The sector reeling under the recent increase in customs duty will require government intervention to get back on track.
Nuclear medicine equipment make use of radioactive substances (also called nuclear medicine or radiopharmaceuticals) that are inserted into the body orally or intravenously. These systems capture the radiations emitted by radiopharmaceuticals to create images of the structures and activities inside the human body. These images enable physicians to look inside a human body to help determine the cause of an illness or injury and provide an accurate diagnosis. The nuclear medicine equipment market is expected to grow at a single-digit CAGR in the next five years. This market is poised to reach USD 2.13 billion by 2020 from USD 1.78 billion in 2015, at a CAGR of 3.6 percent.
In 2015, the global market for radiopharmaceuticals reached USD 4.3 billion, growing by just over 2 percent a year between 2013 and 2015. This slow growth is primarily driven by lower revenues from technetium-99m related products and an unfavorable impact from USD exchange rates versus major currencies. This slow progression is compensated by a robust increase of the radiotherapeutics, which have grown by about 60 percent a year from 2013 to 2015, mostly driven by one product, Xofigo from Bayer. But for this exchange rate influence the nuclear medicine market would have reached over USD 4.7 billion in 2015, thereby exhibiting an annual growth of more than 7 percent for the period 2013-2015. While it has been stable last year, the global radiopharmaceuticals market is expected to climb to USD 25 billion by 2030.
The molybdenum-99 shortage issue, which will be solved within the next two years, will influence additional growth. Yet, the most important factor that will shape the future growth of the radiopharmaceuticals market is the launch of new-generation therapeutic radiopharmaceuticals. In radiodiagnostics, the recent developments in gallium-68 make the year 2015 a milestone for the development of this technology, which in the next five years will lead to a completely new positron emission tomography (PET) environment. It seems that the future of radiodiagnostics will be based entirely on technetium-99m for single-photon emission computed tomography (SPECT) and on fluorine-18/gallium-68 for PET.
The nuclear medicine equipment market is segmented on the basis of product, application, and end user. The market by product is segmented into hybrid PET, SPECT, and planar scintigraphy systems. The SPECT product segment is further divided into hybrid SPECT and standalone SPECT. On the basis of application, the market is segmented into oncology, cardiology, neurology and other applications which include orthopedics, urology, thyroid-relatedâ€¨disorders, and gastroenterology. Based on the end users, the market is divided into hospitals, imaging centers, academic and research institutes, and others, which include pharma/biotech companies and CROs.
On the basis of region, the market is divided into North America, Europe, Asia-Pacific, and the Rest of the World (RoW). In 2015, North America accounted for the largest share of the nuclear medicine equipment market, followed by Europe and Asia-Pacific. However, the Asia-Pacific market is slated to grow at the highest CAGR during the forecast period and serve as a revenue pocket for the companies offering nuclear medicine equipment.
Rising prevalence/incidence of cancer, cardiac disorders, and neurological disorders; growing awareness about the importance of early diagnosis of diseases; launch of advanced nuclear medicine equipment in the market; and rising adoption of nuclear medicine equipment by end users are major factors driving this market.
However, high cost of nuclear medicine equipment and shorter half-life of radiopharmaceuticals are expected to restrain the growth of the market. In addition, growing adoption of refurbished diagnostic imaging systems and hospital budget cuts act as a challenge for the market. On the other hand, strong product pipeline coupled with expansion and penetration opportunities in emerging economies are expected to be lucrative opportunities for the market.
The industry is still reeling under the recent increase in the import duty on nuclear medicine equipment from the current 5 percent to 7.5 percent to help companies manufacture these products in India itself. This is in tune with the government's Make in India initiative. The step came in end-January 2016, over a month ahead of the Budget 2016-17, tabled in Parliament on February 29. The government also imposed special additional duty of 4 percent on these items by withdrawing exemptions.
