A Widening Demand-Supply Gap in the Economics of Ventilator
A ventilator is a medical device that aids an individual to breathe when the lungs are unable to perform their designed tasks itself. There are different types of ventilators available that are utilized based on the gravity of the patient’s conditions. For instance – non-invasive ventilators are primarily used when the patients tend to suffer acute pulmonary malfunction while the invasive techniques are the recommended choice for the healthcare personnel in case of a serious patient condition.
The number of emergency admission in hospitals has increased over the years. For instance, in the United Kingdom, the total number of patients admitted in the hospitals in the emergency condition has increased from 5,010,670 in 2008-09 to 6,437,959 in 2018-19 (source: Hospital Episode Statistics, NHS Digital). Similarly, there were 36,353,946 admissions in the United States Hospital in 2018 (source: American Hospital Association). Moreover, the number of COPD cases has been increasing worldwide, with the World Health Organization (WHO) estimating the burden of moderate to severe chronic obstructive pulmonary disease (COPD) to be around 65 million individuals. Thus, the ventilator market size is estimated to reach US$3,095.180 million by 2025
Hospital Emergency Admissions in the United Kingdom, in Thousands
Source: Hospital Episode Statistics, NHS Digital
As of 30th July 2020, there are 17,195,62 recorded COVID-19 cases worldwide, with the United States, Brazil, and India cumulatively constituting more than 50% of the cases. Moreover, only 10% of the patients may require mechanical ventilation support in order to aid in the patient’s recovery and treatment. However, in absolute terms, the 10% figure is high which is adding significant pressure on the government to ensure that adequate beds and ventilators are available to patients – should a need arise. The COVID-19 pandemic has swelled the revenue generation opportunity for the manufacturers, with the ventilator market, projected to surge in 2020.
- Five contracts have been awarded by The Department of Health and Human Service for ventilator production in April 2020 under the Defense Production Act (DPA) to General Electric, Hill-Rom, Medtronic, ResMed, and Vyaire while two other production-related contracts were given to Zoll and Hamilton. These seven contracts are expected to provide 137,431 ventilators by the end of 2020.
- Similarly, the Department of Health and Human Service announced in April 2020 the second contract, under the Defense Production Act (DPA) for ventilator production to Philips in which the company will be delivering a total of 43,000 ventilators by the end of the year.
- Philips also announced its plans to increase its ventilator production to 4,000 units per week by the end of Q-3 2020. The company has also launched its new Respironics E30 ventilators with the immediate production capacity of 15,000 units per week.
- In May 2020, The National Aeronautics and Space Administration (NASA) has awarded the license to three Indian companies along with 18 others to manufacture its ventilators specifically designed for COVID-19 patients that was recently approved by the Food and Drug Administration (FDA).
- The Andhra Pradesh MedTech Zone (AMTZ) – an initiative taken by the government of Andhra Pradesh, recently announced that it will provide assistance of Rs40 Crore for the large-scale ventilator manufacturing.
- The Health Ministry of India has placed an order of approx. 60,000 ventilators in April 2020 from domestic manufacturers – who scaled up their production capacity to meet the rising demand.
- Magnamed – a Sao Paulo based manufacturer has signed an agreement with Brazil’s Health Ministry to supply 6,500 ventilators by the end of August 2020 in order to cater to the need of COVID-19 patients requiring critical care.
- Vyaire Medical announced that it will be producing 4,300 iX5™ ventilators at its facility in Sao Paulo to supply to the Brazilian Health Ministry that awarded the company a contract worth US$50 million in April 2020.
Developing Healthcare Infrastructure Driving the Market in Asia Pacific
China has made significant progress over the years in improving the access to healthcare services to its large proportion of the population. This is indicative of the fact that more than 95% of the population has been covered under healthcare insurance. Moreover, in 2016, the government of China announced Health China 2030 blueprint that is based on the principle of prioritizing health, supporting innovation and scientific development, and to boost healthcare services in the remote regions of the country.
Number of Hospitals in China, in Units
Source: National Bureau of Statistics of China
Moreover, the number of hospitals in the country has increased at a CAGR of 5.87% from 20,918 units in 2010 to 33,009 units in 2018 (Source: National Bureau of Statistics of China) with Hebei, Jiangsu, Shandong, Henan, Hunan, Guangdong, and Sichuan cumulatively constituting 41.85% share. Similar efforts have been noticed in India as well where the focus is growing to reduce the waiting time and improve the access to healthcare services even in remote location as well. The developing healthcare infrastructure is providing an opportunity for ventilator manufacturers to generate higher revenues. Moreover, as a result of the COVID-19 pandemic, the Chinese manufacturers are working on the full capacity to meet the demand – both from the domestic and foreign markets. In fact, China has approximately twenty-one multifunction ventilator manufacturers out of which eight have obtained the European Union’s CE marking. Moreover, these companies have shipped more than 1,000 multifunction ventilators to both the domestic and foreign hospitals in order to treat critical COVID-19 patients. Similarly, Kerala State and Drugs Pharmaceutical (KSDP) is expected to start the production of a low-cost ventilator after getting the necessary approvals from the Government of Kerala and Indian Council of Medical Research (ICMR). The pandemic has resulted in many companies working on the full capacity to meet the requirement of the current situation, however, apart from the COVID-19 situation, the healthcare industry in the emerging countries have taken measures to cater to the need of mass proportion of the population that is projected drive the market growth in the next five years.
ABOUT THE AUTHOR
Siddharth David is a Senior Market Research Analyst at Knowledge Sourcing Intelligence LLP. Siddharth’s expertise lies in offering predictive analysis and an all-inclusive outlook of different industry verticals from both the macro and micro point of view, with the special knack in market sizing and delivering key strategic insights. To read more articles by him, and for more information regarding multiple global markets, visit www.knowledge-sourcing.com.
Leave a ReplyWant to join the discussion?
Feel free to contribute!