Executive Summary
Developments During the COVID-19 Pandemic
Market Entry and Best Practices
Current Market Trends
Best Prospects/Leading Sub-Sectors
Market Size
Main Competitors
Current Demand
Registration Process
Warranty Terms
Reimbursement
Barriers
Procurement and Tenders
Policy Objectives and Challenges
Trade Events and Resources
U.S. Commercial Service Contact Information
Tab Options
Executive Summary
Developments During the COVID-19 Pandemic
Market Entry and Best Practices
Current Market Trends
Best Prospects/Leading Sub-Sectors
Market Size
Main Competitors
Current Demand
Registration Process
Warranty Terms
Reimbursement
Barriers
Procurement and Tenders
Policy Objectives and Challenges
Trade Events and Resources
U.S. Commercial Service Contact Information
Executive Summary
The German Medical Equipment Market 2019-2022 (USD billion)
2019
2020
2021 (proj.)
2022 (proj.)
Market Size
35.0
36.7
39.2
41.9
Local Production
37.6
40.5
43.3
46.2
Imports
20.2
22.7
24.2
25.9
Exports
22.8
26.5
28.3
30.2
Imports from the U.S.
4.9
6.8
7.3
7.8
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)https://www.destatis.de/EN/Homepage.html . This information is published by the German Federal Statistics Office.
Overview
Germany has a very robust and well-established medical equipment market. Brands such as Siemens, Carl Zeiss and Drägerwerk were founded at the end of the 19th century and vouch for the long history of producing high quality medical equipment, with an emphasis on diagnostic imaging, precision medical and dental instruments, and optical technologies. Germany claims the third-largest medical technology market in the world after the United States and Japan, and it is by far the largest European market, twice the size of the French market and three times as large as those of Italy, the United Kingdom and Spain. The German medical device market ranked no. 1 in Commerce’s Medical Device Top Market Report and still is one of the most lucrative healthcare markets worldwide.
The Healthcare/Life Sciences (HCT) industry is a priority for both the EU and Germany. This is reflected in the European Regional Development Fund (ERDF – or EFRE in German) program and cohesion policy 2021-2027, as well as the German Länder implementation and tendering of this program. “Horizon Europe” , a European Incentive Program for Research and Innovation agreed upon by the EU Council and Parliament and retroactively entered into force on January 1, 2021 after final adoption in April 2021, also has a focus on health and health sector related R&D and innovation. Projects will focus on cancer therapies, smart health, aging, and digital models of care. The innovative environment, government funding and availability of talent and resources provide excellent opportunities for U.S. suppliers to participate in healthcare infrastructure, hospital development projects and to partner with German and EU firms. On the downside, the German healthcare system, because of its decentralized and self-governing structure, is somewhat complex and slow in bringing new care models and innovation to market. The German government as regulator is determined to move the German health system into the digital age and has amended the regulatory environment with a number of laws to mandate progress. This will offer excellent export and partnering opportunities for innovative U.S. health solution providers throughout the health technologies supply chain.
Medical Technologies (MED) is the key sector of the HCT industry. The U.S. is home to the world’s leading medical device manufacturers. One in eight Americans is employed by the U.S. healthcare industry; there are 20 million medical-related jobs, with about $2.7 trillion in profits annually, according to U.S. Bureau of Labor Statistics. Roughly 90 percent of the over 7,000 medical device manufacturers are often export-ready SMEs, and many of the world’s largest medical device manufacturers active in Germany, such as GE Healthcare, Medtronic, 3M, Abbott, Thermo Fisher are U.S.-based. Germany is Europe’s largest market for medical devices, accounting for roughly $35.8 billion annually, or 25.6 percent of the European market total. Key industry drivers include the power of innovation, a solid financial basis of the industry (80 percent of which are SMEs) and a vibrant startup scene, all based on a strong German economy and a commitment to a high-quality health system. Within the EU, Germany is the largest importer as well as exporter of medical devices (source: Medtech Europe, Facts & Figures 2021). All major U.S. suppliers, such as GE Healthcare, Johnson & Johnson, Becton Dickinson, Abbott, Abbvie, ThermoFisher Scientific, Stryker, Zimmer, 3M, McKesson, Cardinal Health, Henry Schein, to name a few, have subsidiaries in Germany. U.S. medical device exporters continue to hold a 30 percent share of the German import market.
Germany has a strong healthcare system, especially with regards to infrastructure, hospital beds and trained staff. In 2019, there were 494,300 beds in 1,914 hospitals (around 545 public hospitals, 645 non-profit and 724 private hospitals), 1,112 rehabilitation centers, and in 2020, the number of pharmacies was 18,753 (source: www.statista.de ). Well-established infrastructure makes the healthcare industry the largest employer in Germany with currently 5.7 million employees (source: Health Ministry ), or under a broader definition of the German Economics Ministry , 7.5 million, 16.7% of the labor market total. In 2020, the number of doctors was 409,121 and thus constituted a physician density of 4.5 per 1000 individuals, an increase of 0.1 compared to 2019, making Germany the country with the fourth-largest density within the OECD. One out of six jobs in Germany is linked to the healthcare sector, which generates an economic footprint of 678.2 billion euros ($798 billion) (372 billion euros ($438 billion) attributed direct), or roughly 12 percent of Germany’s GDP; and with 131.2 billion euros ($154.4 billion) generated through foreign sales, contributes 8.3 percent to Germany’s export total (source: BMWi). The German medical device market grew by 4.0 percent in 2019, and by 3.0 percent in 2020 despite Covid-related pressure on the industry. According to estimates by Fitch Solutions, the expected CAGR of the medical equipment market for 2020-2025 is 5.1 percent in euro-terms and 6.8 percent in USD-terms. This projection is based on the improvement of the pandemic in Germany, with increasing vaccination and fewer cases reported. All these developments have made a strong economic recovery possible. Further growth factors include digitalization of the health economy and the attack on the double-digit investment backlog in the hospital market, which is to be made with the funds allocated by the Hospital Future Act. This law was enacted in October 2020 to provide 3 billion euros ($3.5 billion) of federal funding and additional 1.3 billion euros ($1.5 billion) of state funding to modernize and digitalize the German hospital system.
