歐洲醫(yī)療器械分銷市場研究及啟示- An Attractive Opportunity for Investors -EUROPEAN MEDICAL TECHNOLOGY DISTRIBUTION 2023

RolandBerger

LONDON/GREATBRITAIN

AnAttractive

Opportunity

forInvestors

EUROPEANMEDICAL

Roland

Berger

TECHNOLOGYDISTRIBUTION

Coverphotosudok1/iStock

MANAGEMENT

SUMMARY

M

edicalTechnology,orMedTech,isanattractivemarketbothduetoits

underlyinggrowthdrivers,liketheageingpopulationandtheroleof

technologyinconstraininghealthcarespend,aswellasitsrelative

resiliencetoeconomiccycles.However,deliveringMedTechproducts

tohealthcareprovidersischallengingandinvolvesservingcomplex

patients’needs—fromselectingtherightcombinationofproducts

toinstallation,integration,trainingandeducation,andmaintenance.

WhilstlargemarketssuchastheUS,Germany,France,andthe

UKcansupportdirectsalesandservicingfororiginalequipment

manufacturers(OEMs),thediverseandnationallyregulatedEuropean

marketsposeagreaterchallengeforcomprehensiveproductdelivery.

ThisiswhereMedTechdistributorsplayacrucialrole.Theycaterto

localregulations,offeringtailoredproductsandservicesforeffective

productdeliveryandmix-and-matchsolutionsacrossmultipleOEMs

tobestmeethealthcareproviders’needsandbudgets.Inrecent

years,variousMedTechdistributorshaveachievedrapidvalue-

creatinggrowth.Theyhavebothexpandedtheirportfoliosthrough

theonboardingofnewsuppliersandenterednewcountriesand

therapeuticareastoimprovetheirabilitytoservecustomersand

OEMs.Assuch,MedTechdistributorspresentanattractivemarket

forinvestorsandanopportunityforfurtherconsolidationgiventhe

relativelyfragmentedPan-Europeancompetitivelandscape.

RolandBerger2EuropeanMedicalTechnologyDistribution

FASTFACTS

&CONTENTS

Over50%

ofmedicalconsumablesaresoldviadistributors

162

dealsover10years

intheUK,DACH,and

BeNeLuxcombined

4

1/WHATISMEDTECHDISTRIBUTION

ANDWHATMAKESEUROPEANMEDTECH

DISTRIBUTIONANATTRACTIVEMARKET?

7

2/KEYTRENDSINEUROPEAN

MEDTECHDISTRIBUTION

9

3/THEEUROPEANMEDTECHDISTRIBUTION

INVESTMENTLANDSCAPE

12

14

4/KEYVALUECREATIONMEASURES

CONCLUSION

1/

WhatisMedTechdistributionandwhatmakesEuropeanMedTechdistributionanattractivemarket?

MedTech,isagroupofproducts,services,orsolutionswhichareusedinmedicalcontexts,i.e.,tosavelives,orimprovequalityoflife.Theyarepresentthroughthefullpatientjourneyfromdiagnosisthroughtotreatment,cure,andlong-termcare.Medicaltechnologiescanbroadlybesegmentedintotwocategories:MedicalDevices,whichencompassallinstruments,apparatus,machines,andimplantsusedtocarryoutmedicalactivities,andInVitroDiagnostics(IVD),whicharetestsusedonbiologicalsamplesoutsideofthebodytoassessapatient’sphysicalcondition.

Despitebeingmatureintermsofuptakeofhealthcaretechnology,theageingEuropeanpopulationisforecasttodrivecontinuedgrowthintheEuropeanMedTechmarket.Thisisbecauseoftheincreasingprevalenceofage-relatedconditionsandcomorbiditiesastheaverageageincreases,aswellasthefactthatchronicdiseases,whichaccumulateoverthelifespan,requirerecurringorcontinuoustreatment.Furthermore,thenon-cyclicalnatureoftheunderlyinghealthcaremarketanditsrelativeresiliencetoeconomiccyclesmakesMedTechevenmoreappealingfromaninvestorperspective.

