Rigid Endoscopy – are you tough enough to compete?

Author: Rachael Lewington, Consultant at PDA Research

Within Europe, rigid endoscopes are still a potentially exciting clinical area where both new and existing competitors are fighting hard for market share. Although this market is seen as becoming saturated, the drive to develop new technologies and new procedures continues. In addition, growing restrictions on pricing and a tough competitive environment make this a challenging area where competitors will need to pull out all the stops to win market share.

Minimally invasive surgery is a well-accepted technique, and rigid endoscopy is considered to be a mature market within Europe. The larger, most established clinical areas such as laparoscopy, urology and arthroscopy have reached a state of steady growth, although the search for new procedures for rigid endoscopes within all these areas goes on. One example of this is arthroscopic procedures in difficult anatomies such as the shoulder and wrist. Companies such as Atlantech have been able to build up this niche market by developing rigid endoscopes with a wider field of vision that allow the area to be observed with a single optic. Newer applications, such as neuroendoscopy, have shown much faster growth rates as new procedures become possible and new regions of the body become accessible. Growth rates for increases in the number of neuroendoscopy procedures are believed to be in the region of 7-15% a year.

Neuroendoscopy promises to take rigid endoscopic techniques to a new level. The central nervous system poses challenges to minimally invasive surgery including:

· The use of gas insufflation or fluid perfusion to optimise the field of vision (as is done in conventional endoscopic procedures) is not possible because of the likelihood of damage
· Minor bleeding can be catastrophic
· Utter sterility is a pre-requisite

This has created the need for instruments that are specifically designed for use in the CNS.

Examples of new procedures that have become possible involving the use of rigid endoscopes in neuroendoscopy include:

· Treatment of hydrocephalus (third ventriculostomy and fenestration)
· Removal of tumours and cysts
· Evacuation of some types of subdural haematomas (chronic and multilocated)
· Placement of shunt catheters
· Treatment of aneurysms
· Treatment of sympathetic mediated pain
· Endoscopic procedures on the CNS of children and infants

The rigid endoscopy market as a whole, has been dominated by a few, large competitors such as Karl Storz, Richard Wolf, Olympus and Smith and Nephew for several years. Other companies such as Stryker have a built up a significant presence in many European markets, where the company has made inroads into the arthroscopy market in particular. New competitors, from within Europe, the US and Asia have begun to gain a foothold in some of the larger European regions such as Germany, but for the foreseeable future the current market structure is unlikely to show dramatic changes. Brand and regional loyalty are still important in Europe and established competitors have built up strong customer relationships and continue to be regarded as providers of high quality equipment. In Germany in particular, the label “made in Germany” continues to be seen as a vital sales tool.

Key factors for success are summarised below.

Future developments

European industry members do not appear to be unduly concerned about the influx of cheaper imports from regions outside Europe, specifically India and China. Although prices for these products are significantly lower (costing perhaps $300 in comparison to $2500 for a European product), there is scepticism about product quality. As one interviewee put it “People need to buy quality products and cannot use bad optics or instruments.” In view of the loyal customer base that most major rigid endoscope suppliers have established, and purchaser’s requirements for a high level of customer service (including product replacement and repair), the barriers to cheaper imports becoming widely established in the market appear to be significant.

Views are mixed as to the threat posed by products aimed at niche areas of the market. It is possible, that if effectively marketed and competitively priced, a new market entrant could have an impact in this area. However, many established companies feel that the threat from niche competitors should not be overstated since large existing companies have achieved almost blanket coverage of the market and are able to support the introduction of new products with an established customer support system.

One area where smaller companies are reported to have successfully developed a specialist market is in small joint arthroscopy, where Atlantech have carved out a foothold in the market. This company is highly focussed on arthroscopy and reports that its success has been aided by good customer service back up to quality products that are compatible with systems that are already installed.

Overall, the rigid endoscopy market is driven by applications rather than product innovations. HBS estimates indicate that overall the number of procedures carried out in Europe is growing by 5-7% a year. This includes that development of new procedures in addition to increases in patients receiving treatment using established procedures.

Rigid endoscopy presents a potentially hostile environment for new market entrants in view of the dominance of a few, well established companies. Companies wishing to enter the market would do well to look at ways to achieve sufficient coverage in large European markets. Strategies should focus on customer service, including training and support, price and new applications.