Industry Trend Analysis - Euro Appreciation Will Boost Market Growth - JAN 2018


BMI View: T he Estonian medical device market will record high single-digit growth in local currency terms as the economy outperforms , while it will register higher growth in US dollar terms on the back of a stronger outlook for the euro. The market will benefit from positive drivers such as the ageing population and government investment in primary healthcare services, while the low proportion of GDP spent on health and the small domestic industry will restrict market growth.

We maintain our forecast and project the market will increase at a 2016-2021 CAGR of 7.5% in local currency terms, which will take the total to EUR205.1mn by 2021. We expect the market to register high single-digit growth every year between 2018 and 2021. The market will benefit from moderate economic growth in the quarters ahead and outperformance relative to the rest of the eurozone in the long-term on the back of the stable domestic political situation and open business environment.

Expanding Economy Will Boost Market Growth
Medical Device Market, Local Currency, 2011-2021
Source: National Sources/BMI

We have revised upwards our forecast in US dollar terms on the back of a stronger outlook for the euro, which will stabilise against the US dollar over the forecast period. We now project the market will increase at a 2016-2021 CAGR of 8.7% in US dollar terms to USD240.0mn by 2021. We forecast mid single-digit annual growth in 2018, rising to double digits in 2019 before dropping slightly to high single-digit growth in 2020 and 2021.

Appreciating Euro Will Strengthen Growth
Medical Device Market, US Dollar, 2011-2021
Source: National Sources/BMI

The market will benefit from strong fundamentals such as EU membership since 2004 and eurozone membership since 2011, the bright economic outlook, and a high level of institutional development, reflected in the low level of corruption. Healthcare drivers include the ageing population with increasing demand for health services, the rising prevalence of non-communicable diseases, the expanding private health sector, and government investment in primary healthcare services outlined to 2023. Market drivers include medical regulations based on EU directives, import reliance in most product areas, and growing demand for high-tech medical equipment.

Market growth will be constrained by weak fundamentals such as poor relations with Russia which have the potential to continue impacting trade relations and the small and very open economy, which makes the country vulnerable to external shocks and dependent on external demand for sustainable growth. Healthcare barriers include the small population, the proportion of GDP spent on health, which is low by European standards, and the low uptake of private health insurance. A key market barrier is the small domestic industry with few local high-tech medical device manufacturers.