Medical Equipment Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,100 medical equipment distributors in the US sell and distribute a broad range of medically related products, principally to hospitals, physician and dental practices, alternative care and rehabilitation facilities, and directly to the home healthcare market. Major categories of products include medical/surgical instruments and equipment, medical and hospital supplies, and dental equipment and supplies.

Growing Industry Consolidation

In recent years, the medical, dental and hospital equipment and supplies distribution industries have undergone consolidation.

Complex Billing and Record Keeping Requirements

Medical equipment distributors are frequently subject to many stringent and complex billing and record-keeping requirements in order to substantiate claims for payment under both government and private insurance healthcare reimbursement programs.

Industry size & Structure

The average medical equipment distributor employs 32-33 workers and generates $16 million in annual revenue.

    • There are about 8,100 distributors with total sales of $129 billion and 263,200 employees.
    • The hospital equipment and supplies market is dominated by the influence of Group Purchasing Organizations.
    • The physician office-based practice market is increasingly being influenced by the growth of Integrated Healthcare Networks, as more independent physician practices merge and consolidate.
    • Dental practices have generally remained small and independent, leaving distributors with unique challenges in servicing a large number of small, scattered customers efficiently and profitably.
    • The three largest medical/dental product distributors are Owens & Minor, Henry Schein, and Patterson Companies.
                                Industry Forecast
                                Medical Equipment Distributors Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                May 8, 2022 - Shortages Hit Wider Array Of Products
                                • Current medical equipment and supply shortages dwarf the problems experienced in the early days of the coronavirus pandemic, according to Forbes Magazine. Shortages might have been more urgent in early 2020, but today’s problems include a much wider array of items. Shortages can be traced to component scarcities, backlogged ports, transportation glitches, and lockdowns in China to combat the spread of Covid-19. Healthcare logistics firm Owens & Minor says that 45% of the items it handles are in some way supply constrained.
                                • Distributors that depend on products made in China may face shortages. Supply chain experts say that China’s strict Covid-control policy could cause renewed supply-chain disruptions in the US as shuttered factories there cause orders to back up. The effects of lockdowns in southern Chinese megacity Shenzhen — home to the nation’s most-important port after Shanghai — will affect the Los Angeles-area sea-cargo hubs, the busiest container gateway in the US, according to Noel Hacegaba, of the Port of Long Beach. Backups building at other ports in China may be indicate what's to come at Shenzhen, according to Alex Charvalias, of maritime-analytics firm MarineTraffic. The number of container vessels waiting to berth in the eastern city of Qingdao climbed to 22 from 9 in one week, he said, and the queue is also growing at the biggest port in Shanghai, he said. This will affect the US in the next month or so, because fewer vessels will leave for the West Coast, he added.
                                • Distributors may still have difficulty acquiring sufficient inventory in 2022 due to pandemic-related semiconductor shortages, but the problem may not be as severe as in 2021. The semiconductor shortage will not be as severe in 2022 as it was in 2020 and 2021, according to Ariane Bucaille of consulting firm Deloitte. The shortage will also not affect all chip varieties. Customers were waiting between 20 and 52 weeks in mid-2021 for multiple kinds of semiconductors, according to Bicaille. Those lead times will be closer to 10-20 weeks by the end of 2022, and the industry will be in balance by early 2023.
                                • US Transportation Secretary Pete Buttigieg warned that the global supply chain troubles that continue to be a drag on the economy could continue as long as the coronavirus pandemic. “If you have, for example, the third largest container port in the world in China shutting down because of a COVID outbreak in late summer, you’ll feel that in the fall here on the West Coast,” Buttigieg said. Global imbalances between demand, which is off the charts right now, and supply, which is racing to keep up, are the key driver of supply chain problems, he added: “And in the medium-term, again, at risk of repeating myself, if we really want to see all of these disruptions end, we’ve got to end the pandemic. That’s what getting everybody vaccinated is all about.” The value of medical devices imported into the US has steadily increased over the past decade. The majority of imports are lower tech products, such as surgical gloves and simple instruments. Major low-cost producers are China, Brazil, Korea, Taiwan and India.
                                • The US Food and Drug Administration (FDA) is providing a list of medical devices in shortage or that have been discontinued during the coronavirus disease. The CARES Act requires manufacturers of certain devices to notify the agency of manufacturing interruptions or permanent discontinuances that could lead to a disruption in the supply of a device during a declared public health emergency. The CARES act also requires the FDA to maintain lists of devices reported to be in shortage or discontinued. The shortage list, which includes entries for devices under 20 different product codes, does not mention the specific devices or names of manufacturers. While the CARES Act calls for the list to include “The category or name of the device in shortage [and] the name of each manufacturer of such device,” FDA explains that it is not naming the devices because doing so would increase “the potential for hoarding or other disruptions in device availability to patients.”
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