Developments During the COVID-19 Pandemic
The coronavirus outbreak continues to affect the German medtech industry in multiple ways. Yet, the industry has seen some changes in 2021, particularly with regards to its regulatory framework. Below are some key developments.
After initial postponements, the Medical Device Regulation has been fully in force since May 26, 2021. Based on the MDR, the new German law for medical devices MPDG and the Medical Device EU Adaption Law provide a European framework for the German market; the MPDG replaced the established MPG law on May 26, 2021. The In-Vitro Medical Devices Regulation application date, May 26, 2022, remains unaffected.
On April 3, 2020, the EU Commission announced temporary suspension of custom duties and VAT for medical equipment in order to aid EU Member States in receiving necessary protective equipment and medical devices including masks, protective gear, testing kits, ventilators, and other medical equipment. On April 19, 2021, the European Commission agreed to extend this suspension until December 31, 2021, with a possibility of further provisions depending on the development of the pandemic.
The EU Commission has published guidance to outline temporary extraordinary measures related to medical device Notified Body audits during COVID-19 quarantine orders and travel restrictions to ensure the availability of safe medical devices and the prevention of shortages.
Medical and non-medtech related enterprises have redirected productions to meet the surging demand for personal protective equipment and vaccines. These efforts led the Health Ministry to announce the removal of the vaccine priority system on June 7, 2021, making it possible for every person above the age of 12 to receive protection.
The market saw new cross-tech market entrants, such as automotive and general industrial manufacturers, general textile manufacturers and general online platform providers such as Amazon and Alibaba, entering the health technology markets with Covid-19 products and solutions and set to stay in the healthcare arena, disrupting the previously rather consolidated market with new players and business models.
Despite the improvement of pandemic-related parameters, trade show responses have been mixed, with some major trade shows such as MEDICA and the International Dental Show planning to hold in-person events in 2021, while others canceled or postponed their trade fairs. Some organizers decided to offer virtual conferences or hybrid models.
The rising demand for medical equipment has boosted the potential for this sector’s economic growth and has incentivized the German government to further increase its investment in innovative medical technology. For example, the Federal Ministry of Education and Research announced on April 7, 2021, that it will increase its medical technology funding by further 20 million euros ($23.7 million) to adequately address the needs of Covid-19 patients and to modernize the healthcare system. This additional funding should support medical technology manufacturers, hospitals, research facilities and SMEs. Besides increased funding, the market has seen other changes. SPECTARIS in cooperation with Roland Berger conducted a survey to identify recent and future market trends. Those include greater digital distribution and services, new business models for a digital environment, pressure on prices due to reduced revenues by health insurance companies and that in-vitro diagnostics, robotics/automation and sensorics will benefit the most in this market.
The pandemic has illustrated how complex the supply chain and production networks are in this industry; uncertainty continues to disrupt normal operations as countries have become more protectionist. These political interventions have led to more difficult investment environments, export reductions and capacity constraints. To counter future supply shortages, the German federal government initiated the project “National Health Protection Reserve”, an ambitious one-billion-euro project to establish 19 storage locations across Germany for medical supplies and protective equipment. In the wake of the July 2021 floods in Germany, the North Rhine Association of Statutory Health Insurance Physicians also underlined the importance of such stockpiles as an additional tool in the natural disaster response of the country. The creation of this project should offer American suppliers new opportunities to increase their exports to Germany. On the downside, due to Covid-19, some industry segments recorded revenue reductions of up to 40%. According to a survey conducted by BVMed, firms deem an increasing regulatory framework, such as the introduction of the Medical Device Regulation, as a main growth-hindering factor. The MDR even led some highly specialized firms to discontinue operations as the additional cost of compliance exceeds possible revenues, creating a shortage of certain equipment for hospitals.
The pharmaceutical industry has seen a shift of resources towards the development of corona virus treatments, which reduced new drug introductions. Yet the demand for imports of other drugs has not decreased. Export bans from key drug-producing countries even led to a medicine shortage in Germany in 2020. 68 percent of necessary drugs were unavailable. The German Federal Institute for Drugs and Pharmaceuticals (BfArM) created a list of 22 key substances, such as insulin and antibiotics, whose production should be reintroduced in the EU. Thus, specific supply of critical drugs, but also the establishment of local production facilities prove to be possible avenues of investment in the EU and particularly Germany. Those critical products already constitute sales of approximately $7.1 billion. Securing local production requires constant innovation. This is exemplified by Pfizer’s green factory in Freiburg, whose energy consumption is covered by 90 percent renewable energy. The EU sees this innovative potential and wants to fund modern, digitalized production facilities. At the same time, cooperation has become a central element during the pandemic. 15 pharmaceutical and biotechnological companies have agreed to share their research data in a common database, highlighting that continued challenges provide further transatlantic commercial and research opportunities.
The pandemic has also boosted the biotechnological industry. Prime examples of exponentially successful German companies include BioNTech and CureVac. BioNTech and its close connection with Pfizer illustrate successful, rapid, and innovative transatlantic cooperation that creates safe and effective products. The boost is seen in large increases in funding, on the stock market and capital market. Positive market developments require a growth-promoting regulatory framework, which allows for easier capital inflow, access to capital and tax incentives. Yet the current framework has not been updated yet. On the contrary, fear of selling out German industry experience and knowledge, as well as the goal to secure the medical substance provision have led to greater regulatory hurdles. Still, optimism remains high as investors recognize this sector’s strong growth potential. The listing of CureVac and Immatics on the stock market in 2020 and BioNTech’s continued stock market success show that there is an increased interest in companies like these. BioNTech announced in July 2021 that they have selected Montgomery County, Maryland, for their first U.S. manufacturing facility, creating many new jobs as a result of their partnership with Pfizer.