Medicaltechnologiesarepredominantlysoldtohealthcareproviderssuchashospitalsandclinics.TheMedTechofferinghastwomainroutestomarket:theyareeithersolddirectlybytheOEMtothecustomeroraresoldtoadistributorwhothensellstheproducttothecustomer.Thereisalsoararerroutetomarket—theagentmodel—whereanagentidentifiesthesalesopportunityandthenlinkstheOEMtotheinterestedcustomer,butinthismodeltheagentdoesnotownstockorprovideanyadjacentservicesasthedistributordoes.TherearenumerousfeaturesoftheEuropeanlandscape(andMedTechlandscapespecifically)thatmakedistributorsalesappealingcomparedtoOEMdirectsales.

1)Duetothe

recentlyratifiedEU

“MedicalDevices

Regulation”and“InVitroDiagnostics

Regulation”whicharestillintheprocessof

beingrolledout

EuropeisanattractivemarketforMedTechdistributorsprimarilybecauseofhowcomplexandcostlyitistosellmedicaldevicesacrossthecontinent.Avarietyoflanguagesarespoken,withtheEUalonehaving24officiallanguages,andmostoftheindividualcountriesaresmallintermsofthevolumeofmedicaltechnologiestheyrequire.Foranon-EuropeanOEM,tightandchanging1)EUregulationsofMedTechmaketheenvironmentcomplextosellinto,hence,partneringwithadistributorfamiliarwithcountry-specificregulationsmakestheprocessofmeetingcompliancerequirementssimpler.ThisappliesespeciallyifthedistributorhasContractResearchOrganisation(CRO)capabilitiessocanaidOEMsintheentireprocessfrompatenttopost-marketsupport,includingmedicaldevicesregulatoryaffairs.TherearealsonuancesofmedicaldeviceregulationwithinEUcountries,andmoremeaningfuldifferencesforsomecountriesoutsideoftheEUsuchastheUK,Switzerland,andNorway.Finally,customerkeypurchasingcriteriavaryacrosscountries,assomehighlydevelopedcountriesfocusonproductqualitywithlittleconsiderationforprice,whilstotherlessdevelopedcountrieshavefewerfinancialmeanstoinvestinMedTechsoarealotmorepricesensitive.

Asaresult,OEMsaretypicallymorelikelytofocustheirdirectsaleseffortsonthethreelargest‘G3’markets:UK,France,andGermany.Intheselargermarkets,OEMsmarketandsellthenewerproductranges,services,andsolutions

RolandBerger4EuropeanMedicalTechnologyDistribution

A/OEMstypicallyfocusonlargestrategicdirectmarketswhilstdistributorsaremorecommoninsmallerperipheralmarkets

MarkettypesinEurope

LargestrategicmarketsIntermediatemarketsPeripheralmarkets

Source:RolandBerger

oftendirectly—theyfocusonthelatesttechnologicalanddigitalinnovations,and

distributorstypicallymanagetheOEMs’portfoliooflegacyproducts.WhilstItaly

andSpainbothcompriseasignificantmarketsize,thestructures(aswellas

historicalreasons)ofthesetwocountriesmeanthatOEMdirectsalesorganisations

arelessprevalent.Thereare17autonomousregionsandtwoautonomouscities

inSpain,and20administrativeregionsinItaly,andeachregionhasitsdistinctive

characteristicsmakingitrelativelychallengingforOEMstooperatein.

Additionally,somelocaldistributorshavebuiltsuchastrongunderstandingof

themarketandrelationshipsthatitwouldbehardforOEMstoreplicate.→A

ThisresultsintheproportionofdirectOEMsalesversusdistributor-mediated

salesvaryingsignificantlyacrossEuropeanmarkets.Largercountriessuchas

FranceandtheUKarestronglyweightedinfavourofOEMs(acrossboth

consumabledevicesandcapitalequipment)whilstattheotherendofthespectrum

wefindcountrieslikeSwitzerland,Serbia,andSloveniawheresalesthrough

distributorsarefavoured.Additionally,medicalconsumablesaremoreoftensold

viadistributorsthancapitalequipmentacrossthecountries.Thisismainlybecause

thesalesofconsumablesrequiresnotechnicalservicesorganisationandanupfront

payment.Moreover,capitalequipmentcontractsaretypicallymuchlargerin

value,makingthemappealingtoOEMs.→B

RolandBerger5EuropeanMedicalTechnologyDistribution

UK

Germany

Italy

France

Sweden2)

