This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify Research. To view other recent Premium Insights that are part of the service please click here.
While the Covid-19 pandemic has mercifully ceased to be the all-pervasive issue it was at its peak in 2020, the impact of this world-changing crisis is, unsurprisingly, still shaping many medical imaging markets. In 2020, the pandemic caused a spike in some modality sales which led to a subsequent uplift in sales of some Imaging IT segments. Following such a spike, a cooling of the market was expected for 2021.
However, as highlighted in Signify Research’s Imaging IT – Core Report – World 2022 one of the deliverables of the Imaging IT Market Intelligence Service, this didn’t turn out to be the case for the medical imaging IT market in 2021.
“The majority of the market, and definitely on a global perspective, performed better than expected,” states report author, Senior Analyst Amy Thompson. “We were expecting a softer year in some markets because of the strong year that AV had in 2020 due to the Covid 19 pandemic and the upsell of AV IT via the imaging modality sales channel.
“But, what we actually saw was a second year of unprecedented spending in 2021, which aided stronger recovery and growth in AV and greater volumes in radiology and cardiology IT markets, from both replacement cycles and new deals.
“Deal activity did not quite reach pre-pandemic levels, so we can’t say that the market has fully reverted to “normal”, but it is tracking very positively.”
This is particularly true in mature markets. For total imaging IT; the US saw annual growth in 2021 of 3.6%, growth in Western Europe was 2.7% and growth in Japan was 6.8%, but also applied to some emerging markets such as India, which recovered faster than expected.
This was a particular surprise. “India was hit hardest by Covid later than the rest of the world,” says Thompson, “The expectation that there would be at least a short-term lingering impact from the pandemic. But, actually, the total imaging IT market recovered faster than expected, led by strong modality sales, with opportunities to upsell AV IT.”
This was the case more broadly, with growth of “add-on” products, including image exchange tools, operational workflow solutions and universal viewers continuing into 2021. However, in 2021, these deals sat alongside the pent-up demand from contracts that were pushed out from the height of the pandemic, which began to be initiated in 2021.
These deals will continue to be realised, which will lead to some surprisingly strong growth in certain markets. “There is,” notes Thompson, “almost a convergence of deals that were already planned for 2022, 2023 and 2024 and those planned for 2020 and 2021 which were pushed back.
“There are also other fundamental factors supporting the market. Across the world there is a lot of recovery and resilience funding available, while there are also multiple initiatives around digitisation to deal with the pandemic backlogs for imaging and diagnosis. It is creating a swing in the market that will lead to an unprecedented and atypical growth period.
“This means that in North America for example, which is a very saturated and typically slow-moving market, there will actually be decent growth. It won’t be double-digit that some emerging markets offer, but for a mature market like the US, it is a level of growth that won’t happen again for some time.”
Such unusual growth prospects could lead some vendors to re-evaluate their strategies in order to ensure they are capitalising on this unique opportunity, especially given the typically less risky option that mature markets present.
However, Thompson cautions that it isn’t that simple. “I think that if a vendor is evaluating its strategy for emerging markets, the correct course of action will depend on its portfolio and its current installed base.
“Should a vendor, with no installed base, try and enter a brand-new market, especially considering the growing risk in many emerging markets? Probably not in the next two to five years. However, for those vendors which already have an installed base, looking to expand and grow in these markets might represent a sensible priority and growth opportunity.
“In all cases, it’s important to remember that the performance of any market won’t be uniform, there will be pockets of opportunity. For example at the top-tier academic side, it could be upselling multi-ology solutions, or offering a second iteration of a package for a specific customer. So, there will be examples of vendors growing amid difficult overall market conditions. There are good opportunities, but the question is, how much risk will vendors be willing to take on to maximise this opportunity?”
Best Foot Forward
Despite the differing suitability of specific vendors and their portfolios for different markets, there are several factors which can put them in the best place to take advantage of the expected growth trends. In developed markets future plans are almost as important as current capability.
“It’s very clear where the market is heading,” Thompson explains, “there is a drive to outpatient settings, and a greater need for collaboration and interoperability across healthcare, both in terms of imaging, but also across healthcare more broadly.
“This drive towards multi-ology enterprise imaging platforms, with greater AI integration, as well as operational workflow and business intelligence tools is what providers want, although much of the market is not ready to deliver this today. Providers need to know a vendor’s development roadmap and understand how they plan to deliver this long-term ambition. Providers are looking for long-term partnerships, so they need to have confidence in vendors’ solutions five or ten years from now.
“That could have many facets, including radiology consolidation, the cloud, AI platforms, enterprise imaging with digital pathology integration, the convergence of EMR and diagnostic data into workflows. Providers need to know that when they need it, a vendor can deliver.”
The picture is different in emerging markets, where there is a less defined recipe for success. As markets develop, with increased digitalisation and provider consolidation, they will increasingly look towards international vendors because they will need more advanced capability than many domestic solutions are able to offer.
The Small and the Mighty
As well as varying significantly by region, different types of vendors are also likely to fare differently over the coming years, with different types of vendors harbouring the advantage at different times.
“The bigger health technology vendors,” Thompson elucidates, “compared to the smaller independent vendors have the edge in terms of pure scale, the breadth of their portfolios, their ability to invest and their access to resource.
“All vendors are now offering core enterprise radiology platforms and starting to offer multi-ology, enterprise imaging solutions, they are all slowly working on cloud and are also defining AI strategies, with either native development or AI partnerships.
“However, larger imaging IT vendors with modality and broader healthcare technology portfolios are increasingly placing a lot more emphasis on operational service lines, fleet management solutions, command centres, and the scalable analytics solutions helping to optimise the care pathway and modality use
“Smaller, challenger imaging IT specialist vendors don’t have this capability. They don’t have the breadth to be able to provide a like-for-like product, but instead tend to be nimbler, and able to react more quickly to short-term opportunities. The question is whether they can maintain short-term advantages over the longer term.”
The Journey Begins
This will prove to be the key challenge for the smaller specialist vendors. Over recent years they have been eroding market share from the larger health tech vendors, but as the solutions from these larger vendors evolve, conditions could become increasingly difficult for the smaller vendors. They have enjoyed an early lead with regards to some technologies, but as the larger vendors catch up and, thanks to their breadth, are able to expand their offering further, smaller vendors will need to find a new way to compete.
For all vendors though, in the near term, the outlook is positive. Last year proved to be a much stronger year than was expected, with growth that is set to accelerate, granting significant opportunities for vendors that are able to react.
The market direction is clear, but, as Thompson emphasises, “success in the next two years comes down to more than the portfolios of today.”
“Success will be determined by vendors that can best demonstrate and outline their intentions, highlighting what that means for the provider and showing timelines for delivery. Essentially, it means aligning their roadmap with the key strategic plans that providers have. Vendors need to be transparent and open with providers and be ready to embark on that journey together.
About Signify Premium Insights
This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify Research. To view other recent Premium Insights that are part of the service please click here