The number of procedures carried out on diagnostic imaging systems in the past few years has been showing an increasing trend. This has led to an additional demand for imaging systems across the globe. In Europe the picture is not different. Though some countries have now started to show signs of market saturation for some imaging modalities, there are some countries that still are facing a lack of good quality imaging modalities. These countries are facing a financial crunch which is retarding their investment on new imaging modalities. In such cases refurbished equipment are proving to be a favorable solution as they are priced lower than the new equipment and come with the same warranty as new equipment
Refurbished: Are they worth it???
Refurbished systems are second hand systems which are brought to the same original specification by the OEM or by local refurbishers. Old systems are bought by various brokers, refurbishers or by OEMs themselves. The spare parts are replaced with new ones, and they are brought upto specifications of a brand new equipment. The process involves similar quality checks and standards as for new equipment. Once the equipment gets back its original specifications, it is sold in the market in the form of refurbished modality. The price of refurbished equipment depends on its features and at times also on the age of the system. Major customers for these systems are private healthcare institutions as private hospitals generally do not have budget to buy new modalities.
Though refurbished systems come with the same specifications as the new equipment along with one year warranty, they still face the challenge of being accepted by the hospitals. The "second hand" tag is not allowing the growth of this market. The customers consider them to be old and are not very open to acknowledge the quality of the system. Though this scenario is fast changing, the industry stake holders consider the customer psyche to be one of the main hindrances for the expansion of this market. This could be exemplified by the fact that in many countries, refurbished systems are not allowed to be quoted for tenders. This has made their penetration very difficult in the public healthcare institutions who are the major purchasers for medical equipment across Europe. Also countries such as France do not reimburse procedures done on refurbished systems such as CT and MRI. This has severely affected the refurbished systems market in France for MRI and CT modalities.
Pre Owned or Refurbished???
Customers generally confuse refurbished systems with used second hand equipment. These used equipment or generally termed "pre owned "equipment are those equipment which are sold directly "as is" from one hospital site to another without proper checks on the performance of the equipment. They are newly painted and some nuts and bolts are changed to give it a new look. These systems do not come with warranty and are less in price when compared to refurbished equipment. There are some private institutions that buy such equipment due to its price but are not happy with its performance. This has indirectly led to more awareness about the refurbished equipment in terms of price, quality and maintenance.
The Refurbished Medical Imaging Market
The market for refurbished medical imaging systems is small in comparison to the new imaging modalities. The main customers of these systems are private institutions who are not present in very high proportion in most of the European countries. Also as the private institutions compete with the public healthcare centers on the type of service given to the patients, they generally use the latest technology equipment in their imaging centers. It also helps them to woo the radiologists to work with their centers to provide best services. But many of the private institutions do not have enough financial aid to support purchase of state of the art of equipment. Hence they invest in refurbished equipment of higher diagnostic capability and thereby increase the value of their services. Many imaging centers buy lower versions of the refurbished equipment just to perform basic diagnostic examinations. Higher version equipment is generally not available unless the parent hospital invests in a much higher version or the system is a demo unit.
Product Segment Analysis
Major imaging modalities which have found popularity in refurbished form are CT, MRI, ultrasound and cardiovascular X-ray to some extent. Since CT and MRI are capital equipment, they find more customers. Focus on refurbished CT scanners has shifted from spiral CT to multislice CT systems. Few years back, Spiral CT dominated the refurbished CT market. With the introduction of higher slice CT within a short span of time, technologies are turning old very fast. This has led to the growth of CT market in Europe. Same is the case with MRI scanners. The market has moved from less than 1 Tesla scanners, which are preferred in smaller imaging centers to 1.5 Tesla. Ultrasound scanners though do not need much of refurbishment; they are preferred by small centers. Systems such as cardiovascular X-ray and fluoroscopy are not favored due to the long gap in technology innovation
The Industry Structure
The refurbished medical imaging market is very fragmented with the presence of OEMs, local refurbishers, brokers and dealers. The three major OEMs: GE Healthcare, Philips Medical Systems and Siemens Medical Solutions have their own brand of refurbished equipment in the market. They compete with local refurbishers who have advantage of difference in price between them and the OEMs offerings. The OEMs sell their products through their direct sales force or through their dealer network. There are many small brokers and dealers who market the refurbished equipment as well as pre owned equipment. There are some North American refurbishers who also sell products used in North America in Europe in refurbished form through their local dealers. This has made the competitive environment even more fragmented.
A recent study on refurbished medical imaging systems in Europe estimates the present market in Europe to be worth $139.5 million. The refurbished medical imaging market in Europe may experience some growth provided it is able to overcome resistance of the ‘’second hand’’ reputation among the hospitals. Though the market is poised for growth, it is not expected to be very high as reimbursement also plays a major role in the acceptance of refurbished equipment. The industry players would have to create more awareness about the difference between pre owned and refurbished systems. Overall, the market for refurbished equipment is an attractive one.
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