TheNetherlands

Denmark

Spain

BeLux

Switzerland

TheBalkans

B/Consumablesat~55%aretypicallysoldmoreoftenviaadistributorthancapitalequipmentat~35%

Shareofsaleviadistributor(vs.directsalebyOEM)forMedTechproducts1)

60–70%60–70%

45–55%45–55%

20–40%

23–43%

30–40%

30–40%

35–45%

40–50%

?consumables

~55%

25–35%

?capitalequipment

~35%

1)Involumeterms;2)Sweden,despitebeingasmallermarket,isattractiveforOEMsduetoahighconcentrationofhealthcareproviderscenteredarounditsthreemaincities

Source:Expertinterviews,RolandBerger

RolandBerger6EuropeanMedicalTechnologyDistribution

2/KeytrendsinEuropeanMedTechdistribution

ThemostimportanttrendinMedTechdistributionistheincreasingdemandforValue-AddingDistributors(VADs).Typically,MedTechdistributorsbuyproductsfromsuppliers,repackageit,anddeliveritinsmallerquantitiestothecustomerwhilstactingassalesrepresentativefortheOEM.However,astheneedsofhealthcarecustomershavebecomemorecomplextothepointwheremoreandmoreancillaryservicesbecamenecessaryandtheindustryshiftedtowardssolutions,MedTechdistributorsstartedintegratingvalue-addedservicesandcapabilitiesintotheirofferings.VADsprovidebothMedTechproductsandadjacentservicesbundledasasinglepackage,makingthemtotalsolutionproviders.Theseservicesrangefromcuratingthemedicaltechnologiesofferingandreliabilityofthesupplychaintotechnicalservicesandtrainingandeducation,throughtoproductknow-howandcustomerrelationships.Technicalservicesareanofferingforwhichthecustomerpaysaperiodicfeeinexchangeforthedistributormanagingbothmaintenanceandrepairsonapieceofmedicalequipment(typicallyalsobundledwithotherserviceslistedabove,suchasequipmenttraining).OEMs,incomparisontodistributors,typicallydonotoffertheseservicesdirectly,andprefertooutsourcethemtothirdpartyserviceproviders,furtherprovidinganedgetothedistributorwhentheycanofferatotalsolutioninasinglepackage.OnemajorbenefitofongoingMedTechvalue-addedserviceisthattheyallowthedistributortoretainacontinuousrelationshipwiththecustomer,andthiscontinuouscommunicationinturnmakesiteasierforthedistributortoidentifyandcorrectlysourcenewproductsthecustomerrequires.

Anothertrendisashifttowardsbroaderdistributorproductportfolios,whichincombinationwiththevalue-addingservices,allowthedistributortoofferacomprehensive‘one-stop-shop’experience,maximisingcustomerconvenience.WhereOEMswillinevitablybelimitedtotheirownproductrange,thedistributorcanmixandmatchproductsfromdifferentbrandsandofferthecustomeranoptimalcombinationofproductswithoutthemhavingtosourcefromnumerousOEMs.Thisdynamicmakesdifferentiationchallengingasadistributor,hence,distributorsaimtodeveloprelationshipswithOEMstothepointwheretheycansignexclusivedistributioncontractstobethesolesupplierforanOEM’sproductsinagivenmarket.Thisbroadeningofproductportfoliosimpactsbothgeneralistandspecialistdistributors.Specialists,whofocusonasingletherapeuticarea,arebeingdriventostockproductscoveringtheentiresubcategory,forexample,theentireendoscopyset-upfromgastocamerastolightsources.Forgeneralists,itisaracetoexpandstocktocoverabroaderrangeoftherapeuticareastosuitbothclinicandhospitaldemands.Onewaydistributorsarefurtherexpandingtheirofferingsisthroughtheadditionofaprivatelabel—theseprivatelabelproductsaredevelopedincollaborationwithcustomersandtailoredtomeetspecificneeds.

