This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/29/2019

Overview

Germany has a long history of producing high quality medical equipment, with an emphasis on diagnostic imaging, precision medical and dental instruments and optical technologies. Not only is Germany the third-largest market in the world after the United States and Japan, but it is also by far the largest European market, twice the size of the French market and three times as large as those of Italy, the United Kingdom and Spain.  The German medical device market ranks no. 1 in Commerce’s Top Market Reports.
The Healthcare/Life Sciences (HCT) industry is a priority for both the EU and Germany as reflected in the European Regional Development Fund (ERDF – or EFRE in German) program 2014-2020, as well as the German Länder implementation and tendering of this program.  “Horizon Europe”, a European Incentive Program for Research and Innovation agreed upon by the EU Council and Parliament and scheduled to begin on Jan. 1, 2021, also has a focus on health and health sector related R&D and innovation.  Projects will focus on smart health and aging, rollout of digital models of care and value-based care. All of this aims to increase opportunities for U.S. suppliers to participate in healthcare infrastructure, hospital development projects and partner with German and EU firms.  The German healthcare system falls behind in digitalization and digital solutions compared to other EU countries, and the German government is taking steps to mandate progress. This will offer excellent export and partnering opportunities for innovative U.S. health solution providers.
Medical Technologies (MED) is the key sector of the HCT industry. The U.S. is home to the world’s leading medical device manufacturers.  One in eight Americans is employed by the U.S. healthcare industry; there are 16 million medical-related jobs, with about $2.7 trillion in profits annually, according to U.S. Bureau of Labor Statistics.  Roughly 90 percent of the over 7,000 medical device manufacturers are often export-ready SMEs, and many of the world’s largest medical device manufacturers such as GE Healthcare, Medtronic, 3M are U.S.-based. Germany is Europe’s largest market for medical devices, accounting for roughly $41 billion annually. Key industry drivers include the power of innovation, a solid financial basis of the industry (80 percent of which are SMEs) and a vibrant startup scene.  Within the EU, Germany is the largest importer as well as exporter of medical devices (source: BMI, German MDR report 2018). All major U.S. suppliers, such as GE Healthcare, Johnson & Johnson; Becton Dickinson; Abbvie; Stryker, Zimmer; 3M, McKesson, Cardinal Health, Henry Schein and Medline, to name a few, have subsidiaries in Germany.  U.S. medical device exporters continue to hold a 28-30 percent share of the German import market.
Germany has a strong healthcare system, especially with regards to infrastructure, hospital beds and trained staff.  In 2017, there were 497,182 beds in 1,942 hospitals (around 560 public hospitals, 662 non-profit and 720 private hospitals) (source: vdek), 1,142 rehabilitation centers (source: destatis.de), and 19,748 pharmacies. Well-established infrastructure makes the healthcare industry the largest employer in Germany with currently 7.3 million employees, 16.6% of the labor market total. One out of six (Source: BMWi) jobs in Germany is linked to the healthcare sector, which generates $413 billion, or roughly 12% of Germany’s gross natural product; and with $149 million, contributes 8.4 percent to Germany’s export total (source: BMWi). The German medical device market grew by 4.2% in 2018 and is expected to continue with 4-6% growth rates through 2021 (BVMed estimate), as the health economy is digitalized and the 2-digit investment backlog in the hospital market is attacked.  Business Monitor even estimates the German medical devices market to grow a CAGR of 7.1% between 2018-2023.
Market Entry and Best Practices
The German market for medical devices is regulated by German and European Union (EU) directives, standards, and safety regulations. The EU Medical Device Regulation (MDR) will take effect on May 26, 2020, with increased testing, certification and compliance requirements. The complementary IVD Regulation will come into effect in May 2022. U.S. exporters are well-advised to  become informed about MDR and obtain public or private sector counseling and assistance of the possible impact of their market entry plans into Germany.  Companies seeking market entry should also carefully map their distribution strategy depending on their target group(s).  CE marking is mandatory for selling into Europe. Entry strategies to be considered are top-down or bottom-up marketing, picking the right partners and ensuring patient- and customer-centric system solutions and support.  Most medical equipment imported into Germany is either sold directly through a local subsidiary with a field sales force, through medical distributors with an established distribution network (often on a regional/territorial basis) or through appointed agents or manufacturer representatives. Local representation or market presence is essential when considering differing standards and certifications, warehousing costs, maintenance, accessibility and local marketing/sales preferences/discussions.  An agency agreement is often a cost-effective mechanism to enter the market, but under German law - even if the agent’s performance is not satisfactory - it can be difficult and costly to terminate an exclusive arrangement. A representation or distributorship agreement may be more difficult to arrange, but the German associate will, in fact, purchase the product to be sold, thus sharing the market risk.  Licensing, partnering with large corporate partners or buying a local firm provide alternatives in times where traditional distributors are bought up by corporates and the market increasingly consolidates.  Further information is available in Commerce’s Global Markets Healthcare Team’s annual Healthcare Resource Guide.
Germany hosts the world’s largest annual HCT trade show, MEDICA, making Germany a premier marketplace for U.S. companies to reach their global partners and buyers. The U.S. HCT industry, represented by 500+ U.S. exhibitors, converge every year for the 4-day long MEDICA trade show to sell to Europe and the rest of the world.
The German Medical Equipment Market 2017-2020 (USD billion)
 201720182019 (proj.)2020 (proj.)
Market Size33.835.137.538.2
Local Production33.835.137.938.7
Imports23.324.226.728.9
Exports23.324.227.129.6
Imports from the U.S.6.87.38.08.6
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Spectaris Trade Association; BVMED Trade Association; Eucomed; Statista (German Federal Statistics Office)
General statistics on Germany is available https://www.destatis.de/EN/Homepage.html .  This information is published by the German Federal Statistics Office.

