Global megatrends drive the market

Arjo is primarily impacted by six megatrends that are becoming increasingly important for global healthcare. This includes demographic changes such as an increasing number of elderly people, digitalization of the complete value chain, transfer of patients from acute care to long-term care, and increasing welfare in emerging markets that demand advanced healthcare. In addition, sustainability, including both environmental and social aspects, is becoming increasingly important.

Demographics

Growing number of elderly and
bariatric patients puts pressure on healthcare

The world’s population continues to grow and we are becoming increasingly older. This means that the number of elderly people in the world – and in healthcare – will rise sharply. Another challenge for healthcare providers is the increase in lifestyle-related diseases. Obesity, diabetes, and cardiovascular diseases will put significant pressure on healthcare. According to the World Health Organization (WHO), the number of obese persons globally has increased threefold since 1975. The number of bariatric persons aged over 20 in the US increased from 22% to 32% between 2000 and 2018*. This also means that the demand for acute and elderly care-related services and products will continue to rise.

* CDC; National Center for Health Statistics, USA, 2019

Greater welfare in emerging markets

Higher demand for healthcare in emerging markets

When the economic development of emerging markets results in increased prosperity, the demand for advanced healthcare also rises. There is a clear, positive correlation between GDP per capita and the share of GDP spent on healthcare. A growing middle class is generally accompanied by a strong expansion of private and public medical care. The purchasing power in these markets is generally lower than in mature markets, but is offset by the size and growth that is expected to increase in conjunction with economic growth.

Digitalization

Digital solutions are gaining importance in healthcare

As in the rest of society, digitalization is gaining an increasingly prominent role in healthcare. Digital solutions are becoming an important part of our lives and have a significant impact on healthcare, both as an information source and in decision-­making processes. Automation is also increasing in the health­­care sector, such as through IT systems for various processes and functions. As a result of these advances, diagnostics can be improved as an increasing number of products is connected to facilitate the collection and processing of data. Digitalization also helps create more proactive care in tune with society’s changing demographics.

Increased consolidation

Larger players increase demands on suppliers

Healthcare has undergone major changes in the past decade, partly as a result of increased consolidation. Today, we are seeing fewer but larger healthcare players in the market, with central procurement departments increasingly controlling purchasing. Among suppliers, this leads to price pressure, and makes it difficult for smaller players to offer the extensive portfolio of products and services that are in demand. Since consolidation can create significant cost and revenue synergies, acquisitions and mergers have become increasingly important in the medical device industry.

Changes in healthcare

Transition to long-term care

The world’s population is growing rapidly and the large proportion of elderly people is increasing pressure on health­care. Many healthcare providers need to deliver more care using fewer resources. The average total cost of a bed in an acute care unit, such as in a hospital, is often significantly higher compared to a bed in a long-term care facility. To reduce costs, healthcare providers therefore strive to reduce the patients’ time spent in acute care units. It is becoming increasingly common for patients who require care over a longer period to be moved to long-term care facilities or home care, where the cost per day and patient is significantly lower.

SUSTAINABILITY

Sustainability is receiving greater focus

Environmental impact, climate changes and companies’ social responsibility is increasingly gaining attention, something that all global organizations needs to adjust to. Beyond just talking about it, one must now actively contribute to a sustainable future. At the same time, strategic sustainability efforts must be conducted in a financially sound manner to ensure long-term earning capacity and to strengthen the company’s competitiveness. An active sustainability agenda is important in attracting and retaining both customers as well as the competence required to develop the company. Product and patient safety is a fundamental requirement and must permeate medical device businesses.

34%

The share of the population in Europe aged 60 and above is expected to increase from about 22% in 2010 to about 34% by 2050*.

*WHO, 2017