DrivenbytheCOVID-19-inducedsupplychaindisruption,customersareincreasinglyfocusedonsupplychainresilience—thisisparticularlyimportantduetoregulationslimitingthevolumesofconsumablemedicaldeviceswhichcan

RolandBerger7EuropeanMedicalTechnologyDistribution

C/TotalsolutionprovidersofferenrichedservicesoverandabovebothOEMsandtraditionaldistributors

Serviceofferingbydistributionmodel

DirectsalebyOEM

Saleviatotal

solutionprovider

Saleviatraditional

distributor

Breadthof

offering

Offeringlimitedto

OEMproducts

Weakeroffering

ofproductsdue

tofocusonniche

therapeuticareas

?

?

Combinationoflow-,mid-and

high-endacrossbothcapital

equipmentandconsumables

products

Abilitytobundletheseproductstomeetcustomerneeds

Reliability

ofsupply

Noalternative

solutions

Abilitytooffer

alternativesolutions

?

?

Supplychainmanagementvia

ownbrandedproducts

Dedicatedsourcingpartnerabletoofferalternativesolutions

Technical

services

Typicallyoutsourced

Typicallynotable

toprovide

?

?

Strongintegration/installation

capabilities

Proactiveapproachonrepair,donebothin-houseandonthespot,withreportingcapabilities

Trainingandeducation

Training&education

offeredtocustomers

8None

?

Strongfocusontraining

andeducationofhealthcarepersonnelanddistributor

employeesatkeyopinion

leaders,suppliers,and

associations

Product

know-how

Strongproduct

know-how

Limitedproduct

know-howasfocusonvolumeandprice

?

?

Clinicalapproachtosellingand

highproductknow-how

Ownershipofproductdesignviaownbrandoffer,andsourcingofproductstomeetcustomer

needs

Customer

relationship

Limitedcustomer

interaction

Limitedcustomer

interaction

?Longanduniquekeyopinion

leaderrelationshipse.g.,via

CRO1)services

Scoresforkeypurchasingcriteria6

StrongsalesmodelWeaksalesmodelLimited/nosalesmodel

1)Contractresearchorganisations

Source:Expertinterviews,RolandBerger

RolandBerger8EuropeanMedicalTechnologyDistribution

bestoredon-site.Timelyaccesstomedicalsuppliesisnotonlyimportantforensuringgoodpatientoutcomesbutalsofacilitatesleaner,morecost-effectiveoperationsforthehealthcareprovider.ThisalsohighlightsanotherstructuraladvantageoftheflexibilityofdistributorsoverOEMs—theOEMcannotre-sourceintheeventofsupplychainissues,butadistributorcandosoviaanothersupplier.Foradistributor,greaterresiliencecanbeachievedboththroughdiversificationofOEMsuppliersaswellasnearshoring,thoughthelatteroptionmaycomewithincreasedcosts.Asuccessfuldistributorwillhaveamixofproductsfromlowerreliabilitymanufacturers(whichtheybuyatalowercost)thansomehigh-reliability—typicallynearshored—manufacturers(whichtheybuyatahighercost)tohedgeagainstsupplychaindisruption.

Thefinalmajortrendinthespace,andonewhichisexpectedtoplayoutoverthelong-term,isdistributorsdevelopingCROcapabilitiesandintegratingthemintotheirVADofferings.CROcapabilitiescancoverboththepre-clinicalandclinicaltrialsrequiredforOEMstocertifytheirdevicesaspermittedtobesoldwithinvariousmarkets,andencompasstheexpertiseandinfrastructurerequiredtosupportMedTechOEMsinorganisingandrunningthesetrials.Thisbenefitsthedistributorasitfacilitatesthedevelopmentofstrongsupplierrelationshipsdifferentiatedfromcompetitors,particularlyforsecuringdistributionrightswithsmallerOEMs.C

