PARIS – A weakening exchange rate for the Euro and pent-up demand for purchases of imaging equipment domestically triggered a sudden surge in exports for German manufacturers in 2015.
According to data collected by the German Federal Statistical Office, the total sales revenue for med-tech companies jumped 11.6 percent to €28.4 billion (US$32 billion) with domestic sales alone accounting for a third of that gain at €9.2 billion (US$10.5 billion), an increase of 13 percent.
Each year, German companies export 70 percent of their production, and thanks to a weakened Euro in 2015, foreign buyers jumped for the lower prices to snap up €19.2 billion (US$21.5 billion) worth of medical technologies.
"The increase in exports was anticipated because of the favorable exchange rate, but I cannot explain what drove the high domestic demand," said Mike Bähren, manager for economics and statistics with Berlin-based Spectaris, the national trade association for optical and medical technologies, which published a report based on the statistical office data.
He told Medical Device Daily that with the steadily expanding utilization in the German health care market he would have projected sales gains in the range of 5 percent.
"The 13 percent increase is difficult to explain," he said, speculating that pent-up demand for equipment may be behind the surge.
On the international front, both the North American and Asian markets saw 16 percent increases in sales for German manufacturers.
China posted the biggest gain with a 20 percent spike, and in 2015 officially moved into second place in the German rankings for single-country markets, accounting for 8 percent of total sales when Hong Kong is factored into the mix.
Sales in Japan decreased 6 percent in 2015, according to Spectaris.
Still far out in front as the most important single-country market for "Made in Germany" med-tech is the United States, which annually buys up 20 percent of shipped products.
"The big jump of 16 percent is coming from a low base," said Bähren. He reported that U.S. sales in 2014 increased a bare 2.5 percent and in 2013 sales were flat.
Bähren noted that the German Statistical Office data does not include sales revenue from German production facilities based in foreign countries.
The largest regional market for German med-tech is Europe, where 50 percent of domestically manufactured goods are sold, 40 percent being attributed to fellow Members States of the EU, and the remainder to non-member European countries, such as Switzerland or Norway.
In 2015, the European region posted a 9 percent sales increase for German manufacturers.
A weaker Euro was still out of reach for Russian buyers, where due to the collapse of oil prices, the valuation of the Ruble has fallen dramatically.
Not surprisingly, sales to Russia fell 25 percent in 2015, and the Berlin-based medical technology trade association BVMed noted in its MedInsight report that conditions in that market "continue to be challenging."
Overall, BVMed predicted sustained growth in sales for its members in the near-term, especially in international markets, with prospects in Asia assessed as positive and an increase also expected in the business with North America, though at a lower percentage increase.
In a November 2015 survey, Spectaris found its members optimistic about the outlook for 2016, and BVMed reported a similar sentiment among its member manufacturers.
The 2015 sales increases were greatest for big-ticket equipment in medical imaging and dental offices, Bähren said, adding that not all medical technology categories saw increases.
"I am getting calls from some member companies asking where is this huge sales growth because it is not at their company," he said.
"Not every German manufacturer has seen increased revenues in 2015, and most face pricing pressure that is very strong across most product categories," he added.
On a similar note, BVMed Chair Meinrad Lugan pointed out in an editorial in the MedInsight report that uncertainties cloud the prospects for its members.
German companies are squeezed on the front-end by the high cost of product development and the escalating costs of compliance to increasingly complex regulatory requirements, he said, while on the back-end there is a relentless downward pressure on product pricing and purchasing through cost-cutting measures of third-party payers in Germany and other countries.