Covid-19 also requires a new approach towards patients. Even before the pandemic, wellbeing has increasingly become popular. The pandemic amplified the willingness to use health apps for health-related information and monitoring. Connected with this is a growing demand to receive tailored medical treatment based on one’s collected data. Either specialized or holistic medical applications are readily sought after. Lockdowns have quickly established remote consultation as a main method of medical communication. In 2019, only 583 doctor’s appointments were conducted via video call or phone, while between March-June 2020, this number rose to 1.2 million, showing that the expansion of the digital infrastructure is indispensable. Consumer health apps are in high as are medical apps which are prescribed by a doctor and are immediately reimbursable by the German Statutory Health Insurances. As of August 2021, 20 medical apps have been successfully listed in the BfArM directory, of which have been approved as permanently reimbursable and 23 are under review in the one-year trial period. Furthermore, there is a trend in Germany to pay out of pocket for therapy devices and treatment for chronic diseases, home care, and assisted living, opening additional opportunity for U.S. suppliers.
Market Entry and Best Practices
The German market for medical devices is regulated by German and European Union (EU) directives, standards, and safety regulations. After Covid-related delays of the start date of the EU Medical Device Regulation (MDR), which introduced increased testing, certification and compliance requirements, this regulatory framework has come into full effect on May 26, 2021. The complimentary In-Vitro Diagnostic Regulation will be enforced from May 2022. U.S. exporters are well-advised to become informed about MDR and obtain public or private sector counseling and assistance of the possible impact of their market entry plans into Germany. Companies seeking market entry should also carefully map their distribution strategy depending on their target group(s). U.S. medical device exporters should be aware that responsibilities, and liabilities, of their Authorized European Representative and importers have substantially increased under MDR.
Product Standards
The German market for medical devices is regulated by German and European Union (EU) directives, standards, and safety regulations. The requirements are complex and based on environmental, consumer health, safety, and social concerns. Not all standards and regulations are mandatory, but compliance greatly enhances a product’s marketability. Advice on the requirements and compliance certification in the case of a specific product should be sought from the sources referenced below.
For marketing a medical device, U.S. exporters need to compile a technical file proving compliance of their product with European Regulations, in particular the EU MDR and standards such as IEC 62304, ISO 14971, and others. Obtaining the CE mark equals the technical file plus a Quality Management system according to ISO 13485. The MDR brings multiple challenges for medical device manufacturers and exporters since they now must navigate through an increasingly expansive regulatory environment. To date (August 2021), 22 Notified Bodies have been designated to certify products under MDR, six of which are in Germany. Both AdvaMed and Medtech Europe associations as well as numerous testing organizations such as UL, NAMSA, Emergo and others offer workshops, guidance, and support to navigate through this time of uncertainty. The U.S. Commercial Service’s EU office will closely monitor and report developments to ensure fair access, standards interoperability, and IP protection for U.S. healthcare technology exporters, in particular SMEs.
Packaging and Labeling
The European Union does not legislate packaging and labeling requirements in general, only in very specific high-risk product related cases. The importer or freight forwarder is the first point of contact for shipping documents and outer packaging/labeling. EU customs legislation only regulates administrative procedures, such as type of certificate and the mention of rule of origin on the customs forms and shipping documents. Product specific packaging and labeling requirements applicable throughout the EU apply to food, medicines, chemicals, pharmaceuticals, and other high-risk items. The purpose of harmonizing such legislation throughout the EU is to minimize consumer risk.
Payment & Financing Practices
In Germany, the period allowed for payment is between 30 and 60 days. German businesses are the most reliable payers in Europe, with 83% of payments on time and paid within 24 days in normal circumstances. Due to the pandemic, late payments have increased. According to Atradius’s Payment Practices Barometer, many German firms reported greater waiting times for overdue payments by up to 30 additional days. Early payments are credited with a 3% discount, and supplier credits are common. Practices regarding financing, availability of capital, and payment schedules are comparable to those in the United States. German has a transparent legal system. There are no restrictions or barriers on the movement of capital, foreign exchange earnings, or dividends. Virtually all major U.S. banks are represented in the German market, principally (but not exclusively) in the city of Frankfurt/Main, Germany’s financial hub. Similarly, a number of German banks, including some of the partially state-owned regional banks, maintain subsidiaries, branches and/or branch offices in the United States. Germany is not eligible for support from OPIC, TDA or similar agencies.
Tariffs, Import Regulation
There is no import duty, only a 19% import turnover tax payable at the port entry. For customs clearance, a product description is required, containing the use, origin, and value of the product. The cost of the import – turnover tax is usually offset by ultimately passing it on to the end-user in later distribution stages in the form of a value-added-tax (VAT), known in Germany as Mehrwertsteuer (MwSt). The EU TARIC database provides assistance with product classifications.
Current Market Trends
As Germans account for 20% of the total population in Western Europe, demand for medical technologies and supplies will mainly be driven by an aging demographic, hence a substantial increase in the number of patients. Chronic disease prevalence, a sophisticated healthcare system with highly qualified workers, high healthcare spending, universal healthcare coverage and facilities turning to innovative technologies as revenue-generating optional procedures all herald well for US healthcare exports.
By 2040, the 67 and over age group is forecasted to expand to 21.3 million, up from an estimated 16.2 million for 2020. The German medical technology industry is a highly innovative and dynamic sector. One third of sales are generated by devices that are less than three years old and approximately 9% of all sales are reinvested in research. The German healthcare system is also among the best in the world regarding the uptake of new technologies. Hospitals welcome innovative technologies and more than two thirds of German medical doctors view innovation as the key element in maintaining the high standards of the German healthcare system. The German medical device sector, therefore, remains highly attractive for investors and continues to provide excellent potential for U.S. suppliers of innovative and price-competitive products, particularly in high tech imaging, minimally invasive surgery, big data management, telemedicine, and other key areas. In July 2021, Fitch Solutions forecasted a 5.1 percent annual growth rate in euro-terms and a 6.8 percent in USD-terms for the period 2020-2025, with a positive outlook for the European medical markets, including expansion of the private health segment, upgrade of hospitals and a strong import flow in addition to good local production capabilities. According to them, Europe is the most attractive region to commercialize medical devices, with Germany and the UK ranking numbers 1 and 2. Germany is a perfect “test lab” for innovative medical devices and technologies as well as a playground for collaborative R&D. It also has a pool of talent coming out of a dense university network and continued workforce development.
