The Swiss Medtech

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The Swiss medtech in numbers
More than 500 companies
95%areSMEs
A full-time worktorce of 40.000 persons
More than 40.000 patent documents
Annual sales 01 USD 6 hillion
Annual spending in R&D ot USD 500 million
Annual export goods 01 USD 5 billion
90% of the export goes tu Germany and United States
Issues:
The Swiss Medtech
*
Th Sw Mdh
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Heterogenety
of the medtech sector
in Switzerland
With its universities, dense network of hospitals,
wealth of labour skills and its vast venture
capital industry, Switzerland counts among
the leading countries in medical technology.
The Swiss niedtech sector consists
of several sub-se.gments and can be
considered as very complex. Nevertheless, there is a bright future for a
heterogeneous and not often very
visible industry because of the wealth
oflabour skills, especially in preci-
sion manufacturing and material
technology, a vast venture capital
industry and a huge intellectual
potential.
More than 500 flrms in Switzerland
operate in the £ields ofbiomaterials,
cardiovascular, dental implants and
devices, diabetes devices, electromedical and imaging equipment, orthopaedics, respiratoryequipments, suxgical instruments and wound & care
management. The sub-segments
differ in terrns ofrnarket penetration,
reimbursementpolicies, R&DJ regu-
latory affairs and distribution, The
whole sector benefits from the gro-
wing wealth in most parts of the
world, the increasing nuruber of
elderly people, tEe conbnuous progress in medical science and - sadly
enough - the global growth of «civilisation diseascs» like obesity, diabetes, degenerative joint disease (DJD)
and high blood pressure.
s
klein rit:h
Christen
Partner,
Indusry LeSer
Medtech
Ernst G Young.
Switzer?arrd.
A leading farce
According to official statistics,
approximately 40,000 people work
in this sector. TEe majority ofthe 500
firms are small and mid-sized companies generating revenues of less
than CHF
million a year. Their
annual sales are estimated at CHF 9
hillion with a growth rate of 7% p.a.
Switzerland can be counted among
the leading counlries in medical technology. Even though labour costs are
rather high, this is less and less relevant in a highly autornated and capitalintensive industry. Furthermore,
the label «swiss made» is important
in the global medtech sector. No sign
ofa countertrend exists. We will focus
in our overview on dentals and ortho-
paedics, which have a major impact
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on the sector.
increase by up to 20%. The main
Dental Implants and devices
One of the most attractive sub-
players in this market are Johnson &
Johnson, Stryker, Zimmer, Biomet
as well as Synthes. Synthes is expec-
segments of medical technology is
the area of dental implants. The
world market is estimated to rise by
i%, embodying a market potential
ofmore than USD i billion. In the
developed world, people want to
have good-looking teeth. Nowadays,
only 2% of the world population is
treated with dental implants. The
Swiss-based Nobel Biocare and Strau-
mann are leading companies in the
global market. Both companies provide the specific abutments to their
implants, which are the base for
the dental technician to build the
crowns and bridges.
The global market is dominated by
five companies which control 85% of
the market. From an investor perspective, dental implants are believed
to be lowrisk investments (due also
to the absence of significant product
liability issues) with high growth
rates. However, product demand
depends on the individual financial
situation of a patient, because in
nearly all countries worldwide,
dental treatments are paid by the
patient directly and are not reimbursed by the public insurance system.
ted to enjoy outstanding growth in
the field ofdiscs, especially through
its US business.
Due to the Mathys spin-off of the
osteosynthesis unit (injured bones)
to Synthes, Synthes is now in a leading position in the osteosynthesis
business. On the other hand, Mathys
specialises in joints and biomaterials.
Joints made of ceramic, hut also
wear-reducing materials (ceramic
and metal), minimal-invasive surgery, operative techniques (navigation)
and tissue engineering are considered as future growth drivers. In terms
ofreimbursement, nearly all the products are paid by the medicare Sys-
tem. This makes the sub-segment
relatively resistant to unfavourable
business cycies because product
demand does not depend on a patien-
t's financial situation. However,
we expect the pressure from the
medicare system on the product
prices to increase in the near future.
