The rush to Russia's booming med-tech market

For medical technology giants such as GE, Philips, Siemens and Toshiba, Russia has become a highly promising market, with the potential further increasing in its growing private hospital sector. During the Russian Radiology Congress (26-29 May, Moscow) Meike Lerner of European Hospital met with company representatives to discuss their presence in Russia and any problems relating to financing in a market that has no great experience of capitalistic structures

As one of the biggest foreign companies, GE Healthcare has about 200 employees in cities across Russia and, up to now, has supplied around 5,100 units to over 2,900 medical institutions.

Slava Grischenko
Slava Grischenko

In 2007, GE´s revenues in Russia/CIS reached US$ 207 million, which is expected to more than double in 2012. According to Richard di Benedetto, President and CEO of GE Healthcare’s Eastern & Africa Growth Markets (EAGM), which includes Russia, this success is based on strong regional partnerships that introduce GE´s technologies and solutions, as well as its focus on training local medical staff. ‘Providing a superb service is one of the most important aspects, if you follow our aim to provide all parts of Russia with medical equipment,’ explained Slava Grischenko, who heads GE Healthcare in Russia. ‘Although our products cover all necessary hospital areas, users need very good training to benefit from the technology. To provide this service we need to establish strong partnerships in manpower within the company itself; this wasn’t easy when we began here 20 years ago. Today, GE is very well prepared for that task.’ For the near future the priority is to focus more on the private patients sector, he pointed out. ‘The middle class is growing exceptionally fast; in just a few years that population will be higher than in China. Consequently, demand for healthcare beyond the basic system will rise. Additionally, compared to the West, Russian health levels are bad: Stroke rates are 20 times higher and the average life expectancy for men is about 56 years. Russia’s healthcare market faces a backlog, which is a great opportunity for us.’
Richard di Benedetto believes the Russian situation fits neatly in GE Healthcare’s global vision that the future is about early health. ‘This means moving healthcare delivery to pre-symptomatic and earlier disease detection. The idea of investing today to avoid ever-increasing costs in the future is a powerful and inspiring opportunity. Given the social shift in Russia, we now have the perfect basis for this strategy because people are becoming aware of prevention.’

The biggest challenge: knowledge distribution
For Joost Leeflang, Philips CEO for Russia, Belarus, Ukraine & Central Asia, the reasons why investing in Russia has been so interesting in the past five years are clear: ‘Russia is an unbelievably large country, with oil producing a very good income and, in general, it has a highly educated workforce and population. In addition, the government structure is stable and it aims to provide high-quality medicine across the country, as well as make it accessible to the entire population. So the government is investing huge sums in the national project for public health services. That’s basically why money is not much of an issue for our customers. So, we don’t face the same problems as in the UK or Germany, for example, which have huge private sectors and where every cent must be turned twice before spending. Of course, that’s something developing in Russia as well, and we expect a strong increase of private hospitals over the next few years. But, as a provider of medical technology equipment, this trend is another opportunity.’
His colleague Ilya Gipp, who is responsible for Philip’s CT and MR business added: ‘In previous years we have seen the market become more developed and it’s growing. But, for us, development of the infrastructure is also important. If we install a MR or CT system in a more rural hospital an infrastructure must be developed for it to be utilised and to allow a sensible patient throughput for the system. Considering this infrastructure, one big issue in Russia is education. Although the doctors’ knowledge is incredible, the country has missed the step to the latest diagnostic technologies. Besides technical know-how of the systems, another point is that Russia has very specialised hospitals, based on clinical fields such as oncology or pulmonology. What’s important to think about in the near future is that equipment must be used for various treatment areas, which is only possible if there is an infrastructure to support that. In a nutshell: The challenge is to ensure there is the right infrastructure to maximise the benefit of our technology. In geographical terms, getting the knowledge distributed is the biggest challenge.’
For Philips, equipment installation only begins collaboration with customers, training and education programmes are integral. The firm has piloted a CT training programme with Moscow State Medical University, for which certification courses were established.

CT and MR scanner sales are up
At Toshiba’s Satellite Symposium on CT and MR, which was held at the congress, Dr Jörg Blobel, of Toshiba Medical Systems Corporation, Japan, and Dr Lucia Kroft, from the University Medical Centre, Leiden, the Netherlands, described first experiences with the Aquilon ONE 320-slice CT.
Audience interest was keen: Toshiba has already sold some of these scanners to customers around the globe and according to Mikhail Smirnov, Product Manger for Toshiba Medical Systems in Moscow, there is more than one potential customer thinking of a purchase in the near future. ‘We’ve had good beginnings with Aquilon ONE in Russia. Along with features such as 4-D dynamic image acquisition, the option for low-dose scanning is of particular interest. In Russia dose regulations are far stricter than in Western Europe,’ he explained. ‘In the last years, Toshiba has increased its market share, especially in CT (we hope to number one, now). In previous years, a lot of ultrasound systems were installed because they were affordable. Now it is CTs turn, because its clinical value is much appreciated. With Russia’s growing economy, the number of CT scanners and MR systems being installed is increasing tremendously.’ However, he emphasised that entering the private hospital sector is a huge challenge: ‘Private institutions and hospital networks are created by big Russian corporations, such as oil and gas firms, which are eager to equip them with the ultra-modern technology. Our next task is to participate successfully in that sector.’

01.07.2008

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