Best Prospects/Leading Sub-Sectors
Leading HCT sectors include: Health IT, pharmaceuticals, biotechnology, and dental products.
Health IT : The German Health Ministry and its agency, Health Innovation Hub (www.hih-2025.de/en/ ), are ambitiously implementing the digital care law and digital health solutions, called “DiGA”. DiGA Fast Track is Germany’s path for digital health solutions to get access to the German statutory health system, reaching over 75 million German citizens insured under the mandatory health insurance. The German Health Ministry’s subordinate agency, the Federal Institute for Drugs and Pharmaceuticals, BfArM (German equivalent to the FDA) is taking online applications for DiGAs and once approved, DiGAs can be prescribed by any German physician. DiGA providers will be reimbursed by German insurance funds.
Likewise, the telematics infrastructure including 5G rollout, is being developed at a dramatic pace, and the electronic medical record (in German: ePA) is taking shape and a mandatory right of every citizen as of January 1, 2021. This law facilitates easier access to patient data for research purposes as healthcare providers transmit their patient records to a centralized government-owned server. The Hospital Future Act enables German hospitals to become competitive among the international list of digitalized health facilities. So far, there has been an innovation deficit in the German hospital sector because this has not been the focus of the German health policy agenda for years and there still is an insufficient number of dedicated digital solution providers. Thus, this market is especially penetrable for American companies familiar with the digitalization of the hospital environment.
E-medication is also on its way, with the new para. 360 of Germany’s SGB V social law, relating to the Patient Data Protection Act (PDSG). It mandates doctors and dentists to issue prescriptions in digital format from January 1, 2022. The law also makes it clear that even with digital prescriptions, the free choice of pharmacy of the insured remains and neither health insurance funds nor contract physicians have a right to assign or influence here. On July 1, 2021, an app for digital prescriptions was launched on all major mobile device app stores by Gematik, a subordinate agency to the German Ministry of Health. Concurrently, a pilot experiment began in Berlin and Brandenburg, involving 50 doctor’s offices and 120 pharmacies testing the new digital prescription format. Testing will be expanded to the whole of Germany on October 1, 2021. This digital implementation should increase medication safety and efficiency in the process of obtaining a prescription, receiving medication and the subsequent insurance coverage of the costs.
These developments will be decisive for Germany to catch up to its EU neighbors and will present excellent opportunities for U.S. digital health solutions providers. Digital health applications currently represent more than $450 million, with numerous projects throughout Germany and a University Hospital excellency network which drives innovation in key diseases such as stroke, Alzheimer’s, cancer and diabetes. An ageing society (with significant share of chronic disease), rollout of e-health patient portals by public health plan providers and high Internet and mobile phone penetration, make Germany a strong digital health market and offers valuable potential to specialty solution providers. The digital health ecosystem in Germany will be driven by cloud computing solutions, Artificial Intelligence (AI), Robotics, Sensors, Big data analytics; and the Internet of Medical Things (IoMT). The German Ministry of Health maintains a website on digitalization in healthcare; the German Ministry of Education and Research maintains a website on the medical informatics initiative. As of January 1, 2021, Germany is a member of SNOMED International. This means that there are now no costs associated with the acquisition and the use of a SNOMED CT license, which is issued by the Federal Institute for Drugs and Medical Devices (BfArM).
Germany has an excellent base for digital health, with over 80 percent of its workforce holding a degree and a startup-friendly environment. This makes it a very strong market for m-health and e-health products and services. The strong German medical technology clusters develop telehealth and telemedicine solutions and form excellency clusters for oncology, neurological disorders, and chronic disease management in cooperation with hospitals and industry. The German government’s medical informatics initiative aims at improving medical R&D and patient care through innovative IT solutions for specific applications and integrated health data centers. The multi-million-dollar funding resource should pose excellent opportunities for U.S. solutions providers. E-procurement and e-commerce, Machine-to Machine communication (M2M), mHealth/apps and big data applications are areas of digitalization, in addition to telehealth and telemedicine, with windows of opportunity for U.S. suppliers. It is strongly recommended to open an office in Germany or work with a knowledgeable partner to enter the German digital health market, which is dominated by some large players in the various segments, Compugroup, Siemens Healthineers, to name a few. U.S. players well entrenched include Apple, Microsoft, IBM, Nuance, InterSystems, and Infinite Convergence Solutions.
Pharmaceuticals : The German pharmaceutical market was valued at $76.0 billion in 2020 and remains one of the most attractive worldwide over the coming years. It accounted for 15.6 percent of total health expenditures and 2.0 percent of GDP. Annual per capita spending is above average at $907.1, with prescription medication contributing 87.6 percent to the total. According to market analysts, the German pharmaceutical market is expected to grow by an average of 4.2 percent in euro-terms and 6.1 percent in USD-terms annually until 2025. Major growth drivers are the aging population and chronic diseases. Germany counts over 520 pharmaceutical companies; many global U.S. Corporations such as Pfizer, Eli Lilly, Abbott, and more have production facilities in Germany; Germany is regarded as a test market for other EU countries for pricing and distribution and it is a good location for API (active pharmaceutical ingredients) production. In 2019, the German pharmaceutical industry manufactured products worth $37 billion, a decrease of 13.7 percent over the previous year. For the same year, exports of pharmaceuticals decreased by 6.0 percent, generating sales of $86.3 billion, while imports grew by 2.4 percent, amounting to $55.0 billion. For 2020, exports of pharmaceuticals increased by 6.4 percent, generating sales of $91.8 billion, while imports grew by 8.7 percent, amounting to $59.8 billion
Biopharmaceuticals : Sales of biopharmaceuticals in 2020 (pharmacies and hospital market) increased by 14 percent to $17.6 billion (14.6 billion euros) compared to 2019. The market share in the total pharmaceutical market rose from 29 percent to 30.8 percent. Growth was seen in nearly all fields of application. Among current focus areas are ATMPs (Advanced Therapy Medicinal Products), such as gene therapy products, cell therapy products, and tissue engineered products. Compared to classical medicines, where the active substance consists of a chemical molecule or protein, ATMPs are nucleic acids (such as genes) or can be whole cells or tissues. While classical medicines for the treatment of hereditary diseases usually require life-long use, ATMPs could achieve long-lasting therapeutic efficacy, possibly even a cure, after one use. The German term for ATMPs translates to ‘novel therapies’ and emphasizes the innovation aspect, which is reflected in their development, production, approval and market access, and reimbursement process.