Wide range of human resources
available
Merger and acquisition transactions
Contrastingly, this makes dental
have also taken place in the Swiss
implant manufacturers less vulnera-
medtech environment. Since the
ble to the often dramatic changes
medtech sector is considered to be a
in public health policies.
global business, the consolidation
Orthopaedics
Growth within the orthopaedic sub-
segment is between io and 20%.
Whereas sales ofartificial joints for
knees, shoulders and hips as well as
arthroscopy are expected to increase
by io%, products for spine stabilisa-
tion and bone stimulation could
process is likely to continue. Foreign
companies, in particular, are on the
lookout for interesting acquisition
targets in the Swiss sector. One of
the most important reasons is the
wide range of human resources available in Switzerland. Key executives
mention that companies need to be
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Sinn manufacturing and material
where the intellectual potential is.
that is why Switzerland, with its universities and schocis of applied sciences, hut also its dense network oftop
hospitals (within a radius of3oo km,
you lind six large and highly reputed
hospitals and university clinics) is a
top location für die medtech industry, Furthermore, the industry benefits from the wealth of labour skills
in Switzerland, especially in preci-
technology. lt also profits from a vast
venture capital industry that has discovered the prospects ofthe medtech
industry in die last few years.
Investors tend to like this cash-flowrich sector, where Urne to market für
new products is significantly lower,
and product liability issues are less
draniatic than in the pharmaceutical
or biotech industries.
Business areas
BomaIeriaIs
Cardiovascular
Dental Implanis
tjental Devices
Diabeles Devices
Electroniedical /
Imaging Equipment
Orlhopeadics
Respiratory Equipnienl
Surgical Instruments
Wound
& Care Management
Source: Annual Reports and vehsde Information. E&Y 2005
Companies' oriqin
Slarted Independently
MBO
(Management Buy-out)
Academic Spin-oft
Iidustry Spin-olt
Other
Source Annual Reports and website intormalpon. E&Y 2005
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Headcounl growih
2004
138,38
12690
2003
124,81
-
2002
111,38
2001
100
0
20
40
60
80
100
R&Llempioyees
Otheremployees
120
140
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Seurce: Ernst & Young 2005
Revenve in million GHF
<1
1-4
4-7
7-10
>10
Scurce: Ernst 8 Young 2005
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Abstract
Les techniques mdicaIes en Suisse
Plus de 500 entreprises, soit plus de 40000 employs, des exportations ä hauteur de 5 milliards de dollars et des dpenses annuelles en
matire de recherche et de dveloppement s'levant ä prs de 400
millions de dollars: tels sont les chiftres qui dcrivent l'industrle
medtech suisse, laquelle compte principalement de petites et moyen-
nes entreprises ayant un chiffre d'affaires intrieur ä 10 millions de
francs. Trs htrogne, le secteur medtech suisse dispose d'une
forte densit d'entreprises spcialises dans la technique dentaire.
Deux des leaders du march dans ce secteur, Straumann et Nobel
Biocare, ont opt pour la Suisse. Mais les domaines de l'orthopdie,
du cardio-vasculaire ou des biomatriaux sont galement des piliers.
L'intret des entreprises medtech trangres qui dcouvrent la
place boursire suisse va galement croissant. Et ce en raison du
"peer group" de haut niveau et ä forte croissance forme par des soci-
ts renommes teIles que Synthes, Phonak, Straumann ou Ypsomed ainsi que de la longue exprience des analystes et investisseurs
dans le domaine des sciences de la vie et de la solidit de la place
financire suisse. La Suisse reprsente aussi un march pilote en
raison de grandes exigences et de normes strictes sur le march
intrieur qui sont autant d'arguments de poids pour l'exportation.
La russite d'entreprises suisses sur le march mondial a amen
des groupes internationaux renomms de la branche ä envisager
et raliser une implantation en Suisse comme Medtronic, Zimmer,
Johnson & Johnson, Edwards Lifesciences, etc.
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