Consumables are often associated with low-cost, standardized products. This has often been the case with breathing system solutions used in ventilation. However, the COVID-19 pandemic has highlighted the importance of sufficient infection control in the hospital environment, subsequently uplifting demand for solutions that reduce infection risk. Vendors of all calibers grabbed this opportunity to expand market share, but questions remain on whether they will keep up in a crowded and price-sensitive market?
A glance into the ventilator consumables market
The COVID-19 pandemic had a mixed impact on the demand for ventilator consumables globally. While the demand for solutions to be utilized in surgeries shrunk in 2020, as less critical procedures were put on hold, respiratory consumables used in the ICU saw a clear increase. Infection control became more important as it was crucial not only to protect the patient but also to safeguard the healthcare professional from the spread of infection. Disposable solutions were also used to reduce the infection risk further. As the pandemic progressed, hospitals saw a shift towards less invasive clinical techniques, driven by the need to improve patient care and clinical outcomes. The endotracheal tube market was also negatively impacted by the preference to ‘trach early’, where a tracheal tube was placed more quickly than traditionally seen, to improve the patient’s recovery time.
Breathing systems: Critical consumables in time of the COVID-19 pandemic
During the first wave of the pandemic hospitals increased their ventilator capacity in the ICU, field hospitals and lower acuity settings to help manage the surge in numbers of COVID-19 patients. Consequently, demand for ventilator breathing systems, including filters and circuits, saw a dramatic increase as well. As the pandemic eased, hospitals became more cautious with their purchasing due to the stockpiles generated in the first wave to treat the patients.
The filter segment saw the fastest revenue growth in 2020 due to increased awareness of infection control, especially in the treatment of COVID-19 patients. All countries showed consistency in adhering to filter replacement schedules, while disposable solutions gained more and more attention. As clinical practice developed due to a better understanding of the COVID-19 virus, some physicians extended replacement times to the maximum level. This reduced the number of breaks in the breathing circuits, subsequently reducing the risk to both the patient and the healthcare professional. As the pandemic subsides, demand for filters is expected to decrease but the focus on infection control will sustain demand to above pre-pandemic levels.
Despite being replaced less frequently, circuits generate the highest revenue within the breathing systems market due to their higher price point. Heated circuits tend to be preferred to heat & moisture exchangers (HMEs) in ICU settings, as they facilitate the ability to reduce the number of breaks in the circuit, due to less frequent replacement times.
Overall, the market dynamics generated by COVID-19 emphasized the importance for hospitals to find the sweet spot between costs and clinical outcomes. Despite the market being driven by cost, bundle deals and a preference for disposable solutions, hospitals still need to provide the best level of patient care. To remain competitive after the pandemic, vendors must position themselves in such a way that they are able to offer this balance. They will need to demonstrate that they are reliable partners providing improved performance and clinical outcomes.
How can vendors survive and thrive?
The breathing systems market is predominantly a tender-driven business across the globe and a market where the price is key. The peak in demand caused by the pandemic encouraged low-cost vendors to enter the market which was attractive to hospitals with increasingly tight budgets. To add additional pressure, group purchasing is becoming increasingly powerful in driving bulk purchasing of ventilator consumables and achieving the best pricing for hospitals. The final strain on prices has been the rising adoption of disposable single-use accessories which are often sold in large bundle contracts and therefore more exposed to price erosion.
The COVID-19 pandemic has also unleashed the market dynamic that typically arises out of panic caused by bottlenecks and delays in the supply chain. During the first wave of the pandemic, desperate customers purchased solutions from both new low-cost vendors in addition to established vendors whose portfolios offered premium products. Customers simply tried to get whatever they could find and could be supplied with short delivery times. Focus from vendors will now be to capitalize on the favorable market dynamics boosted by the pandemic. How can smaller low-cost vendors maintain presence and how can premium vendors stay competitive and maintain market share?
Whether new and existing vendors will succeed in maintaining their position in this market depends on many factors including their individual strategic interests. What is certain is that the effective approach in nurturing sporadic customers will be defined by one paradigm: cost-efficiency. As costs associated with the ICU and operating room increase, the return on investment will be of the highest priority. To remain competitive, vendors will need to prove that their products represent the best combination of cost and performance. Low-cost vendors will need to stress that their products are both cheaper and meet requirements. Premium vendors will have to convince customers that their higher prices translate in improved clinical outcomes without compromising the hospital budget. As governments around the world push for a ‘healthcare for all’ vision, vendors will have to show commitment in delivering solutions that have the best return on investment and that improve the overall level of patient care.
Hospital consolidation, group purchasing, tightened budgets and a move toward disposable solutions have all exerted extra pressure on the breathing systems market, already hindered by low prices. Nevertheless, the urgency created by the pandemic shook the competitive environment. As hospitals were desperate to obtain whatever solutions they could find, the supply network was reshaped. New vendors targeting the low-cost segment managed to penetrate the market. Whilst vendors renowned for their premium prices were also an option. Whether these doors stay open will depend on the ability of vendors to guarantee their customers the best return on investment.
About Kelly Patrick
Kelly joined Signify Research in 2020 as a Principal Analyst. She brings with her 12 years experience covering a range of healthcare technology research at IHS Markit/Omdia. Kelly’s core focus has been on the clinical care space, including patient monitoring, respiratory care and infusion.