Medical Biotechnology : Germany is Europe’s largest biotechnology market. In 2020, 710 dedicated* biotechnology companies (+1 percent to 2019) generated sales of $7.7 billion, a 36 percent growth over 2019. The number of employees in the biotech industry increased to 37,415, up 10 percent. The significant market growth is largely attributable to the key players listed on the stock exchange: among Germany’s dedicated biotech firms, the twenty-three listed companies generated roughly 49.3 percent (+43 percent compared to 2019 due to a pandemic-related demand surge) of overall industry sales. Of these, major players QIAGEN, Evotec, and BioNTech alone contributed 44 percent to the market sales total. It is especially noteworthy that during this year, Morphosys registered a 357 percent growth, BioNTech a 344 percent growth rate and the Covid-19 diagnostics firm CENTOGENE a 59 percent increase. R&D spending was $2.9 billion, an increase of 37 percent over 2019. Growth in spending was again attributable to the small number of listed companies, whose expenditure amounted to approximately $1.67 billion, or 58 percent of all R&D expenditures (+66 percent), privately held firms recorded a substantial increase in R&D of 11 percent. Growth sectors in Germany’s biotech industry continue to focus on new drug development and diagnostics, such as early disease detection. The pandemic has especially created a financial incentive to expand the development and sales of vaccines. In-vitro diagnostics are an important growth driver in the market, with more than two-thirds of all clinical diagnoses being made through IVDs.
With more than $3.2 billion (+27 percent compared to 2019) in annual sales, Germany represents the largest IVD market in Europe and second worldwide behind the USA. Germany’s biotech clusters are Europe’s leading research and development hubs, and important partners for industry/academic R&D and technology transfer. Biotech is strong in Bavaria, North Rhine-Westphalia, Baden-Wuerttemberg, and the Berlin-Brandenburg region. Some of the largest and most reputed clusters are in the Rhine-Neckar Triangle (Heidelberg), Cologne/Düsseldorf, Berlin/Brandenburg, and Munich. Biotech is a priority for EU and German Governments and is central to Germany’s innovation and high-tech policies. Biotech action plans focus on diagnostics, therapy and preventive medicine in bio-medical research and care, and research-based bio-medical technologies in specialized clusters. Germany’s participation at the BioEurope trade show, and in the world’s leading annual biotech event, BIO Convention, in the United States, with an official Germany pavilion, shows the commitment and close transatlantic ties in this health tech subsector.
Dental products : Germany is Europe’s largest market for dental equipment valued at $2.48 billion in 2020. For the first time since 2015, the total sales of dental products from 207 mostly medium-sized member companies of the Association of German Dental Industry (VDDI) declined to $5.7 billion in 2020 (- 13.1 percent compared to 2019) and an export share of 60.6 percent with $3.5 billion (-16.5 percent compared to 2019). These firms represent 85-90 percent of the German dental market and employ more than 20,861 people. Even though VDDI’s numbers constitute a market contraction, the firms that participated in their annually conducted market survey remain optimistic. 59% of the surveyed firms expect exports to increase in 2021 compared to 2020, while 32% expect similar numbers and only 9% have negative expectations. A similar pattern can be seen with their evaluation of the German market. 51% expect sales to increase, while 42% anticipates similar sales and only 7% think their revenue will decrease. The Federal Dentists Chamber, BZAEK , expects the workforce in the dental industry to increase by 18.6 percent in the period 2010-2030, from 410,000 to 486,000 employees. This includes dentists’ offices; dental labs; and the trade with dental products. Estimates by Fitch Solutions reveal a forecasted CAGR of 7.6 percent in euro-terms and 9.3 percent in USD-terms for this industry for the period 2021-2022
Digitization with advanced 3D imaging and printing, the use of CAD/CAM systems and robotics as well as innovation in dental materials and minimally invasive techniques have a major impact on market development. Another key factor contributing to Germany’s dental market growth is the increasing dental health awareness among its population and an increasing willingness and ability to pay for preventative and corrective treatments.
U.S. exports to Germany amounted to $126 million for dental equipment and supplies, and $55.2 million for dental laboratory products in 2020. Over 200 U.S. companies are actively exporting, with heavyweights Henry Schein, Danaher Corp. and Dentsply Sirona holding a direct presence and major market share. The major U.S. dental technology supplier Henry Schein is one of the largest distributors in Germany’s dental market, with annual sales of more than $126 million and an estimated 5 percent market share in 2020.
The United States is a technology leader and is competing with Germany in large markets such as China and India. Both the U.S. and Germany have branded for top quality products and innovative technologies and have strong trade ties. Traditionally, the leading global trade fair for the dental community, the (IDS) in Cologne proves to be an arena where both the U.S. and Germany demonstrate strength and forge further ties in R&D and trade, in view of increasing Chinese competition. Staged biennially, the U.S. dental industry is represented by 200+ U.S. exhibitors in two USA Pavilions and independent exhibits; this number has remained solid over the past ten years with 15-20 percent newcomers at every show.
