Multinational medical device giant's "Great Retreat": Global ventilator market facing changes
楚一帆
发表于 2024-2-22 18:23:45
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21st Century Economic Reporting Intern Reporter Han Liming Shanghai Report
Recently, Medtronic released its third quarter financial report for the 2024 fiscal year. During the reporting period, thanks to the substantial growth in demand for cardiovascular and diabetes equipment, Medtronic achieved a global revenue of US $8.089 billion, up 4.7% year on year. At the same time, in order to further enhance profitability, Medtronic announced its withdrawal from the ventilator product line.
In fact, as early as October 2022, Medtronic announced the spin off of its Patient Monitoring and Respiratory Intervention (PMRI) business. Unlike the previous spin off, Medtronic will completely abandon its ventilator business this time.
Coincidentally, a month ago, Philips also released a notice of changes in its sleep and breathing product portfolio for American customers, stating that in the United States and its domestic market, Philips Respironics will focus on selling consumables and accessories, including masks, and will no longer sell hospital ventilators, certain household ventilators, portable and fixed oxygen concentrators, and sleep diagnostic products.
With the exit of multinational medical device giants, the global ventilator business market will be reshaped. Will domestic medical device companies usher in new market opportunities?
Industry insiders have analyzed to 21st Century Business Herald, "On the one hand, it depends on whether the product is excellent. For products that can gain recognition in foreign markets, there is naturally a chance to gain overseas market share. On the other hand, domestic products cannot rely solely on a few enterprises for overseas sales. Industry enterprises need to work together to expand the influence of Made in China in overseas markets."
Medtronic exits ventilator business
According to Medtronic's official website, its respirators include a series of products such as Puritan Bennett. In 2020, when the COVID-19 global pandemic led to a shortage of ventilators, Medtronic will open the full set of intellectual property rights of its Puritan Bennett 560 on its official website, including design schematics, production specifications, instructions, etc.
It is understood that Medtronic's PMRI business includes ventilators, connected bedside monitors, pulse oximetry sensors, and anesthesia equipment. These devices are used in hospitals and families, especially during the COVID-19, when demand exceeded supply, but with the end of the COVID-19 pandemic, the sales of products also declined rapidly.
In 2022, Medtronic decided to split PMRI, and announced that splitting the two departments would allow Medtronic to focus more investment on areas with the highest strategic priority, including cardiovascular, neuroscience and medical surgery, as well as relatively small diabetes businesses.
At that time, the industry believed that one of the obstacles that most medical companies faced in their development was that their businesses were too large and complex. Compared to their large and rigid situation, spin offs may become a trend. After splitting PMRI for a year, Medtronic ultimately chose to abandon its ventilator business.
According to Medtronic's Q3 2024 financial report, the ventilator product line belongs to the PMRI business. After exiting the ventilator product line, Medtronic will merge the remaining PMRI business into the Acute Care and Monitoring (ACM) business unit. It is understood that the department will include pulse oximeters, remote patient monitoring, airway management, and respiratory monitoring products.
According to public reports, Geoff Martha, CEO of Medtronic, stated during a earnings conference call that the decision to shut down the ventilator business was difficult, but in the best interests of the company. "Last year, the profitability of this business became increasingly difficult, growth further slowed down, and at the same time, the field is changing towards lower sensitivity ventilators. Medtronic's flagship high sensitivity products have lost their competitive advantage."
Why retain patient monitoring services in PMRI? Geoff Martha explained that there has been a significant change in the competitive landscape regarding the patient monitoring equipment that was originally planned to be divested together. Medtronic is gradually gaining the upper hand in competition with its main competitor Masimo in this field and has found a growth path. Therefore, after exiting the ventilator business, the company may invest more funds in the patient monitoring business.
According to the third quarter financial report, the Surgery and Endoscopy (SE) and PMRI departments achieved revenue of $2.148 billion during the reporting period, a year-on-year increase of 3.9%. Among them, the growth of patient monitoring business supported the revenue of PMRI business, Nellcor pulse oxygen saturation monitoring instrument increased by 20%, while the performance of respiratory intervention business showed a downward trend.
