Getinge grows for cost efficiency

An aging population, and a growing acceptance of institutional care are part of the factors fostering continual growth in sales of medical products. At the same time, demands for cost efficiency are stricter than ever within the health care sector. The Swedish supplier of medical equipment, Getinge Group, is expanding rapidly to meet the market’s demands.

In 2007, Getinge Group acquired the British-owned medical technology company Huntleigh. Huntleigh is now a part of Getinge’s Extended Care business area, with a product range that comprises devices for the hygiene and transfer of the elderly and disabled, as well as products to prevent and treat pressure sores. The acquisition was partly financed with a loan from NIB.

Historically, Huntleigh’s customer base has been mainly in hospital care, while Getinge’s Extended Care customers are within the care for the elderly. Long-term sales synergies between these two will be achieved now that Huntleigh’s products can be marketed to Extended Care customers, and vice versa.

Through the acquisition, Getinge Group also broadened its selection of hospital beds and products for wound care-an area that previously has been considered a weaker segment in their line of products. Among Huntleigh’s primary products are special mattresses for the prevention of pressure wounds and beds for use in intensive care.

Global growth in sales

More than half of Getinge’s sales are in the European market, but in recent years the group has increased its presence in major emerging markets, such as Brazil, India, China and Russia. Getinge’s President and CEO Johan Malmquist points out that there are several factors indicating that the global demand for advanced health care and high-quality care for the elderly will continue to grow in the foreseeable future:

“Since the larger part of an individual’s health care costs normally are concentrated in the last years of life, the demographic changes in society, with an aging population, mean that demand for care increases. Another factor is that advances in various areas of health care and medicine makes it possible to treat an increasing number of diseases, which contributes to the increased demand for care. The rise in global prosperity also means that more and more countries can afford a modern health care system. On the other hand, we will see a growing amount of prosperity-related problems, such as excessive overweight and cardiovascular diseases.”

Increasing demands on cost efficiency

At the same time, the increased demand means that the health care sector must find ways to improve its cost efficiency, as political decision-makers try to bridge the gap that arises between supply and demand. Getinge is broadening its line of products to meet its customers’ needs through considerable investments in innovations and product renewal, as well as in growth through company acquisitions.

“The overall goal of Getinge’s acquisition strategy is to establish the group as a ‘preferred partner’ for the medical care sector. The ever-increasing demands on cost-efficiency mean that medical care players are looking to suppliers that can contribute to resolving problems and creating more efficient care processes through their offerings. The more areas in which Getinge can offer solutions and specialist knowledge, the more attractive the group becomes as a supplier,” says Mr Malmquist.

The price for Huntleigh was approximately SEK 5.6 billion (EUR 592 million) and NIB’s part of the financing was SEK 500 million (EUR 54 million). Lars Synnes, Senior Manager at NIB comments that the Bank is pleased to cooperate with Getinge:

“Getinge is an interesting company in a rapidly growing field that is relatively new to us. The loan is well in line with our mandate to promote competitiveness of companies with a strong emphasis on research and development.”