Features, Strategies and Promises of Medical

Imaging in South Africa

Opportunity Analysis of Five Key Device Segments

Shalena Naidoo, Research Analyst

Healthcare

19 March 2013

© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of

Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

2

Today’s Presenter

Functional Expertise

• Particular expertise in:

- Conducting scientific research into core diseases affecting the South African neonatal

population

- Designing and implementing vaccine-specific clinical trials

- Developing and implementing laboratory methods for solving and understanding complex

pathologies

- Data collection, analysis and the construction of scientific research reports

Industry Expertise

Experience in conducting market research in Ethiopia creating working relationships with key

industry participants in the pharmaceutical sector

Evaluation of market opportunities for medical imaging devices in South Africa

Career Highlights

• Awarded best oral presentation for academic research conducted in the field of pathology

(Faculty of Health Sciences, Stellenbosch University)

• Served a key role in the initiation and co-ordination of an international multi-collaborative pilot

study aimed at evaluating key health-related issues in South African infants

Education

• Master of Science in Medical Sciences (Medical Microbiology and Immunology) from

Stellenbosch University, Stellenbosch (South Africa)

• Bachelor of Science with Honours in Medical Sciences (Pathology) from Stellenbosch

University, Stellenbosch (South Africa)

• Bachelor of Science (Molecular Biology and Biotechnology) from Stellenbosch

University, Stellenbosch (South Africa)

Shalena NaidooResearch Analyst

Healthcare

Frost & Sullivan

Africa

Cape Town

Place photo here

Shadow Background

for effect

3

Focus Points

1. Occasion for the Analyst Briefing

2. Key Opportunities in Africa

3. South Africa in the Global Context

4. External Challenges: Drivers and Restraints

5. Growth of the South African Medical Imaging Market

6. Growth Opportunities for Key Device Segments

7. Overview of the Competitive Landscape for Medical Imaging in

South Africa

8. The CEO’s 360 Degree Perspective

9. Conclusion

`

4

The Occasion for the Analyst Briefing

This analyst briefing:

o Growth Opportunities

o Key Drivers and Restraints

o Competitive Landscape

o Key Purchasing Factors

o CEO’s 360 Degree Perspective

How you will benefit:

o Understand Market Forces

o Identify Opportunities for Growth

o Challenge your Current Growth

Strategy

o Identify the Leading Market

Participants

5

Africa 2020 – The Summary

Medical Devices:

$16 billionMedical imaging and

clinical diagnostics

Healthcare Expenditure:

US$200 billionTotal annual healthcare

expenditure will double

over the next decade

Pharmaceuticals:

US$23 billionAnnual market, includes

prescription and OTC

products

Risk Pooling:

US$2.5 billionMedical insurance investment

over the period 2010-2020

Private Healthcare:

>US$20 billionThe demand for Private

healthcare presents a growing

opportunity

Life Science: $800 millionLocal formulation and filling

Summary of Key Opportunities – Investment in

Healthcare 2020

South Africa in the Global Context

7

Global Perspective – Revenue Generation by

Geographical Region

USA5 392.323.1% Canada

365.51.6%

Brazil687.33.0%

Mexico268.11.2%

Rest of LATAM406.71.7%

Western Europe3 988.017.1%

CEE725.83.1%

South Africa122.60.5%

Turkey250.11.1%

Rest of ME&A392.21.7%

Russia1 215.05.2%

India479.92.1%

China2 845.912.2%

Japan4 065.117.4%

Australia645.32.8%

Rest of Asia1 446.16.2%

8

Global Perspective – Revenue Generation by Imaging

Modality

GXR3 539.515.2%

XRM914.83.9%

IXR3 158.713.6%

CT3 395.714.6%

US5 496.923.6%

MRI4 918.021.1%

NM973.04.2%

PET899.33.9%

External Market Challenges -

Drivers and Restraints

10

Competitive

Demands within

the Private Sector Hospital

Revitalisation

Initiatives

Implementation

of National

Health Insurance

Demand for

improved

technology

External Challenges – Market Drivers

11

External Challenges – Market Restraints

Skills shortage

within the

industry

Long Replacement

Cycles Specifically

within Public

Sector

Increasing

radiation

concerns

Growth of the South African Medical

Imaging Market

13

Market Segmentation

General X-rays Mammography

Total Medical Imaging Market

CT ScannersFluoroscopy MRI Scanners

Analogue Analogue

Digital

Less than16 slice

3.0 Tesla

1.5 Tesla16 slice

64 slice

128 slice

Analogue

Remote

Remote Digital

Digital

Less than1.5

Tesla

14

(15.0)