"Medtronic will continue to fulfill its existing ventilator contracts to meet the needs of its customers and their patients. At the same time, it is expected that existing manufacturers, who currently account for the majority of the market, can meet customers' demand for new ventilators." Medtronic stated in its annual report, "Given the increase in investment and the improvement of the competitive landscape, the company has a firm belief in promoting a lasting category leadership position in this newly merged business."
Domestic manufacturers welcome new machines to the market?
According to the market research report "Global COPD (Chronic Obstructive Pulmonary Disease) and Asthma Equipment Market Research and Forecast 2018-2023" released by WiseGuyReports, the global ventilator market is expected to reach a market size of 26.662 billion US dollars by 2023.
There are many companies with a layout in the field of ventilators. From a scenario by scenario perspective, in the field of household ventilators, there are mainly manufacturers such as Ruisi Mai, Philips, Xuepaike, Wanman, Debaish, and Jardine Matheson with a layout. In the field of medical ventilators, the main participants include Philips, Delge, McCormick, GE Medical, Hamilton Medical, and others.
According to Ruisimai's sales revenue in the fourth quarter of 2023 was 1.163 billion US dollars, a year-on-year increase of 12.48%. Among them, the equipment part of the sleep and respiratory care business achieved revenue of 606 million US dollars, a year-on-year growth rate of 11.64%. The company believes that after excluding the impact of exchange rates, the rapid growth of related businesses mainly benefits from the global demand boom. The global development trend of the ventilator industry has been verified to some extent.
But in recent years, there have been constant controversies in the ventilator industry. Taking Philips as an example, it has been deeply embroiled in the recall controversy in recent years. According to a research report by Pacific Securities, in April 2021, Philips released its first quarter financial report and highlighted the potential health risks associated with the PE-PUR sponge silencing component in its ventilator products. In June 2021, Philips sent an "Emergency: Medical Device Recall" letter to customers, recalling 3-4 million ventilators.
In January 2022, Philips expanded its global recall of ventilators to 5.2 million units, increasing recall costs by 225 million euros. In June of the same year, the National Medical Products Administration of China issued two consecutive notices, announcing the recall of a total of 28494 non-invasive ventilators and X-ray computed tomography equipment under Philips.
Philips has had a significant impact on the industry through multiple active or passive recalls of ventilators. In July 2021, Riesman stated in a statement that due to the global recall of Philips ventilators, the market demand for ventilators and other products has significantly increased, and the company is expanding production. However, it is worth noting that in January of this year, the FDA website showed that all magnetically activated continuous positive airway pressure (CPAP) respirator masks being recalled by Reesemai were designated as a Class I recall.
In January 2024, Philips announced that it would stop selling important respiratory products in the United States, including medical ventilators and home ventilators.
According to the prospectus of Jardine Matheson, the global market share of non-invasive home ventilators is mainly concentrated in top foreign-funded companies, with Ruisimai and Philips being global industry leaders, accounting for nearly 80% of the market share in 2020. Ruisimai has the first market share, accounting for about 40.3% of the global market share, while Philips ranks second, accounting for about 37.8%.
As industry giants exit the market, the regional market competition pattern will be reshaped, and domestic medical device manufacturers may have the opportunity to further expand their overseas market share.
According to public information from Jardine Matheson, from 2019 to 2021, the company's overseas market revenue accounted for 62%, 45%, and 70% respectively, contributing to the company's main revenue. Affected by product recalls by competitors, the demand for products in the US market has further increased, and orders continue to grow.
Mindray Medical has also stated in its financial report that "Mindray's future battlefield is far beyond the domestic market, and the future of China's medical device industry should not be limited to the domestic market." In terms of overseas, Mindray Medical claims to benefit from the improvement of product competitiveness, and its life information and support business, including monitors, ventilators, etc., is accelerating its penetration into high-end customer groups.
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