Revenue will grow, but competition from imports will constrain profit
Los Angeles, CA (PRWEB) May 16, 2013
Despite growing demand for dialysis treatment, the Dialysis Equipment Manufacturing industry suffered from the poor economic environment following the recession. According to IBISWorld industry analyst David Yang, “Older individuals are more likely to develop chronic kidney diseases.” As a result, the aging US population has years increased the number of individuals with kidney diseases since 2008. According to the US Renal Data System (USRDS), the incidence of end stage renal disease increased at an average annual rate of 1.5% over the past five years. Consequently, demand for dialysis treatment increased, fueling growth for downstream kidney dialysis centers. However, dialysis centers were hesitant to invest in new machinery due to the uncertainty economic outlook following the recession. Industry operators also faced competition from cheaper imports. As a result, IBISWorld expects industry revenue to moderately decrease at an annualized rate of 0.5% to $2.0 billion over the five years to 2013.
This industry is expected to be in full recovery over 2013. Medicare and Medicaid funding is estimated to grow 9.9% over the year, allowing more individuals to pursue dialysis treatment. “Growing demand for kidney dialysis treatment, combined with the recovering economy, provides an impetus for dialysis centers to invest in new equipment and machinery,” says Yang. As a result, industry revenue is expected to increase 2.9% over the year. Dialysis equipment manufacturers experienced relatively stagnant profitability over the past five years. Profit has marginally decreased since 2008, mostly due to the recession. Firms have cut wage costs by expanding manufacturing automation. Nevertheless, wage cuts were insufficient and stagnant profit caused firms to consolidate. In 2012, major player Baxter acquired Gambro, another dialysis equipment manufacturer, which significantly bolstered market share concentration among large firms.
The Dialysis Equipment Manufacturing industry has a very high level of market share concentration, with the four largest firms accounting for over 90.0% of industry revenue. Major player Fresenius is highly integrated. In addition to manufacturing dialysis equipment, it also operates kidney dialysis clinics and produces dialysis medication. In 2012 major player Baxter acquired Gambro, another major dialysis equipment manufacturer, which further bolstered its market share. In general, only large manufacturers have the scale and capital resources to operate in this industry. As a result, market share concentration has increased over the past five years.
Over the next five years, this industry is forecast to return to growth, because demand for dialysis treatment will continue to expand as the population ages. IBISWorld anticipates industry revenue to grow in the five years to 2018. Private and public health insurance coverage are both projected to increase strongly over the next five years, which will make it easier for individuals to pursue dialysis treatment. However, profitability will be constrained. The dollar will appreciate as the economy recovers, which will increase price competition from imports.
For more information, visit IBISWorld’s Dialysis Equipment Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures machines that cleanse the blood of toxins, replacing work that the kidneys normally do.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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