Whilstpan-EuropeanMedTechdistributorsarerespondingwelltodisruptivehealthcaredistributiontrendsandallowingOEMstounlocksignificantvaluefromtheiractivities,theyalsofaceOEMswhicharere-evaluatingtheirbusinessmodelsand—consequently—distributionpartnership.OEMstypicallyconcentrateondirectsalesintwoinstances.Firstly,OEMswouldliketoeducateandtrainonhighlycomplexandinnovativemedicaldevicesthemselves.Secondly,leadingOEMstypicallytargetlargecustomerssuchasuniversityhospitalsratherthansmallclinics,whichcanbemoreefficientlyservedbydistributors.Hence,toensuremutuallybeneficialpartnerships,MedTechdistributorsoftenfocusonmanaginglegacyproductlinesandsmallercustomersinlargermarketswhereasinsmallermarkets,theytypicallyentirelyrepresenttheOEM.

3/

TheEuropeanMedTechdistribution

investmentlandscape

ThenumberofEuropeanMedTechdistributiondealshasbeengrowingoverthepast10years,drivenrecentlybytheCOVID-19pandemicgrowingdemandformedicaldeviceswhilstdrawingattentiontothebroaderhealthcareindustry,andthe2021–22M&Aboom.Asanon-cyclicalindustry,MedTechisforecasttoremainareliableinvestmentrouteforstrategicplayersaswellaseveninthefaceoffuturemacroeconomicuncertainty.

Overthepast10yearsthespacehasbeenconsolidating,withfourplayersinparticularleadingtheeffort.Mediqmade12acquisitions,includingBunzlRetail

RolandBerger9EuropeanMedicalTechnologyDistribution

24

Italy

36

1

2

4

3

1

3

4

4

6

6

6

26

France

32

1

3

1

1

2

2

4

4

8

6

2

30

1

2

2

1

6

9

4

5

30

3

2

4

2

3

2

4

5

5

29

1

1

2

1

3

1

6

6

6

Nordics4)

37

6

23

2

2

1

1

4

2

4

3

4

22

1

2

2

1

7

2

2

5

48

BeNeLux

7

18

1

2

2

4

2

1

2

4

DACH

55

12

58

UK

7

D/DealvolumesinEuropeanMedTechdistributionhavebeenrisingoverthepast10years—UK,DACH,andBeNeLuxtargetsrepresentoverhalfofthedealsclosed

EuropeanMedTechdistributordealsclosedperyear,bytargetheadquarters’location,2013–22[#]1)

52

313

12

13

2

1

3

SoutheastEurope3)

18

Central&EasternEurope2)

Ireland

22

6

Iberia

41

4

1

2

1

7

3

3

7

7

6

2013201420152016201720182019202020212022Total

1)CountmaynotbeexhaustiveaslistofdealscategorisedbyPreqinandPitchbookarenotnecessarilycomprehensive;2)CzechRepublic,Estonia,Latvia,Poland,Russia;3)Bulgaria,Croatia,Greece,Serbia,Slovenia,Turkey,Romania;4)IncludingFinland

Source:Preqin,Pitchbook,RolandBerger

RolandBerger10EuropeanMedicalTechnologyDistribution

&HealthcareSuppliesLtdforitsprivatelabelbrand365Healthcare,andDuomedGroupalsomade12acquisitions,withtheheadlinebeingthe2022acquisitionofFrenchdistributor‘TheSurgicalCompany’.ASKERhascompletedover30acquisitionsincludingONEMED,andPalexmadeeightacquisitions.