(10.0)

(5.0)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenue 46.6 60.4 64.9 69.6 75.1 80.8 87.1 94.1 102.0 110.7

Growth Rate (%) (10.3) 29.6 7.5 7.3 7.8 7.7 7.8 8.0 8.3 8.5

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ M

illi

on

)

Year

Total Medical Imaging Market Revenue Forecast

CAGR: 7.9%

Growth Opportunities for Key Device

Segments

16

`

General X-rays

2011: $16.2 million

2018: $ 29.2 million

Key Device Segments - Growth Opportunities

CT Scanners

2011: $22.6 million

2018: $43.9 million

MRI Scanners

2011: $10.5 million

2018: $13.8 million

Fluoroscopy

2011: $10.2 million

2018: $14.1 million

Mammography

2011: $5.4 million

2018: $9.6 million

17

Growth Forecast for Five Device Market Segments

0

5

10

15

20

25

30

0.0 2.0 4.0 6.0 8.0 10.0 12.0

CT Scanners

Fluoroscopy

General X-rays

MRI Scanners

Mammography20

11

Re

ve

nu

e $

mil

lio

n

% CAGR (2011-2018)

Device Segment Factor 1 Factor 2 Factor 3 Factor 4

General X-ray, Fluoroscopy, and

Mammograms

Quicker workflow, ease-

of-use

Price and

running cost

Improved

workload

Quality and

application

CT and MRI ScannersMulti-slice technology Functionality

High

throughput Image quality

Competitive Landscape for Medical Imaging

in South Africa

19

GE21.1%

Siemens20.6%

Philips16.1%

Toshiba12.0%

Shimadzu7.8%

Others22.4%

Competitive Analysis—Market Share

Tier Competitors

Tier 1 GE, Siemens, Philips, and Toshiba

Tier 2 Shimadzu, Hologic, K&S, and Stephanix

Tier 3 All other market participants

20

Competitor Analysis – Public vs Private Sector for

General X-rays

0.0

50.0

100.0

150.0

200.0

250.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Un

its

Shimadzu Philips Siemens K&S Toshiba

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Un

its

Shimadzu Philips Siemens K&S Toshiba

Public Sector

Private Sector

21

CEO’s Perspective

2

Limited radiologists have increased

workloads. Ease-of-use and operational

efficiency are important factors to consider

when purchasing new technologies.

3

There is a trend towards less radiation

exposure, therefore, factors considered

during purchase include radiation dosage,

throughput, and speed of examination.

4

Public health institutions have budget

constraints. To overcome this, there is

greater preference for multi-functional

imaging systems.

5

Radiologists are continuously demanding

high resolution imaging machinery in order to

ensure effective diagnosis and treatment of

the patient.

1

Due to price sensitivity in the public sector,

pricing is important when making purchasing

decisions. A price-performance ratio is key to

featuring in this market.

Conclusions

23

Three Key Market Predictions

Hospital

revitalisation

initiatives will serve

as the major driver

of growth for the

medical imaging

market in South

Africa.CT scanners will

serve as the largest

contributor to

revenue and the

market will have the

highest growth over

the forecast period.The need to be

competitive within

the private sector

will drive growth of

innovative

technology in this

sector

24

Next Steps

Develop Your Visionary and Innovative Skills

Growth Partnership Service Share your growth thought leadership and ideas or

join our GIL Global Community

Join our GIL Community Newsletter

Keep abreast of innovative growth opportunities

25

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other?

Please inform us by “Rating” this presentation.

What would you like to see from Frost & Sullivan?

26

http://twitter.com/frost_sullivan

Follow Frost & Sullivan on

Facebook, LinkedIn, SlideShare, and Twitter

http://www.facebook.com/FrostandSullivan

http://www.linkedin.com/companies/4506

http://www.slideshare.net/FrostandSullivan

27

For Additional Information

Christie Cronje

Corporate Communications

Africa

(+27) 21 680-3566

Christie.Cronje@frost.com

Shalena Naidoo

Research Analyst

Healthcare

(+27) 21 680-3201

Shalena.Naidoo@frost.com

Mani James

Regional Director

Growth Partnership Services

+27 21 680-3208

Mani.James@frost.com

Danielle Kruger

Account Manager

Healthcare

+27 21 680-3262

Danielee.Kruger@frost.com