Germany - Healthcare and Medical Technology (2023)

Overview

Germany claims the third-largest medical technology market in the world after the United States and Japan and 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 is one of the most lucrative healthcare markets worldwide, accounting for roughly USD 35.8 billion annually, or 25.6 percent of the European market total.

The Healthcare/Life Sciences (HCT) industry is a priority for both the EU and Germany as 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 focuses on health and health-sector-related R&D and innovation. Projects target conquering cancer, smart health, aging, and digital models of care. All of this aims to increase opportunities for U.S. suppliers to participate in healthcare infrastructure, hospital development projects and to partner with German and EU firms. However, the German healthcare system, because of its decentralized and self-governing structure, is complex and slow in adapting new trends. German health ministry officials are determined to move the German health system into the digital age and have amended the regulatory environment with several 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.

Germany has a strong healthcare system, especially with regards to infrastructure, hospital beds and trained staff. One out of six jobs in Germany are linked to the healthcare sector, which generates an economic footprint of EUR 678.2 billion (USD 798 billion), or roughly 12 percent of Germany’s GDP. With EUR 131.2 billion (USD 154.4 billion) generated through foreign sales, HCT contributes 8.3 percent to Germany’s total exports (source: BMWK). According to estimates by Fitch Solutions, the expected CAGR of the German medical equipment market for 2020-2025 is 5.1 percent in euro-terms and 6.8 percent in USD-terms. Growth factors include the digitalization of the health economy and tackling the double-digit investment backlog in the hospital market with the funds allocated by the Hospital Future Act. This law was enacted in October 2020 providing EUR 3 billion (USD 3.5 billion) of federal funding and additional EUR 1.3 billion (USD 1.5 billion) of state funding to modernize and digitalize the German hospital system.

Market Entry and Best Practices

The German market for medical devices is regulated by German and EU directives, standards, and safety regulations. After a one-year delay of the start date of the EU Medical Device Regulation (MDR), which introduced increased testing, certification and compliance requirements, this regulatory framework came into full effect on May 26, 2021. The complementary In Vitro Diagnostic Regulation will be enacted 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). CE marking is mandatory for selling into Europe.

Entry strategies to be considered are top-down or bottom-up marketing, picking the right partners and ensuring patient- and customer-centric system solutions and support. Most medical equipment imported into Germany is either sold directly through a local subsidiary with a field sales force, through medical distributors with an established distribution network (often on a regional/territorial basis) or through appointed agents or manufacturer representatives. Local representation or market presence is essential when considering differing standards and certifications, warehousing costs, maintenance, accessibility, and local marketing/sales preferences/discussions. An agency agreement is often a cost-effective mechanism to enter the market, but under German law – even if the agent’s performance is not satisfactory – it can be difficult and costly to terminate an exclusive arrangement. A representation or distributorship agreement may be more difficult to arrange, but the German associate will, in fact, purchase the product to be sold, thus sharing the market risk. Licensing, partnering with large corporate partners or buying a local firm provide alternatives in times where traditional distributors are bought up by corporates and the market increasingly consolidates. Further information is available in Commerce’s Global Markets Healthcare Team’s annual Healthcare Technologies Resource Guide.

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources: Spectaris Trade Association; BVMED Trade Association; Medtech Europe; Statista (German Federal Statistics Office); Fitch Solutions

General statistics on Germany is available by the German Federal Statistics Office.

Leading Sub-Sectors

Medical Technologies (MED): MED is the key sector of the healthcare industry. All major U.S. suppliers, such as GE Healthcare, Johnson & Johnson, Becton Dickinson, Abbott, Abbvie, Thermo Fisher Scientific, Stryker, Zimmer, 3M, McKesson, Cardinal Health, Henry Schein, to name a few, have subsidiaries in Germany. Within the EU, Germany is the largest importer as well as exporter of medical devices (source: Medtech Europe, Facts & Figures 2021). U.S. medical device exporters continue to hold a 30 percent share of the German import market. 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 the commitment to a high-quality health system.

Health IT: The German Health Ministry and its agency, Health Innovation Hub, are ambitiously implementing the Digital Care Act 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 as a medical app, 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. From January 1, 2021 German health insurers are mandated to provide their insured with the ePA; and from July 1, 2021 all statutory health insurance accredited physicians and psychotherapists must be able to read and fill in the ePA. This law also 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 and its funding allow German hospitals to speed digitalization and remain competitive globally. So far, there has been an innovation gap in the German hospital sector because of lacking focus for digitalization among the German health policy makers and hospital management for years and there is still an insufficient number of dedicated digital solution providers. Thus, this market is especially penetrable for U.S. digital solution providers. E-medication is also on its way, with the new paragraph 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. The digital health ecosystem in Germany will be driven by cloud computing solutions, artificial intelligence (AI), robotics, smart wearables, 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’s BfArM-German Federal Institute for Drugs and Medical Devices is a member of SNOMED International, global standards organization for health terms. With full membership, all German institutions and specialist groups in the healthcare sector wishing to use SNOMED CT in their applications can apply for a free license from BfArM. More information can be found on the SNOMED website.