Market Size
Healthcare spending (including investment)
… as percent of GDP
11.9%
… of which spent on inpatient services (including long-term care)
44.8%
… of which spent on pharmaceuticals/consumables
15.5%
… of which spent on investments
1.2%
… of which spent on outpatient services
21.6%
… of which spent on administration
4.4%
… of which spent on other
12.5%
Hospitals, Procedures, Healthcare Professionals:
Number of hospitals
1,914
…Public
545
…Non-Profit/Charitable
645
…Private
724
Number of hospital beds
494,300
…available beds per 1000 people
7.9
…of which in public hospitals
235,800
…of which in charitable hospitals
163,000
…of which in private hospitals
95,600
Number of surgical procedures
17.3 million
…of which on intestinal tract
2.64 million
… of which giving birth surgeries
923,769
…of which heart surgeries
415,628
Physicians
409,121
… of which general practitioners
44,158
…of which surgeons
39,463
…of which internists
58,155
…of which pediatricians
15,732
Physicians density
4.5/1000 individuals
Dentists
98,734
Demographics:
Number of hospitals
1,914
…Public
545
…Non-Profit/Charitable
645
…Private
724
Number of hospital beds
494,300
… available beds per 1000 people
7.9
…of which in public hospitals
235,800
…of which in charitable hospitals
163,000
…of which in private hospitals
95,600
Number of surgical procedures
17.3 million
…of which on intestinal tract
2.64 million
… of which giving birth surgeries
923,769
…of which heart surgeries
415,628
Physicians
409,121
… of which general practitioners
44,158
…of which surgeons
39,463
…of which internists
58,155
…of which pediatricians
15,732
Physicians density
4.5/1000 individuals
Dentists
98,734
Sources: https://de.statista.com/; https://www-genesis.destatis.de/genesis/online ; http://www.gbe-bund.de/stichworte/OPERATIONSSTATISTIK.html ; https://www.bundesaerztekammer.de/ueber-uns/aerztestatistik/
Main Competitors
The German market for medical devices is sophisticated and well served. Germany has a handful of large producers, headed by Siemens Healthineers, B. Braun, Fresenius and Biotronik. 95% of the German medical technology industry is characterized by SME companies or sub-groups of larger companies. The medical technology industry has over 235,000 employees in Germany, 12,000 positions of which were created within the past five years. There are 1,418 SMEs (more than 20 employees) employing 149,770; and 13,000 smaller businesses employing a workforce of 85,00. 93% of all companies employ less than 250 employees and rarely does one company represent more than 2% of the entire sector. In addition, foreign industry giants such as Philips (NL), Hitachi (Japan) and Toshiba (Japan) are well entrenched. GE Medical, Medtronic, 3M Healthcare, Baxter, Abbott, Edwards Life Sciences, Boston Scientific, Zimmer Biomet, and Johnson &Johnson are only a few of the many German subsidiaries of U.S. medical device suppliers. U.S. medical distributors Medline and Henry Schein have large distribution centers in Germany and distribute throughout the country.
As a result of a conservative domestic market, the German medical technology industry has to rely heavily on export markets for continued growth. On average, German medical technology companies export 66% of their products. In 2020, German medical device export sales totaled $26.5 billion, with roughly 45% going to other European countries and 19% to North America. In 2019, exports to China amounted to $ 2.8 billion, making it the second most popular export destination for German firms. Next to a strong German manufacturing base, imports supply around three-quarters of the German medical market. U.S. medical device exporters to Germany continue to hold a 27-30% import market share, depending on the product and exported goods. U.S. medical technology exports to Germany amounted to $4.8 billion in 2019, and the U.S. is the number 1 exporter to Germany ahead of Switzerland, China, and Japan (source: Fitch Solutions). U.S. suppliers of innovative and price-competitive products can especially compete strongly on the German market.
Current Demand
The current German government has proposed several new health plans to improve and ensure the quality of patient care, hospitals, patient management and digitalization. For example, the Development of the Healthcare Provision Act (in German, “Gesetz zur Weiterentwicklung der Gesundheitsversorgung”) , which went into full effect on July 20, 2021, allows for greater quality of care, more transparency and better service by making hospitals publicly release quality-specific data, introducing digital patient questionnaires and mandating higher wages for nurses. A related law, the Digital Care Provision Modernization Act (in German, “Digitale-Versorgung-und-Pflege-Modernisierungs-Gesetz”), which is planned to come into full force over the course of 2021, establishes the framework for the introduction of care-related digital applications for the improvement of patients’ health and easier access to digital consultations. The initiatives also include the Hospital Future Act (in German, “Krankenhauszukunftsgesetz”, KHZG), and the PDSG-Patient Data Protection Law (in German, “Patientendaten-Schutz-Gesetz”), which passed the German Parliament on July 3, 2020 and is the legal basis for the electronic patient record (mandatory as of January 1, 2021), the e-prescription and ehealth/mhealth solutions in Germany. The Care Provision Strengthening Act (in German, “Versorgungsstärkungsgesetz”) creates incentives for doctors to open their offices in rural areas due to a demographic aging among medical staff and the associated closures of many doctor’s offices. In addition, the Hospital Structure Act (in German, “Krankenhausstrukturgesetz”) lays out that hospitals meet quality standards today and continue to do so in the future. Large scale cost savings and more hospital efficiency are expected. The new Digital Care Law (DVG-Digitale Versorgungsgesetz) took effect at the end of 2019, strengthening digital patient care solutions and allowing for medical app prescription and reimbursement via clearly outlined procedures and so-called Fast Track Application procedures (https://www.bfarm.de/EN/MedicalDevices/DiGA/_node.html ). Information on all healthcare laws is available, in German, on the German Health Ministry website: https://www.bundesgesundheitsministerium.de/service/gesetze-und-verordnungen.html
The German government’s health laws and informatics funding initiatives and the German states’ initiatives on healthcare digitalization during Covid-19 and beyond offer good opportunities for U.S. firms to engage in Germany. A successful example would be the cooperation between Siemens Healthineers and IBM. In December 2020, the companies introduced teamplay digital health platform connect, a data hub for patient-related data, from which service providers can access and share information. Since the German medical device market is increasingly becoming more innovative, German industry knowledge has been regarded as a lucrative investment option by both domestic and international actors. For example, In April 2021, the American company Intuitive Surgical Optics, which specializes in minimally invasive robotic solutions for surgeries, fully implemented its incorporation of Schölly Fiberoptic’s robotic endoscope business.
