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Opportunities for Medical Devices in Eastern Europe

Admittance into the EU Presents New Growth Opportunities in Eastern European Medical Devices Markets

Overall Development and Increasing Private Sector Participation Augur Well for Medical Device Manufacturers in Eastern Europe

The accession of several eastern European countries to the European Union (EU) has brought in standardised regulations and norms even while opening up new markets for medical device manufacturers in the region. At the same time, the lower operating costs in these countries is making them an attractive destination for offshore production.

While 2004 witnessed the entry of ten countries into the EU, more countries are likely to follow suit by 2008. This trend, along with the rapid overall development of eastern European countries is creating exciting new growth opportunities for medical device manufacturers. As new and aspiring EU members move to harmonise their legislation to comply with EU standards, new market entrants, especially the quality conscious private sector, will be encouraged to expand their presence in the region.

"Many east European countries have witnessed a transition from conservative communist or socialist regimes to market economies," notes Frost & Sullivan Healthcare analyst Kavitha Ravikumar. "Subsequent novel processes and procedures will demand improved infrastructure in order to tackle the price-conscious nature of the markets and improve their attractiveness."

The high degree of price sensitivity prevailing in the markets is tilting the balance in favour of lower-cost products, and is making it difficult for higher-priced quality medical units to find acceptance. Moreover, the trend towards tender purchasing has further squeezed prices and profit margins. In many cases, enterprises providing flexible payment deadlines have been favoured in such procurement deals.

In addition to being promising markets, many eastern European countries are also emerging as cost-effective manufacturing bases. Private investors are increasingly realising the region's advantages in terms of lower taxes, labour and production costs and are, consequently, hiking their investments. Furthermore, consistent development, rising salaries and, the strong performance of local currencies are set to contribute to the growth of the medical devices markets in eastern Europe.

"To leverage the region's vast potential, manufacturers need to realise the importance of building local relationships, conforming to local law and regulation as well as re- labelling products as well as translating operation manuals into local languages," advises Ms. Ravikumar.

Medical device manufacturers are currently focussing on service sector technologies that have ample support from improved infrastructure and production facilities. Financial aid from the EU and other international sources is set to drive the demand for high-end technologies from medical devices makers in future.

"Encouragingly, medical devices companies in most countries in eastern Europe are benefiting from consistent revenues by meeting the needs of the replacement markets, while government initiatives such as modernising healthcare provisions will further strengthen the market's growth," observes Ms. Ravikumar.

On a larger scale, it will become necessary for market participants to take into account diverse factors such as demographic and lifestyle changes, end-user views on specific products as well as related industries, attitudes towards health, wealth, age, gender, work and leisure. Enterprises will also be required to comply with new environmental protection norms that conform with EU levels, which could necessitate some restructuring in their processes and increased production costs.

If you are interested in a virtual brochure, which provides manufacturers, end-users, and other industry participants an overview of the latest analysis of Opportunities for Medical Devices in Eastern Europe (B675-54), then send an e-mail to Radhika Menon Theodore, Corporate Communications, at