Colombia benefits from one of the most extensive insurance systems and medical financial protection in Latin America, second only to Chile, thanks to the 1993 health care reform project. Law 100 created the social security system and covers standards governing the general system of pensions, professional risks and complementary social services. During the subsequent ten years, insurance coverage expanded from 20 to 78 percent of the total population. Presently, five of the twenty best hospitals and clinics in Latin America are in Bogotá (2), Medellin (2) and Cali (1)2, according to “America Economia” magazine. The United States is the most popular source for importing medical equipment.
In 2008, the total market size for medical equipment reached USD 329.9 million and the U.S. achieved an import market share of USD 103.6 million, or 31.4 percent of the total import market of USD 239.9 million. The total market grew 36.8 percent by the end of 2009 however U.S. market share fell to 26 percent. Other competitors include Germany, Japan and China with market shares of 13 and 8 and 5 percent, respectively. The economic crisis affected competitors across the board with all of them registering a slight decrease in their market share. The excellent quality and engineering of German medical equipment poses the greatest competition for U.S. medical equipment exporters.
The Universal Coverage by 2010 law enacted by the Uribe government caused this spike. The 15 percent increase in public investment forecast by industry experts was surpassed in 2008, fueled by institutions preparing for the implementation of the law. By 2010, the market should grow two percent to USD 460.4 million. Plan Vallejo3 for technology imports is a financial tool that should help to create greater demand for imported products, including U.S. medical equipment.
Despite the decline in U.S. market share, the local market prefers U.S. medical products. Many local physicians trained in U.S. medical schools and hospitals. U.S. equipment suppliers benefit from long-standing compliance with industry standards, reliability, lower shipment costs, innovation, and a favorable exchange rate. In 2009, Colombia officially adopted UL standards. The global economic crisis clearly affected the ability of local industry to import state of the art technology, including in the healthcare sector this year. The decline in the growth rate of imports, including a slight cutback for U.S. equipment, when compared to 2008, reflects this reduced purchasing capacity.
The decrease in U.S. market share in 2009 was also a consequence of the current public health financial crisis faced by the Colombian government. Analysts have suggested increasing tobacco and liquor taxes to address this deficit4. Another factor that burdened the growth of the U.S. medical equipment industry was the enforcement of new legislation (Decree 4725 of 2005) related to importing refurbished/remanufactured equipment. This legislation aims to protect the quality of medical service provision in Colombia. Many of the specific conditions and requirements are challenging for small and medium companies. Hardest hit are small, remote facilities in poorer departments of Colombia that have a high risk security profile (i.e. Choco, Sucre, Tolima, Meta etc.).
If the U.S.-Colombia Trade Promotion Agreement (CTPA) is approved, it will make newer and better technology more available and affordable to local medical institutions, which seek to improve their service and build a domestic and international reputation. The CTPA will eliminate the current five to 15 percent Colombian tariffs on U.S. products. In addition, the ban on remanufactured products will be lifted which will help out poorer departments of Colombia.
Best prospects for U.S. medical equipment manufacturers include:
• Non-electrical medical, surgical, dental or veterinary instruments
• Prosthetic devices
• Diagnostic imaging equipment
• Laboratory equipment and consumables
• Ultrasound, mammography and cardiovascular equipment.
• Dermatological and laser treatment apparel (boosted by medical tourism and expanding plastic surgery demand)
• Intensive care, cardiology, neurology and oncology related equipment
According to the World Health Organization, over 70 percent of medical decisions in developed countries are based on clinical laboratory results, whereas in developing countries such as Colombia, decisions based on laboratory results are only around 30 percent. Colombia’s planned health care system improvements aim to upgrade clinical laboratories to enhance the quality of service delivery to the health sector. The market for clinical laboratory medical equipment will benefit from these measures and the resulting increased income. Other leading prospects include medical, surgical, dental or veterinary instruments and electro medical equipment.
The 2010 is expected to be more positive for the global economy, including expected economic recovery in Colombia. This should boost U.S. medical equipment imports. Several factors have positioned Colombia’s medical industry for continued growth, after the downturn. First, until late 2008, the positive economic climate stimulated the demand for construction of new facilities throughout Colombia. Second, in June 2008, the Colombian Health Ministry (Ministerio de la Protección Social) joined the Pan-American Health Organization’s Safe Surgery Initiative to reduce the incidence of complications from surgery. This enhanced focus on technology and medical security boosted the modernization of hospitals, clinics and clinical laboratories. Third, medical tourism is developing rapidly, albeit late vis-à-vis South American competitors (Brazil and Argentina) mainly for plastic surgery and ophthalmology – where Colombia is considered a leader in advanced techniques – as well as trauma and orthodontist work. Colombia also believes its proximity to the United States is a key selling point in promoting the medical tourism industry. Recent studies support the current supply of diagnostics-imaging equipment does not adequately meet existing demand. The Colombian government plans to double the acquisition of diagnostics-imaging equipment within 10 years. Despite the new legal conditions and requirements for importing refurbished equipment which impact the acquisition of imaging equipment, the demand and need of American imaging products remain high.
U.S. medical equipment is still a very popular choice in Colombia and outstanding opportunities could result from the long term impact and trend on public funding for medical equipment of the Colombian Social Health Insurance (NSHI). Government reforms to upgrade and renew technology in hospitals and clinics may also foster the acquisition of U.S. medical imports. Medium-term opportunities will be determined by the sustained and continued growth of the medical and healthcare sector, which is greatly affected by government investment.
Medical services outsourcing - Colombia is seriously evaluating exporting medical treatment services for chronic conditions with an emphasis on cardiovascular and cancer treatment due to acquired expertise and infrastructure. The projected success of this industry has led hospital and clinic management to upgrade existing facilities, adding medical equipment and providing English language training for their staff. Another window of opportunity are the new medical trade shows that will take place in Bogotá and nationwide to promote international medical equipment. MEDITECH is an important trade show to be held in Bogotá in April 2010.