London, Sept. 8: With the exception of the United Kingdom where strong government commitment to health care is funding investment in new equipment, the European market for key medical imaging modalities is witnessing capital constraints. As an increasing number of public hospitals lease imaging equipment, there is a growing need for vendors to be more flexible and inventive in their offerings to better compete in the contract market.

While public health care institutions are dependent on government funding for new equipment, imaging service providers in the private sector have to invest their own capital and therefore, they tend to be highly price sensitive.

"In an increasingly unstable health care market, the challenge for vendors is to have the right financial tools to facilitate deals that do not severely constrict their margins," notes Mr. Martin Bryant, Research Analyst with Frost & Sullivan (http://medicaldevices.frost.com). "While offering the best specifications at competitive prices along with attractive financing options, it is essential to harmonise the communications process between the sales and finance departments to ensure significantly shorter sales cycles."

Purchase mechanisms in the medical imaging industry are undergoing drastic changes and there is a significant rise in the issue of large public tenders by health care providers. Since such a practice enforces significant price competition, there is immense pressure on research and development (R&D) departments to produce cost-effective, high-performance products.

In meeting this challenge, vendors need to balance their R&D spending, while simultaneously curtailing investment in fiercely contested areas where a drop in unit shipments is likely.

As imaging technology continues to develop, health care providers are looking to upgrade their services with a complete range of advanced diagnostic solutions. This has lead to growth in both multi-modality deals as well as product bundling that encompasses the whole scope of a modality, wherein providers value the security of being supplied everything they require by the same vendor.

By offering a comprehensive solution with the necessary peripherals, software and connectivity vendors stand to gain high volume contracts.

The growth of competition in the medical imaging modalities market has seen vendors increasingly differentiate themselves by means of financial, training and asset management services, a tendency which reflects the mature stage of the western European market.

"While Germany continues to be the largest and most stable regional market, there is a shift in market trends across key imaging modalities," says Mr. Bryant. "Ultrasound is presently the largest market segment but it is shrinking due to market maturity and the magnetic resonance imaging (MRI) segment is emerging as the best potential market sector."

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