Leading Sub-Sectors

Leading HCT sectors include: Health IT, pharmaceuticals, dental products, and biotechnology.
Health IT:  The period 2019-2021 will be decisive for Germany to catch up to its EU neighbors on digitalization and electronic patient records and medication management.  This should present excellent opportunities for U.S. healthIT providers. HealthIT applications currently represent more than $320 million, with numerous projects throughout Germany and a University Hospital excellency network which drives innovation in key diseases such as stroke, Alzheimer’s, cancer and diabetes.  An ageing society (with significant share of chronic disease), rollout of e-health patient portals by public health plan providers and high Internet and mobile phone penetration, make Germany a strong healthIT market and offers valuable potential to specialty solution providers.  From 2014 to 2017, revenue in German m-health increased by CAGR 22% (Source: GTAI) and the 2-digit growth is expected to continue. 
Germany has an excellent base for healthIT, with over 80 percent of its workforce holding a degree and being a startup-friendly environment. This makes it a very strong market for m-health and e-health products and services. The strong German medical technology clusters develop telehealth and telemedicine solutions and form excellency clusters for oncology, neurological disorders, and chronic disease management in cooperation with hospitals and industry. The German government’s medical informatics initiative aims at improving medical R&D and patient care through innovative IT solutions for specific applications and integrated health data centers. The multi-million-dollar funding resource should pose excellent opportunities for U.S. solutions providers. E-procurement and e-commerce, Machine-to Machine communication (M2M), mHealth/apps and big data applications are areas of digitalization, in addition to telehealth and telemedicine, with windows of opportunity for U.S. suppliers.
Pharmaceuticals: The German pharmaceutical market was valued at USD 60.5 billion in 2017 and remains one of the most attractive worldwide over the coming years. According to a report by GlobalData, the German pharmaceutical market is expected to grow to 67.3 billion EUR by 2021. Major growth drivers are the aging population and chronic diseases. It is regarded as a test market for other EU countries for pricing and distribution. In 2017, the German pharmaceutical industry manufactured products worth EUR 30.6 billion, an increase of 4.7% over the previous year. Exports of pharmaceuticals increased by 6.8%, generating sales of $88.9 billion, while imports were up by 8% to $62.2 billion in the same period.
Medical Biotechnology: Germany is Europe’s largest biotechnology market. In 2017, 646 dedicated biotechnology companies generated a turnover of $4.6 billion, and initial estimates for 2018 put the turnover at USD 4.8 billion. R&D spending in the same timeframe registered $1.2 billion. Growth sectors in Germany’s biotech industry remain unchanged and continue to focus on new drug development and diagnostics, such as early disease detection.  More than half of Germany’s red biotech companies are in the preclinical stage. Sales of biopharmaceuticals in Germany increased to $11.5 billion in 2017, a growth of 10.3% compared to 2016. Growth was seen in nearly all fields of application, particularly in drugs treating immunological (e.g. rheumatic) diseases and cancer. In-vitro diagnostics are an important growth driver in the market, with more than two-third of all clinical diagnoses being made through IVDs.  With more than $2.3 billion in annual revenue, Germany represents the largest IVD market in Europe and second worldwide, behind the USA. Germany’s biotech clusters (aka “BioRegions”) are Europe’s leading research and development hubs, and important partners for industry/academic R&D and technology transfer. Biotech is strong in Bavaria, North Rhine-Westphalia, Baden-Wuerttemberg and the Berlin Brandenburg region.  Some of the largest and most reputed clusters are in the Rhine-Neckar Triangle (Heidelberg), Cologne/Dusseldorf, Berlin/Brandenburg and Munich. Biotech is a priority for EU and German Governments and is central to Germany’s economic and innovation policy. Biotech action plans focus on diagnostics, therapy and preventive medicine in (bio) medical research and care, and research-based medical technologies in specialized clusters. Germany’s participation at BioEurope, and in the world’s leading annual biotech event BIO in the U.S., is of great importance to both sides.
Dental products: U.S. exports to Germany amounted to $112 million for dental equipment and supplies, and $49 million for dental laboratory products in 2017. Germany has the biggest dental market in Europe valued at $13.1 billion.  Over 200 companies are actively exporting, with heavyweights Henry Schein, Danaher Corp. and Dentsply holding major market share.  Germany is Europe’s largest market for dental equipment.  Total sales of dental products from 200 VDDI member companies, which employ more than 20,700 people, amounted to $6 billion (+5%) in 2017. The major U.S. dental technology supplier Henry Schein has a subsidiary in Germany and is one of the largest distributors in in the German dental market, with annual sales of more than $123 million and an estimated 10% market share.  Many U.S. dental technology exporters consider the German market the “test lab” for Europe and make it the first stop for European rollout.  Germany hosts the world’s largest biennial dental trade show, IDS, making Germany a premier marketplace for U.S. companies to reach their global partners and buyers. The U.S. dental industry, represented by 200+ U.S. exhibitors, converge every second year for the 4-day long IDS trade show to sell to Europe and the rest of the world.  The 2018-2023 CAGR market growth is estimated at 5.8% by BMI research.
Policy Objectives and Challenges
The Commercial Service will work with the local MED cluster and their members to evaluate the broad impact of EU and German trade policies such as the MDR or the SPC-Supplementary Protection Certificate for manufacturing pharma on companies in the HCT and Life Sciences sector, with a particular focus on SMEs. We will report major procurement deals and opportunities to U.S. businesses and encourage a positive outlook on transatlantic trade among industry contacts we meet at events and in the context of partner search outreach. We plan to organize an International Patient Day event in the Spring of 2020 to raise awareness for innovation-based U.S. patient care solutions. We will closely monitor the impact of the EU’s new medical devices directive and its challenges for U.S. exporters to Germany.
We will follow the latest healthcare policy developments and discussions in Germany, and work with U.S. associations, such as the Advanced Medical Technology Association and PhRMA-Pharmaceutical Research-based Manufacturers Association based in Washington to ensure fair access, standards interoperability and IP protection for U.S. firms to and in the German and European markets.

