Region/Countries: Europe, Germany Industry: Biosciences / Medical Devices, Other Date: May 2019

Why this is important to Wisconsin businesses: Longer lifespans and increased expectations for quality of life are driving continued growth.

Germany has a long history of producing high-quality medical equipment, with a particular emphasis on diagnostic imaging, precision medical instruments, dental products and optical technologies. Not only is Germany the third-largest manufacturing market for medical equipment in the world (after the U.S. and China), but due to its population of approximately 83 million, it is also the biggest market for products of the health care and life science industry in Europe. The industry has considerable economic significance for Germany as a business location. The market size of the entire German health care industry in 2018 was just under $416 billion. This corresponds to more than 12% of Germany’s total GDP.

The health care industry continues to be a growth industry in terms of not only numbers but significance. With an average annual growth rate of 4.1% over the past 10 years, the sector has grown considerably faster than growth rate for Germany’s economy as a whole, and appears to be one of the industries that is less affected by economic cycles.

The industrial sector of the health care industry, which includes production, distribution and wholesale of human pharmaceuticals and medical technology, accounts for almost half of the entire health care industry in Germany. Medical devices alone make up $33 billion of the industrial sector, which makes Germany the biggest market in Europe for this category. The other half (53%) of the $416 billion market volume is spent on inpatient and outpatient health care.

The German health care system consists of 73 million people who are insured by statutory health insurance and 9 million people who use private health insurance, which means that most health care spending in Germany comes from insurers. Statutory health insurers alone spent $244 billion for patients in 2017. Spending of these insurers is increasing by almost $8 billion a year.

To increase efficiency and keep up with market expansion, there are tremendous efforts underway to digitize the health care industry and introduce innovative solutions, including in the area of mobile health, which is particularly interesting for less populous or remote areas where doctors and hospitals are scarce.

Since the German government’s medical informatics initiative aims to improve medical R&D and patient care through innovative information technology (IT) solutions for specific applications and create integrated health data centers, Wisconsin exporters should look at not only the hardware side of the medical industry but also the IT side.

Despite its large domestic health and medical sector, Germany needs to import certain health technology products, such as MRI, ultraviolet or infrared ray apparatuses and ophthalmic instruments and appliances. In order to fulfill domestic demand and benefit from innovative technologies developed abroad, many German companies import from Wisconsin businesses small-sized medical, surgical or dental instruments: Germany’s imports from Wisconsin in this category totaled around $30 million in 2018, while larger machines used for x-ray, MRI and ultraviolet or infrared ray screening accounted for $40 million.

Wisconsin’s worldwide exports of medical and scientific equipment have been decreasing slightly over the last few years. In contrast to that, exports to Germany have been increasing steadily, peaking at $130 million in 2017. This ranked Germany No. 5 in 2017 and No. 7 in 2018 on Wisconsin’s worldwide export list for medical and scientific equipment. In 2017, Germany’s total imports of medical equipment reached $4.5 billion from the U.S. alone, which is around one-third of its total imports of medical goods.

Germany is an aging society with significant levels of chronic disease, as well as widespread use of e-health patient portals by public health plan providers and high internet and mobile phone penetration. All these factors make Germany a promising health IT market with strong potential for U.S.-based providers of specialty solutions. Given estimates that by 2035 Germany will be home to 24 million people age 65 or older, and that by 2030 Germany will have 4 million elderly dependent care patients, the health care sector will gain more importance and continue to grow over the next years.

With an increasing focus on improving quality of life through health care, and with patients increasingly willing to pay more for better quality and additional services, this market is only expected to continue to grow. With Wisconsin ranked No. 14 among U.S. states with regard to exports to Germany, there is the potential for Wisconsin to increase the amount exported to this important trading partner. To better understand the market and also get to know potential partners but also competitors, companies should consider attending the MEDICA trade show in November 2019.