications. Veterinary applications are currently estimated to be worth approximately EURO 15-20m.
The coagulating effects of CO2 laser scalpels could be even more beneficial in small animals, for
whom blood loss is more critical than in humans. This is primarily a US application, but systems are
appearing in Europe.
Spectrum www.expertsinternational.com/arons
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