It is strongly recommended to open an office in Germany or work with a knowledgeable partner to enter the German HealthIT market, which is dominated by some large players in the various segments, i.e. Compugroup, Deutsche Telekom Healthcare, Siemens Healthineers, i-Solutions, Nexus, Visus, to name a few.

Dental products: Germany is Europe’s largest market for dental equipment valued at USD 2.48 billion in 2019. For the first time since 2015, total sales of dental products from 207 mostly medium-sized member companies of the Association of German Dental Industry (VDDI) decreased to USD 5.7 billion in 2020 (-13.1 percent compared to 2019) and an export share of 60.6 percent with USD 3.5 billion (-16.5 percent compared to 2019). These firms represent 85-90 percent of the German dental market and employ more than 21,290 people. Even though VDDI’s numbers constitute a market contraction, the firms that participated in their annually conducted market survey remain optimistic. 59 percent of the survey firms expect exports to increase in 2021 compared to 2020, while 32 percent expect similar numbers and only 9 percent have negative expectations. A similar pattern can be seen with their evaluation of the German market. 51 percent expect sales to increase, while 42 percent anticipate similar sales and only 7 percent 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 trade in 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.

U.S. exports to Germany amounted to USD 126 million for dental equipment and supplies, and USD 55.2 million for dental laboratory products in 2020. Over 200 U.S. companies are actively exporting, with heavyweights Henry Schein, Danaher Corporation 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 USD 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-International Dental Show 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 170+ 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, except for the 2020-21 pandemic years.

Opportunities

Germany’s healthcare market offers more than just agents and distributors; it has various opportunities along the value supply chain route: Design and research and development collaboration; strategic partnerships; equity partner and investor engagements; mergers and acquisitions; project collaboration, and other types of opportunities for SMEs to grow business and expand in the market. For example, we will assist major U.S. players in the Healthcare Cybersecurity arena gain further visibility and brand awareness in Germany and German-speaking Europe with seminars around cybersecurity and ransomware attacks in hospitals and other medical facilities. Likewise, the U.S. German Digital Health Forum initiated by the U.S. Commercial Service in partnership with a major German digital health platform continues to expand and opens the door to innovative U.S. digital health solution providers and allows them to forge relationships with university hospitals in Germany.

The German government’s health informatics funding initiative and the German states’ initiatives on healthcare digitization offer opportunities for U.S. firms to engage in Germany. An example would be a procurement for North Rhine-Westphalia’s Public Hospitals to re-organize their system and reconstruct and upgrade existing facilities. In a four-year span, U.S. companies will have the opportunity to participate in consortia or as sub-contractors.

The German government’s “Medical Informatics” funding scheme as part of the Health Research Framework Program offers an aging society where diseases like cancer, dementia and various cardiovascular, metabolic, and muscular ailments will become more prevalent to improve the exchange of data across different institutions and locations. The aim is that faster diagnoses and treatments will help to cut costs and help individuals receive faster and more precise care.

For more information on procurements, you can get involved in, please contact us via our website to be added to a regular email of tender opportunities, or visit Tenders Electronic Daily by the EU.

Resources

Trade Events

• Medica – medical equipment and devices, IT solutions, laboratory equipment, physiotherapy and orthopedic technology, disposables and consumables, Dusseldorf, November 14-17, 2022
• Greater New York Dental Meeting – dental care, New York, November 25-30, 2022
• DMEA, – digital health, Berlin, April 25-27, 2023
• HIMSS23 Global Health Conference & Exhibition – general healthcare, Chicago, April 17-21, 2023
• Analytica, – laboratory technology, analysis, biotechnology and analytica, Munich, likely summer 2023 (last iteration was June 21-24, 2022)
• American Hospital Association Leadership Summit – healthcare association, Seattle, July 16-18, 2022
• American Association for Clinical Chemistry: AACC Annual Meeting – laboratory medicine, Anaheim, July 23-27, 2023.
• Rehacare – rehabilitation and care, Dusseldorf, September 14-17, 2022
• The MEDTECH Conference – medical technology, Boston, October 5-7, 2022
• International Dental Show (IDS) – dental care, Cologne, March 14-18, 2023

Government Links

• Federal Institute for Drugs and Medical Devices (Competent Authority)
• Healthcare Procurement and Tenders