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(Last updated: 11 Jan 2008)
Trends and opportunities
Market overview
With a population of 61.5 million people (of which 10.11 million are aged over 65), France represents the second largest European market for medical care after Germany. Over the last 30 years, new healthcare technologies and products have contributed to an increase in life expectancy of eight years.
France ranks sixth in the world in terms of medical density, with approximately 335 healthcare professionals for every 100,000 French residents. There are 234,739 practicing doctors, of whom 102,330 are general practitioners.
The French social security system has been accumulating a deficit over the past 25 years. This problem is causing the French Government increasing concern. Due to the heavy cost of the social security system (the deficit is estimated at A$14.6 billion for 2007), the French Government is encouraging self-medication, particularly through the use of generic medicines. The government is also implementing some cost-containing reform programs for the health sector which include new measures to control spending on medical devices.
Market structure and functioning
The French healthcare system is based on the principle of free choice of medical treatment. Patients choose their doctors, pay them directly and claim for reimbursement afterwards. The amount of reimbursement represents a percentage of the standardised fees set by the social security administration, which may vary according to the services.
Ninety-nine per cent of the French population are covered by the Statutory Health Insurance, a branch of the Social Security System. There are different schemes depending on the social and/or professional category of the individuals. Eighty per cent of the French population are protected by the General System, which covers employees and pensioners from trade and industry sectors.
Medical expenses are covered as following:
- The French healthcare system covers 75.5 per cent of all medical expenses
- Private households – 11.3 per cent
- Private health insurance – 10.1 per cent
- Provident societies – 2 per cent
- Other government – 1.1 per cent
The French market for medicines is divided into prescription-only, or non-prescription, over-the-counter (OTC) products. The large size of most of the pharmaceutical companies is due mainly to the need for substantial (and expensive) research and development, combined with high product sophistication, which pushes laboratories to merge.
Homeopathy is recognised by the French healthcare system, and remedies are reimbursable under applicable rules. However, only prescribed medicines are reimbursable. Sales of homeopathic remedies with potencies beyond 30C are forbidden.
There are public and private hospitals and both sectors are expanding. The main sources of income for hospitals are:
- Social security – 90 per cent
- Households – 6.6 per cent
- Complementary private insurance – 2.3 per cent
- General public – 1.1 per cent
In general, the number of qualified medical staff in France is increasing. However, the trend for non-medical staff has stagnated and in some sectors, such as anaesthesia-reanimation and obstetrics, there is a shortfall in qualified specialists.
The Hospital Federation of France represents 2500 public hospitals with a total of around 470,000 beds, ie. 65 per cent of the French market. This association undertakes marketing activities, such as the promotion of public healthcare to the general public and propositions to hospitals.
The 'Carte Vitale' is a plastic smart-card that is progressively replacing the paper social insurance card. Use of the Carte Vitale is becoming more widespread but unfortunately not all healthcare professionals have the required equipment to read the card and be linked to the national network.
Opportunities
Australian companies have already been successful in France with medical devices such as surgical instruments, disease diagnostics and software, however, broader opportunities exist.
Telemedicine, non-invasive surgery, orthopaedic equipment, and surgical and medical instruments are areas in which demand is expected to grow sharply in the next years.
Medical devices
France is the fourth largest medical device market in the world behind USA, Japan and Germany. The market value in 2007 is estimated to be A$8.1 billion. France spends 2.9 per cent of its health expenditures on medical equipment which represents 0.3 per cent of total GDP.
The market operates with a negative trade balance as imports outweigh exports in most major product groups. This deficit reached A$923 million in 2006. France, however, has a positive balance for radiology equipment and X-ray film. Between 1998 and 2002, exports increased faster than imports. This trend has slowed since 2002 and imports are now increasing at almost the same rate as exports. Eighty per cent of the medical device consumption is derived from imports. Since 2002, the value of both imports and exports almost doubled and around two-thirds of French medical imports are now sourced from Europe, up from 46 per cent in 2001.
There is a myriad of sectors in this niche market, each with a marginal market share. For each product, specific manufacturing and distribution skills are needed. Examples of sectors, which offer potential for Australian exporters include:
- Products designed for the elderly population (eg. incontinence products)
- Care kits for nurses and medical professionals
- Surgical equipment
- Disposable equipment (disposable diagnostic)
- Hospital waste treatment products
Over the last few years, the medical device sector has been growing at a faster rate than the overall market. Medical device imports in France reached A$8.7 billion in 2006. Not all of those products are for the national market as some are re-exported, eg. pacemakers.
The acquisitions process in the medical industry has opened up new channels for distribution, which favour the importation of foreign-manufactured equipment on the French market. The opportunities for investment in this sector remain strong as the French Government in 2003 launched a A$15.8 billion investment program for French hospitals to modernise and renew their equipment, in particular imaging and radiotherapy equipment.
A similar investment program is planned for 2008-2012. A five-year cancer plan was launched in 2003 and a similar plan for Alzheimer’s disease will start in 2008. To implement the plans, both will require new investments in medical devices. Some activity-based funding has also been implemented. This funding should act as an incentive for hospitals to increase their activity levels, but may consequently reduce the expenditure on equipment that is not reimbursed.
Finally, the increasing proportion of elderly people in the population will also create new demands for home care products and services, such as disposable equipment.
However, there is also a counteracting force in this market, that is, the will to reduce operational expenditure costs and to regulate the medical device expenditure in the same manner as drug expenditure (with reduced reimbursement tariffs). This will obviously restirct the market growth on such devices and supplies.
The medical device market is therefore expected to see limited growth in the future, with its turnover rising from A$8.1 billion in 2007 to an estimated A$10.56 billion in 2012. This nevertheless represents an average growth rate of 5.3 per cent over the next five years.
Fruit extracts and essential oils
French consumers are now more conscious of maintaining a healthier lifestyle and are expressing a desire to ‘return to nature’. The French Government is also encouraging people to self-medicate, which is resulting in a boom in the nutraceutical and functional food and beverage, phytotherapy and homeopathy industries. This market offers great opportunities for Australian exporters as the Australian industry has some unique products in this area, thanks to its rich natural environment.
The major opportunities for Australian services include:
- Ambulatory/outpatient surgery. This area of medicine has significant potential in France as it provides cost-effective medical services in an environment that is often considered more convenient and less stressful for patients than traditional hospitals.
- Home healthcare. Home care is a luxury, but with further improvements in technology, this form of healthcare will become available to a larger proportion of the community. For this to happen, improvements are required in the level of equipment sophistication and the level of computerised information management within the French healthcare network.
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