Opportunities

Germany’s healthcare market offers more than just agents and distributors; it has various opportunities along the value supply chain route: design and research and development collaboration; strategic partnerships; equity partner and investor engagements; mergers and acquisitions; project collaboration, and other types of opportunities for SMEs to grow business and expand in the market. For example, one of Germany’s lead biotech cluster and the U.S. National Cancer Institute recently partnered on a webinar to promote the NIH’s Cancer Institute’s clinical study capabilities and resources for innovative German life science startups.  Combining the resources of NIH and the networks of the German life science clusters, we will see a unique and powerful partnership that will bring the most innovative and brightest solutions to the U.S. market, and help both economies to grow and create jobs.
The German government’s health informatics funding initiative and the German states’ initiatives on healthcare digitization offer prime opportunities for U.S. firms to engage in Germany. An example would be a procurement for NRW Public Hospitals to re-organize their system and reconstruct and upgrade existing facilities. In a four-year span, U.S. companies will have the opportunity to participate in consortia or as sub-contractors.
The German Government is jump-starting a “Medical Informatics” funding scheme as part of the Health Research Framework Program. In an aging society where diseases like cancer, dementia and various cardiovascular, metabolic and muscular ailments will become more prevalent, it is important to improve the exchange of data across different institutions and locations. The aim is that faster diagnoses and treatments will help to cut costs and help individuals receive faster and more precise care.
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Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Germany Healthcare Trade Development and Promotion