AcrossEuropeovertheselast10years,themostactivecountriesintermsofdealtargetshavebeentheUK,DACH,andBeNeLux,withacombined162dealstotalsincethestartof2013.2022wasaparticularlystrongyearfortheItalianmarket,withsevendealstotal,includingtheGADAGroupsale,thetradesaleofneurodiagnosticOEManddistributorMicromedtocompetitorNatusMedical(anArchimedportfoliocompany),andInvestindustrial’sbuyoutofmedicalconsumablesdistributorKabo.~D

WithinthePE-backedsegmentofEuropeanMedTechdistribution,therearefewlargeplayersleftduetoconsolidation.Highlightsinclude:

MEDIQ(ownedbyAdventInternationalsince2013)

OneofthelargestMedTechdistributorsinEurope,theDutch-baseddistributorMediqsellsawiderangeofmedicaltechnologiestocountriesacrossEuropeincludingtheUK,Nordics,andCentralEurope.Focusingalmostexclusivelyonlow-criticality/high-volumeconsumables,Mediqhasapresenceacrosshospitalsolutionsandnumeroustypesofsurgicalequipmentandsellsthroughbothonlineandaccountmanagementchannels.SincecomingunderAdventInternational’sownershipin2013,Mediqhaspursuedanextensivesetof12acquisitions,includingDanishmedicaldevicesupplierMaersk-Andersen,UK-baseddistributorH&RHealthcare,FinnishdistributorPuls,andSwedishdistributorMedirum.HavingbeenunderAdventownershipforaround10years,Mediqhasthepotentialtocomeavailableforasecondarybuyoutopportunityatsomepoint.

DUOMEDGROUP(ownedbyGSquaresince2017)

Across-Europeandistributor,DuomedcontrastswithMediqasitfocusesonmissioncriticalhigh-marginproducts.WithsalesacrossBeNeLux,France,UK,Switzerland,Nordics,andtheBalkans,thisBelgian-headquarteredplayersellsawiderangeofbothconsumablesandcapitalequipment.Duomed’scoreproductportfolioisinmissioncriticalhospitalsolutionsandendoscopyproducts,alongwithsomesurgicalofferings.Duomedalsooffersnumerousvalue-addingservicesandanadjacentCROoffering.GSquarehasbeenthemajorityshareholdersince2017,soitmaybeavailableforasecondarybuyoutinthenearfuture.

PALEXMEDICAL(ownedbyFremmanCapitalsince2021)

Barcelona-headquarteredPalexisthesinglelargestMedTechdistributorinIberiabuthasabroadercross-Europeanpresencesellingbothconsumablesandcapitalequipment.Palexoffersproductsinawiderangeoftherapeuticareasacrossitsfocusarea—surgery—alongwithmedicalspecialitiesandlaboratory.Palex’svalue-addingcredentialsarealsostrong,throughmanagedequipmentservices,logisticsmanagement,andhospitalconsultancy,inadditiontoR&D

RolandBerger11EuropeanMedicalTechnologyDistribution

services.ThisSpanishdistributorhaditssecondarybuyoutinlate2021byFremmanCapital,andhassubsequentlyenteredtheItalianmarketthroughthe2022acquisitionofItaliandistributorGADAGroup.

ASKERHEALTHCAREGROUP(ownedbyNalkaInvestsince2019)

Withportfoliocompaniescoveringmanytherapeuticareasandgeographies,thelargestcompanywithinAskerisOneMed,alow-criticality/high-volumedistributorofSwedishoriginwhichhasbeenextendedacrossEuropethroughacquisitionslikeSmedico,Evivamed,andMedireva(particularlyintheNetherlands,whereitsfourlargestadd-onsoriginatefrom).TheAskerGroupcoversawidevarietyofMedTechproducts,withOneMedspreadacrossgeneralhospitalequipment,urology,andrenal,andtheothersmallerportfoliocompaniespossessingnicheofferingslikeDiashop’sdialysisproducts.Asitwasacquiredinearly2019,itmaybeupforasecondarybuyoutsoon.

Therearealsonumerousprivateandpublicdistributorswellsituatedforbuyoutorgrowthequity.Someexamplesinclude:

?Uniphar,alargeDublin-headquarteredMedTechdistributorlistedontheLondonStockExchange,whichsellsbothconsumablesandcapitalequipmentthroughonlineandaccountmanagementchannels.Uniphar’ssalescoverawiderangeoftherapeuticareasincludingacutecare,surgery,primarycare,imaging,endoscopy,andorthopaedics,whilstalsoofferingsomevalue-addedserviceslikeconsultancyandequipmenttraining.AlthoughitsfocusisontheUKandIreland,italsohasasalespresenceintheNordicsandBaltics.

