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Medical Devices, a good place to work…….

After witnessing declines in every quarter since the second quarter of 2009, the UK’s gross domestic product (GDP) increased by 0.4% in the fourth quarter of 2009, an indication that the economy is on a recovery path. While the UK continues to recover from one of the worst economic downturns, the healthcare sector, particularly the medical devices industry, is well on its way to witnessing growth.
This resilience to the economic crisis is largely because demand for healthcare is not tied to consumer discretionary spending and it continues to remain stable, even during times of recession.

Healthcare’s underlying drivers

The UK is home to 62 million people, of which 16% are aged 65 and above. By 2050, this will grow to an estimated 77 million. As a sizable chunk of this population continues to age, a surge in the incidences of chronic diseases is also expected. This, coupled with a sustained rise in benefits provided by payers and providers, is expected to boost demand for medical devices and supplies. Many manufacturers and healthcare providers are spending heavily in raising awareness through direct-to-consumer advertising, and this is further boosting the country’s demand for healthcare.

It is not just the private sector that is encouraging growth. The UK Government can be credited with improvements in the country’s healthcare delivery and services infrastructure, the result of a steady increase in spending on healthcare, which was estimated at $220bn (£141bn) in 2009, roughly 10.1% of the country’s GDP.
“As a sizable chunk of this population continues to age, a surge in the incidences of chronic diseases is also expected. This is expected to boost demand for medical devices and supplies.”

UK healthcare spending has witnessed an increasing trend for more than a decade, in absolute terms and as a proportion of GDP. The overall implications of this, and consequently an improved healthcare delivery network, can be judged from the marked improvements in the country’s leading health indicators.
The adult mortality rate (the number of deaths of adults between 15 to 60 years per 1,000 population) fell to 93 in 2010 from 129 in 1990 (males), and to 58 in 2,010 from 78 in 1990 (females).
• Under-fives mortality rate (children less than five years old per 1,000 births), for both sexes, decreased to five in 2010 from ten in 1990.
• Maternal mortality rate (maternal deaths due to childbearing per 100,000 births) fell to 61 in 2008 from 65 in 1990.
• Life expectancy at birth increased to 78 years in 2008 from 73 years in 1990 (males) and to 82 years in 2008 from 78 years in 1990 (females), an indication of the improvement in the UK’s overall health climate.

The flip side to this growth is the severe budgetary constraints that the country’s National Health Services (NHS) will face in the next few years. Publicly financed healthcare expenditure has contributed to most of the increase in health spending for almost a decade.
The UK’s public healthcare is financed through the NHS, the total expenditure of which amounted to $153bn (£98.3bn) in 2009-10.
While the NHS continues to suffer from underfunding, a bigger concern is an estimated £2.6 billion ($4bn) cost savings that the NHS is expected to contribute. Consequently, the funding to NHS for 2010-11 was reduced to £102.3bn ($160bn) from the £104.6 billion ($163bn) originally planned in last year’s budget.

Reportedly, NHS trusts are expected to deliver efficiency savings in the range of £15 billion ($23bn) and £20bn ($31bn) over three years from 2011 to 2014. While there are growth obstacles that do not seem to leave the horizon any time soon, the fact that the underlying demand drivers remain in place, should make the UK industry stakeholders happy.

3 thoughts on “Medical Devices, a good place to work…….

  1. To say no change is not an optoin’, and then argue that the only alternative to no change’ are these reforms, is very dishonest. This might not be full privatisation or a US style health insurance system’ yet, but they are great strides towards that goal and that is clearly the direction the government is going in. There are also no clear plans for accountability in the proposed system, and there is no evidence that it will cost less than the current system. And the mantra that competition improves performance / quality’ is just a myth there is no evidence that this is the case, and in fact the evidence from previous privatisation of public services shows the opposite, ie that quality is severely reduced (e.g. social services, trains) and the cost to the taxpayer is greatly increased (utilities, water, trains).Nobody denies there is a need for reform, but market reform and creeping privatisation is not the answer. Nobody wants these reforms, and nobody voted for them, so they need to be ripped up completely and replaced with clear evolutionary change that is built on greater co-operation NOT more competition.

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