Europe’s medical equipment giants

"Medical Valley", is how local people describe the Nuremburg/Erlangen valley region of Germany and the hi-tech companies clustered around the medical equipment division of electronics giant Siemens, which is located there.

In the Netherlands, too, there is another electronics-based medical equipment giant, Philips. This gives Europe two unsung ‘champions’ in one of the fastest growing business sectors in the world, a global market worth around €224 billion, growing at around 5-7% a year and requiring the integration of advanced computer software and electronics in order for firms to be competitive.

Their biggest rival, the third giant of the industry, is America’s General Electric (GE), a company which, in this field is the equal of, but certainly not technologically superior to, its European rivals.

Siemens likes to describe itself as the world’s first integrated medical diagnostics company. It offers a range of diagnostic products from magnetic resonance and ultrasound scanning to computed tomography and X-ray equipment and it links them to healthcare information systems, management consulting and support services aimed at optimising both clinical and financial outcomes. Siemens as a group has annual sales revenues of around €86bn, around 10% of which are in the Medical Solutions division. Its research and development expenditures in the division are currently running at more than €880bn, a chunky 10% of sales revenues.

For Philips, medical systems are an even more important part of its business and its growth strategy, accounting for more than €6bn of its €30bn plus annual sales. The division employs more than 30,000 people worldwide and also has a strong focus on research, with R&D facilities in the Netherlands, the US, Germany, Singapore and China, a market which is a high priority for both Philips and Siemens.

GE is reckoned to be world number one in MRI scanning, a technology in which the biggest breakthrough (which won a Nobel Prize) was made by a Briton, Peter Mansfield.

Philips claims to be the world number one in equipment for cardiac ultrasounds, cardiac X-rays, as well as patient monitoring systems.

How both companies perform will depend not only on their innovative capacity and management skills, but also on how they interact with national health systems. Professor Michael Porter, perhaps the best known guru in the field of international competitiveness, has written extensively about why the American healthcare system has not been more effective. He has argued that competition in the US does not work effectively and is focused too much on the way private insurers try to drive down hospital prices. Europe’s health systems seem to be better focused on improving patient health. But here, too, the task of containing the costs of health systems in aging societies is becoming more and more challenging, requiring closer co-operation between medical equipment suppliers and hospitals.

• Stewart Fleming is a freelance journalist based in Brussels.

"Medical Valley", is how local people describe the Nuremburg/Erlangen valley region of Germany and the hi-tech companies clustered around the medical equipment division of electronics giant Siemens, which is located there.

• Primary Source