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Durable Medical Equipment
A Bolt-On-Able Industry

Durable medical equipment (DME) is generally defined as medical equipment used in the home to aid in a better quality of living, that can be leased or purchased, and is commonly covered by insurance or Medicare benefits. The items can include large fixed pieces like hospital beds and oxygen tents; portable equipment like wheelchairs, nebulizers and CPAP machines; and small items like blood-testing strips and blood glucose monitors. In addition to individual patients, end users can be hospitals, specialty clinics, ambulatory surgical centers, diagnostic centers, home healthcare providers and others. These segments combined create a sustained high demand
for DME.


According to a study released just this spring by Market Study Report, LLC, the global durable medical equipment (DME) market is projected to reach $246.6 billion by 2026. Not only does North America hold the largest share in the global market, the U.S. is the largest contributor to its revenue. According to Select USA (a program led by the U.S. Department of Commerce.), the U.S. is the largest medical device market in the world, representing around 40% of the total market.


We’re likely to retain that position considering factors such as the aging baby boomer population, increase in chronic disease, and the rising trend for patients to receive post-surgical, post-hospitalization and other long-term care in their homes. Improved means of diagnosing diseases has led to larger numbers of patients receiving maintenance care at home or in clinical settings versus acute care via hospitalization. Steady advancements in medical equipment technology, especially contributing to improved diagnostic capabilities, is another factor contributing to the growth of the DME market.

 

The healthy demand for these goods has supported DME market players like Philips Healthcare and Stryker in their growth through bolt-on deals. Philips, for instance, made seven acquisitions in one recent four-month period; the giant of the medical systems and software industry continues to maintain its strategic direction with both organic and external growth. Similarly, Stryker has thrived for years with a dual growth strategy that includes acquisitions. Between 2011 and 2018, the company completed nearly 30 acquisitions in core or adjacent segments.

 

Bolt on growth brings in additional products, expanded capabilities and new staff to a company’s existing core area of business. In the DME sector in particular, the gain of these assets can result in the company being able to provide better, more innovative products and features to consumers in a highly competitive market.
Market leaders have also found that bolt on acquisitions can provide the opportunity to explore expanded or related product lines that have already progressed past costly R & D. These small segments may lead to larger ventures if they prove successful, but will not funnel away substantial resources if the glimpse into expansion they provide suggests they are not a good long-term fit.


Another advantage of bolt on growth in the DME market is its global nature; humans everywhere need medical care. Demand for and financial capability to attain higher levels of healthcare is present in all four of the major five regions of the market outside of North America: Europe, Asia Pacific, Latin America, and Middle East/Africa. Studies project the fastest growth in the Asia-Pacific region due to factors like federal and commercial investment in healthcare research, relatively high disease risk and an elevated rate of life-threatening conditions. Japan, China and India in particular have enjoyed recent economic growth, which has improved healthcare for the average citizen and brought healthcare to more citizens, supporting an increased demand for DME goods. And aging trends evident in the U.S. are reflected globally; the World Health Organization projects the number of people 60 and older to nearly double in the next 30 years, meaning a rising proportion of elderly men and women with age-related conditions will require ongoing care. The Market Study Report study indicates an expected CAGR of 6.3% for the global DME market during the forecast period ending in 2026.

 

Companies that expand internationally through bolt on acquisition can potentially introduce American DME products and technology to overseas clients and bring those counterparts in to the U.S. market. The result could potentially be a lucrative mix of in-demand goods, cultivation of revolutionary advancements and robust workforce growth.

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