Germany is scheduled to receive 25.6 billion euros from the EU’s recovery fund, and its proposed allocation plan includes significant investment in the digital infrastructure with a focus on the modernization of the healthcare system. The German Government’s “Medical Informatics Initiative” to integrate health data and to close the gap between patient care and medical research is now in its rollout phase under the auspices of both Ministry of Health and Ministry of Research. The aim of the scheme is cost efficiency and faster, more precise care through improved diagnoses, treatments, and better access to healthcare-related data for doctors, patients, and researchers. A good summary of the initiative, in English, is available, here: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6178199/#:~:text=The%20Medical%20Informatics%20Initiative%20(MII,and%20medical%20research%20in%20Germany
For more information on procurements of interest to U.S. medical exporters, please visit http://ted.europa.eu/TED/main/HomePage.do
Germany’ healthcare market offers more than just agents and distributors; it is full of different opportunities along the value supply chain route: design, research, development collaboration, strategic partnerships, equity partner and investor engagements, mergers and acquisitions, project collaboration, and other types of opportunities for SMEs to grow their business and expand in the market.
Interest in and demand for innovative technologies is high in Germany. German healthcare players regularly travel to the United States, many doctors have studied in the U.S. or have participated in exchange programs via post docs, and there is a natural affinity and many ongoing partnership and collaboration projects. Demand is high for digital health solutions, including infrastructure, health apps, and cybersecurity, minimally invasive home care/technical aids, orthopedics and implants, and chronic condition management technologies, as well as oncology diagnostics, molecular diagnostics, personalized medicine, and patient management technology/systems.
Registration Process
CE Marking, Medical Devices Directive and New MDR
On May 26, 2017, the new MDR and IVD Directives took effect. Changes include expansion of the scope of products covered, more rigorous requirements for clinical evaluation, mandatory UDI mechanisms, and increased post-market surveillance by EU Notified Bodies. MDR compliance has been mandatory as of May 26, 2021. Information on the management of legacy devices and their registration into the EUDAMED database is available here . The competent authority for implementing the EU new medical devices directive is the Federal Health Ministry through BfArM , the executive registration authority, and Paul-Ehrlich-Institute .
The CE Mark is now a legal requirement for equipment manufacturers signifying that a product fulfills all necessary EU requirements. Certification requirements for use of the CE mark vary depending on the product. For some, such as those in the MPG low risk class I, the manufacturers (or importer/ authorized representative, if the product is manufactured outside the EU) may self-certify compliance with EU requirements and affix the mark; for others, the certification of a “notified body” (an accredited certification agency such as the TÜV) will be required. For the medical aids sector, the workability and safety of a product is now considered satisfied by CE marking. The CE mark is a visible indication that the manufacturer signed a “Declaration of Conformity” prior to affixing the CE mark, claiming compliance with all relevant CE marking directives in force. Under MDR, classifications will change, and many products previously classified under class I will move up to class IIa or IIb. It is recommended to consult with one of the MDR expert consultants and accredited notified bodies to determine product classification under the MDR.
All electro-medical equipment in Germany must be suitable for use with 220 Volt, 50 cycle electrical current, and should have VDE or TÜV approval. A UL approval is not a substitute but is helpful to obtain “GS/VDE”, or GS/ TÜV” approval in Germany. “GS” stands for “geprüfte Sicherheit” (safety tested). Although “GS” and the “VDE” (or “GS and TÜV”) marks are not required by law, they are highly recommended for marketing electro-medical goods in Germany. These labels denote high product safety; German consumers look for these labels as Americans do for the “UL” mark.
The U.S. Product Safety Testing Institute, Underwriters Laboratories (UL), the VDE Testing and Certification Institute, and the TÜV Product Service, have formed a strategic alliance for testing of electromagnetic compatibility (EMC), which has resulted in the globally recognized EMC test mark. For manufacturers of electrical and electronic products, this cooperation has led to a substantive simplification of EMC testing. Through a single test carried out by one of these three partners, a product can now be awarded an international EMC mark, which replaces the national test marks in the major world markets of Europe, the USA and Japan.
To place a medical device on the market, a manufacturer, authorized representative, reseller, or distributor must observe all relevant legislation. A list of notified bodies can be downloaded from the EU Commission’s medical devices section and IVD devices section . There are currently 22 notified bodies that have been certified for testing medical devices under the MDR and 5 under the In-Vitro Medical Devices Regulation.
Warranty Terms
According to the German Civil Code (BGB), a warranty is a promise of performance from the manufacturer, whereas a liability is a legal claim of the buyer existent while a medical product, spare parts, and accessories are given to the operator. The manufacturer is held liable for any material defect that is already present and can be proven, excluding defects caused by external factors such as handling. The service and timeframe covered by any additional guarantees granted from the manufacturer must be agreed upon by the contractual partners. This differs from the liability for material defects, which is legally fixed at 24 months unless reduced to 12 months for commercial buyers. The warranty terms are further explained in German here .
Reimbursement
The reimbursement of innovative medical devices depends upon whether the device will be used in the hospital (inpatient) or ambulatory (outpatient) setting. In the inpatient setting, new medical services are reimbursed without prior assessment, as long as fundamental principles of quality and cost-effectiveness are not violated. In the inpatient sector, billing of services is based on DRGs, a fee-per-case system. There are roughly 1,300 different DRGs in Germany. The DRG classification system uses case-related coding rules, which apply to diagnoses (ICD-10 German modification) and procedures (Operations and Procedure Codes-OPS). With the DRG case-based flat rate, all costs related to the inpatient diagnosis/treatment are covered, including medical devices. The DRG system is revised annually by InEK-Institute for the Remuneration System in Hospitals. The amount of each DRG compensation is based on data collected continuously from several hundred German clinics. Hospital reimbursement changed in 2020, following the PpSG-Care Personnel Improvement Law in effect since Jan. 1, 2020). It is now a combination of a case flat rate and a care personnel reimbursement. The care budget for the financing of care/nurse personnel in the hospital has to be negotiated between hospitals and insurance funds. The DRG catalog 2021 includes 1,275 case flat rates and 226 added payments for expensive medication and specialty medical products. More detailed information on calculations and pricing is available on the German Health Ministry website here .
