GW Equity

Here is some information that might be helpful to you about the Medical Equipmet industy.

Industry Overview

• The medical equipment and supplies distribution industry in the US includes about 6,000 companies with combined annual revenue of about $53 billion. The largest national distributors include Owens and Minor, Henry Schein, Patterson, and PSS World Medical. The industry is highly concentrated: the top 50 companies hold almost 65 percent market share. Most companies participate at a regional or local level and have revenues of about $5 million.
• Demand is driven by population demographics and advances in medical technology. The profitability of individual companies depends on merchandising and efficient delivery. Large companies have economies of scale in purchasing power and highly developed infrastructures that allow for efficient distribution of supplies and equipment. Small companies compete by specializing in a product line and excellent customer service to a local customer base. Annual revenue per employee is about $500,000.
• Major products include medical and surgical supplies (about 45 percent of the market) and instruments and equipment (about 40 percent). Other products include orthopedic and prosthetic appliances, dental products, and veterinary supplies. Some companies carry over 100,000 items while others specialize in niche markets and may carry only a few different stock items to serve a local market's specific needs.
• Distributors buy high volumes of product from manufacturers, store these products at company-operated distribution centers, and deliver to customers as required. Products are generally delivered by company-owned or leased trucks. Common carriers are used as needed.
• Computer and Internet technologies play a major role. Distributors operate proprietary systems that allow customers to place orders directly and receive products the next business day. Inventory monitoring, automated vendor purchace order creation, order analysis, pricing, delivery scheduling, and automated billing are components of the most refined systems.
• Major end-users are physician offices, hospitals, dental offices, alternate care facilities such as same day surgical centers, clinics, and extended care facilities. In the US, about 230,000 physician offices, 130,000 dental practices, and 5,800 hospitals operate. Many belong to buying groups known as Group Purchasing Organizations (GPOs) that negotiate pricing directly with manufacturers and then contract with distributors for distribution at a fixed price. Alternatively, GPOs may set up long-term contracts directly with distributors based on cost-plus percentage.