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Asian diagnostic imaging device market reaching record growth

Amritpal Khalsa

Market growth at record levels

Asian market growth for diagnostic imaging devices is seeing its greatest rate in history—greater than any other region of the globe. Valued at $8 billion in 2012, the market is expanding at an average annual rate of 10%. Today, the market is 33% of the global market for the devices, compared to 27% in 2010. Common diagnostic imaging devices include X-rays, ultrasounds, CT scanners, mammography equipment, MRIs, and nuclear medicine imaging.

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High-tech device demand driving growth

MRIs were previously the device with the smallest market penetration, but now they’re the segment leading market growth. India is seeing its greatest growth in its MRI and ultrasound segments, with MRIs leading sales revenue. Japan is also seeing dramatic growth in demand for MRIs and high-tech devices. In most Asian countries, these devices are imported from the United States, a positive for U.S. device makers.

As Asia gets older (particularly Japan, with one-third of its population over 60) and wealthier, more people are finding themselves needing and able to afford disease diagnostic services. Growth trends suggest demand for higher-tech devices are continuing to increase with demand for nuclear medicine imaging and mammography equipment. Drivers of this trend include increased demand from Japanese patients due to concern about radiation from the 2011 Fukushima Daiichi disaster.

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Low-tech devices driving volume

As the demand for lower-tech devices shifts to high-tech devices in developed markets, rural markets are still investing in basic and midrange equipment. CT scanners and ultrasounds are generating significant revenue in the market, driven by increases in demand from rural parts of China and India, which have only recently begun receiving funding for healthcare. Because of significant income disparities in China and India, unlike the rest of Asia, lower-end devices are still experiencing the most growth in demand as more of the population is introduced to basic healthcare.

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Reimbursement increasing

Government reimbursement for diagnostic imaging devices have increased across Asia. Leveraging the increase in reimbursements, federal and private hospitals are heavily investing in the equipment.

Multinational companies expanding operations

On top of the increased exports to countries demanding higher-tech devices, foreign companies are expanding their operations to rural areas of developing countries, fighting off domestic competition by offering high-tech devices at lower price points. By reducing frills on their devices and stripping them to their bare purpose, companies are cutting out costs and lowering their pricing model, where prices face greater demand elasticities.

Philips Healthcare is one U.S. manufacturer seen expanding its sales operations into rural parts of China with its “Dandelion Plan,” aimed at increasing Chinese CT scanner revenues by 65% in the coming years. GE Healthcare followed suit with its “Spring Wind” initiative and a $500 million R&D (research and development) investment aimed at producing lower-cost devices to supply Chinese demand. Siemens Healthcare has invested significant capital into a product line called “SMART portfolio” that designs, manufactures, and markets devices in India. It has reduced its prices by as much as 40% as a result. The company has already invested $250 million into the initiative and is aiming to significantly grow its X-ray and fetal heart monitor business.

Look for more companies to expand into this market as it continues its astounding growth, driving up sales revenues for many U.S. diagnostic imaging device manufacturers.

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