?Healthcare21isanIreland-baseddistributorfocusingonhigh-criticality/low-volumeproductsacrossbothconsumablesandcapitalequipment,withapresenceacrosstheUK,Ireland,andDACH.AsubsidiaryoftheSwedishMedTechplayerAddlifesince2021(concurrentwithH2EquityPartnerssellingtheir49.9%stake),Healthcare21offersnotonlyawiderangeofproducts(acrossacutecare,surgery,imagingandlabequipment,endoscopy,pharma,andorthopaedics),butalsomanagedequipmentservices,consulting,andtraining,makingitavalue-addeddistributor.

Theremainingdistributors,whicharemostlyprivatecompaniesandthuswellsuitedforacquisitioninabuy-and-buildstrategy,fallintothreedistinctcategories.Regionalone-stop-shops,whichboastawideproductrangeandvalue-addingserviceswhilstsellingacrossnumerousgeographies,suchastheBelgianHospidexandtheDutchArsisMedical.Regionalspecialistswhichstilldistributeacrossmultiplecountriesbuthaveamorefocusedproductandserviceoffering,liketheFrenchdistributorsFranceHopitalandBernasMedical,theNetherlands-headquarteredTrompMedical,SpanishspecialistPrim,ItalianspecialistsMoviandGADAGroup(nowpartofPalex),andBritishCreoMedicalandGBUK.Andfinally,localplayers,whichonlysellinone,orafew,similarneighbouringcountries,forexample,Anklin,API2000,GroupeGaillard,Hospilux,JemedImportaciones,Prothia,VanHoudt,andProspitalia.

RolandBerger12EuropeanMedicalTechnologyDistribution

4/Keyvaluecreationmeasures

WhenevaluatingapotentialinvestmentintheMedTechdistributionmarket,therearethreeprincipalconsiderations—deepeningandbroadeningproductassortment,enteringnewgeographies,andincreasingcustomerstickinessthroughvalue-addingservices.

Deepeningandbroadeningproductassortment

Thedistributorcandeepentheproductassortmentofexistingtherapeuticareasinmanyways,mostsimplybywinningnewdistributionrightsfornewproductsfromexistingsuppliers,whichinturnallowsthedistributortorenegotiatemorefavorablecontractsusingtheirlargervolumesandhencestrongerpurchasingpower.Broadeningportfoliocoverageinvolvesreplicatingtheexistingbusinessmodelinnewtherapeuticareas—thisisachievableeitherorganicallyorthroughacquisitions,andalongwithstrongpurchasingpowerwithsuppliersalsofacilitatesonboardingofnewcustomers.

Enteringnewgeographies

Thesecondprincipleisenteringnewgeographicmarkets,whichismosteasilyachievedthroughacquisition,andthiscanbedeployedbothtosmalldistributor-focusedmarkets,aswellaslargermarketswithstrongerOEMdirectsalespresencewhendonestrategically(forexample,whenactingasthedistributorforthelegacyproductportfolioofanOEM).Alloftheseexpansionroutesareunderpinnedbythecross-sellingopportunitiesthatresult—adeeperorbroaderproductassortmentallowsforcross-sellingofthesenewproductstoexistingcustomers,andwhenenteringnewmarketsinorganicallythedistributor’sproductportfoliocanbeofferedalongsidetheacquiree’sexistingproductrangetorealisemajorvaluecreationwithonlyminorcostincreasesfromanadministrativeperspective.

Increasingcustomerstickinessthroughvalue-addingservices

Value-addingserviceofferingsareimportantastheybothimprovemarginsontopofthecoreproductsalesbusinessandprovideacompetitiveadvantageforthedistributorovermoresimplisticproduct-onlycompetitors.Forexample,ifadistributorpossessesprivatelabelcapability,thisisnotonlyindicativeofstrongvalue-addedservicebutalsooflong-termcustomerrelationships