Discussion Group: A Road Map of Diversification
Many companies are looking to diversify into the medical technologies sector – but how can they decide which routes are profitable and which are dead ends?
In a time of economic turmoil, healthcare technologies is perhaps the most solid and stable market sector to be in.
Why? Politicians may change the NHS, but they will not close it down. It will continue to grow and expand. The demographics of a population living longer and the increasing demand from large populations in countries such as China, India and the Latin American nations means there is an increase in global demand for health services.
The healthcare market is a global market: any product used in the UK can generally be sold worldwide. Also, provided you avoid high-volume low-price commodities and look at lower-volume niche or value added products, there is the potential to make good profit margins.
In the UK, the NHS is by far the largest provider of healthcare. Its annual budget of £90 billion (in 2007) makes around £5 billion per year available for healthcare technology products and services. Figure 1 indicates the areas of spend and thus the areas of opportunity for suppliers. Medtech companies can also access very large export markets such as the USA, Japan and Germany. The US healthcare market alone is worth £50 billion.