Cardiac rhythm management devices, such as pacemakers and defibrillators, are used to treat arrhythmias in patients, which extends their lifespans and improves quality of life. However, it comes at a price.
In Australia, cardiac rhythm management (CRM) implants have traditionally been very expensive, with a pacemaker costing anywhere from $5,000–6,000 (AUD6,600–7,920), and defibrillators costing the healthcare system up to $40,000 (AUD53,000) per implant.
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This highly lucrative industry is presided over by the ‘Big 4,’ Medtronic, Boston Scientific, St. Jude, and Biotronik, the largest four companies in the CRM field, who are constantly vying to take market share from each other to become the market leader. This is traditionally done through offering special deals, technical innovations, or undercutting opponents’ prices. The latter is exactly what Biotronik has done.
Biotronik has traditionally been far behind the other three, having less than a third of the next competitor’s market share, and thus has the least to lose. In a highly unpopular move (amongst its opponents), it slashed its prices across the board, crashing the prices of CRM devices in Australia to 20–25% of their original prices. This has hugely disrupted the market, dropping profits and causing the market leader Medtronic to completely bow out of the public CRM sector, allowing the other three to fight over it uncontested.
This has achieved Biotronik’s aim of gaining market share; it has more than doubled to almost catch up to Boston Scientific and St. Jude, but at what cost? With CRM companies suddenly making a quarter of their previous earnings, they are barely able to make any profit, with some devices being sold at a slight loss due to infrastructure and maintenance costs. While this state of affairs is untenable for all companies affected and will eventually be rectified with a price hike, at least there is one clear winner: the patient.
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By GlobalData
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