The new medical device is reimbursed immediately if it is part of an established method which has been implemented already in the reimbursement system. For innovative devices and technologies not yet in the system, pathways such as the NUB (novel diagnosis and treatment methods) procedure should be explored, particularly when the device is significantly more expensive than current methods. A good summary of the NUB application process is available here . For a more detailed description of NUB methods and timelines, please contact the country specialist listed further below.
Outpatient services are mostly provided by private practitioners (around 161,400), which, by law, are members of their regional Statutory Health Insurance (SDI) accredited physicians association (ASHIP). The physicians are paid by their respective ASHIP who in turn is paid by the public insurance funds. ASHIP funds pay their members on the basis of a uniform evaluation scale known as EBM. Physicians are only able to invoice services that appear on the EBM. The EBM is set by a committee of SHI representatives and ASHIP representatives, together called the Evaluation Committee (in German: Bewertungsausschuss). The payment scheme for outpatient physicians is based upon a mix of services delivered, number of patients served, and a fixed budget distribution system. Any novel diagnostic/therapeutic device/procedure must be evaluated before being reimbursed. Only procedures which “show a benefit, are medically necessary and efficient” can be reimbursed. The decision on reimbursement has to be ratified by the Federal Joint Committee, which may request a Health Technology Assessment (HTA) by the Institute for Quality and Efficiency in Healthcare (IQWIG). The actual payment amount of an EBM-listed procedure is the responsibility of the Evaluation Committee. In case of an approval, the medical service/device must be covered by SHI and will then be reimbursed throughout Germany by all SDI insurance funds. U.S. companies interested in filing for reimbursement are almost certain to need a local partner for the process. Country specialist can provide a list of resources upon request.
Barriers
Firms exporting medical devices to Germany will not encounter any direct trade barriers or quotas. Non-tariff, indirect trade barriers could include the complex German reimbursement system, the need for additional registration procedures in the case of medical assistive technologies, for example, or products sold in pharmacies, with the requirement to apply for HMV or PZN codes, respectively. For Class 2 medical products, the German medical products law requires manufacturing and distribution control/quality control documentation. The new EU Medical Devices Directive (in addition to Brexit) will result in substantively higher expenditures and cost for clinical evaluations of medical products, according to the German Advanced Technology Association, BVMED. At the same time, the new medical technology evaluation procedure according to §137h SGB V German Social Law has considerably changed the established annual applications of hospitals for first-time, high-risk, especially invasive NUBs (Novel investigative and treatment methods) with DRG Institute InEK. BVMED has published guidance on new NUB procedures , in German. BVMED’s Olaf Winkler (email: winkler@bvmed.de ) is the contact for further questions.
Procurement & Tenders
Legal basis can either be the national ‘domestic public procurement law’ or the standardized EU public procurement law as per §97ff. GWG. The national public procurement law serves only to ensure as economical a purchase of services as possible by the (public) payer; the EU public procurement law aims to provide standardized access for companies in all EU member states to procurement markets within the EU. The legal basis is outlined in the EU Procurement. However, the requirements of the EU procurement law, compared to the national procurement law, are more formal. Nevertheless, the EU procurement law – different from the national procurement law – offers the bidders effective legal protection and therefore an instrument that allows for an official legal review of the correctness of the procurement process and decision and, if necessary, to have another check carried out by the courts. The purely national procurement law does not offer this option. An essential criterion of demarcation is the exceedance of a standard value. In the area of delivery and services, which must be put out to tender according to standard official contracting terms, this amount is 206,000 euros. Only when the net total order value over the entire duration exceeds this value does the EU procurement law apply. A public employer issuing a public tender with a net order value above the threshold where no obvious exceptions apply is a condition for intervention by the EU public procurement law regime though. The obligation to tender according to the EU public procurement law is therefore aimed at public hospital operators such as communal hospitals, university hospitals, other public hospitals, such as those partly funded by trade associations, and the respective pooling agreements, for instance in the form of purchasing associations. The European Tender database is: http://ted.europa.eu
Hospital Tenders in Germany if below the 200,000 euros threshold, are published in:
https://www.deutsches-ausschreibungsblatt.de/da/service/branchen-informationen/krankenhausbedarf/
https://www.medizinprodukte-ausschreibungen.de/cms/index.php?option=com_biddings&category=3&&task=testMode&Itemid=55
A good summary of health insurance options in Germany can be found here . A more detailed overview, with historical track, is available as a booklet here .
Policy Objectives and Challenges
The Commercial Service will work to evaluate the broad impact of the EU Council’s respective health policy goals, as follows:
Europe to find ways to re-shore the manufacture of essential medicinal products and medical devices (such as face masks) to Europe and build a European stockpile.
Europe to become more attractive for research. This requires data. Europe to drive the creation of a European health data space and a respective code of conduct for dealing with patient data.
European public health organizations such as ECDC and EMA to be strengthened to allow them to work on equal terms with their U.S. counterparts.
We collaborate with the local MED cluster and their members on EU and German trade policies such as the MDR, IVDR, the SPC-Supplementary Protection Certificate for manufacturing pharma, IP and cybersecurity issues, with a focus on SMEs and countering malign third-country influence. We will report major procurement deals and opportunities to U.S. businesses and encourage a positive outlook on transatlantic trade among industry contacts we meet at events and in the context of partner search outreach. We encourage foreign direct investment by German healthcare and life science companies in the United States by outreach and organization of virtual events and single location promotions. A planned International Patient Day event in 2022 will raise awareness for innovation-based U.S. patient care solutions.
A short overview of the state-of-play of joint assessments of notified bodies in the medical device sector is available now from the European Commission’s webpage “Medical Devices - Sector - New Regulations - Implementing measures for Regulations”: https://ec.europa.eu/health/md_sector/new_regulations
U.S. Commercial Service Contact Information
Name: Anette Salama (Medical Devices) Anette.Salama@trade.gov
Name: Sabine Winkels (Biotech; Pharma) Sabine.Winkels@trade.gov
Name: Uta Kirst (Dental; HealthIT) Uta.Kirst@trade.gov