The Indian nuclear medicine equipment market in 2015 is estimated at Rs.135 crore, with sales of 10 PET scanners, 21 gamma cameras, and one cyclotron. The buyers for PET scanners included Rajiv Gandhi Cancer Institute & Research Centre, New Delhi; Jaslok Hospital and Research Centre, Mumbai; Lilavati Hospital and Research Centre, Mumbai, and a couple of leading diagnostic centers in Bangalore. The cyclotron was purchased by Dr. Maniar in Mumbai.
There is a change in the buying pattern for PET scanners. Till last year the buyers were upgrading their equipment from 16-slice to the better contrast and spatial resolution offered by 64- and 128-slice systems. 2015 saw the mid-segment take a beating, with preference for 16- or 128-slice equipment.
While GE, Philips, and Siemens are the three leading vendors marketing PET scanners with an equal market share, GE and Siemens are the major vendors in the SPECT scanners segment. The cyclotron was supplied by GE.
A Dynamic Industry
The conventional pharmaceutical industry has gradually become interested in nuclear medicine with some recent mergers and acquisitions activity.
In January 2016, IBA Molecular North America was renamed Zevacor Pharma, Inc., following the acquisition made by mid-2015, and Advanced Accelerator Applications SA acquired the IDB Group, a producer of Lutetium 177.
In February 2016, inviCRO acquired Molecular NeuroImaging; Ipsen and 3B Pharmaceuticals signed a license agreement to develop novel radiopharmaceuticals; and Bayer published once again strong results for its Xofigo (radium-223 dichloride), a radiotherapeutic used in the treatment of prostate and bone cancers, with sales rising by over 60 percent in 2015 versus 2014. Last year, Ipsen had already acquired Octreopharm, hence confirming its interest in this area.
During the month of March 2016, ITM (Isotopen Technologien MÃ¼nchen) successfully raised â‚¬ 20 million to fund the development of its promising proprietary pipeline of targeted radionuclide therapies; Clarity Pharmaceuticals has been awarded AUD 1 million to fund a definitive clinical trial of Cu-64 Sartate; the Imaging Dementia-Evidence for Amyloid Scanning (IDEAS) study started to enroll as many as 18,000 patients to determine the clinical usefulness on patient-oriented outcomes of a brain positron emission tomography (PET) scan, using new fluorinated tracers; and IBA successfully completed the sale of IBA Molecular to funds advised by CapVest Partners LP.
By end of 2015, FACIT invested in Fusion Pharmaceuticals to support the development of alpha particle-emitting radiotherapeutics.
Presently, the global nuclear medicine market is rather fragmented, with nearly 70 companies selling radiopharmaceuticals on a regular basis. Three companies control almost half of the world market, while 56 firms share 14 percent of the market. Though nuclear medicine is not a recent science, the past years have witnessed the emergence of new radionuclides, and more than 35 companies are involved in research and development but are not yet selling radiopharmaceuticals.
New opportunities lie ahead in the nuclear medicine landscape. This potential has been identified not only in the radiodiagnostic area, but most notably in therapeutic radiopharmaceuticals, with the first products scheduled to reach the market before the end of 2020. Opportunities exist for larger groups or investors to finance such development, to merge with key partners and/or to acquire companies.
The Road Ahead
Over the years, the nuclear medicine devices market has witnessed various new products being launched, coupled with various technological advancements. These advancements have led to the improved use of many existing nuclear medicine devices as well as the introduction of some new ones. During the last decade, PET/CT and SPECT/CT have made advances in research and clinical application of fusion imaging. These two modalities are established in the market today, with PET/CT being the standard-of-care in oncology and SPECT/CT an upcoming hybrid modality currently being used mainly for cardiac scans.
Over the past four years, PET/MRI has been making inroads as well and it could eventually supplant PET/CT as the modality of choice in some areas of oncology, neurology, and cardiology. The excellent soft-tissue contrast of MRI and the multifunctional imaging options it offers, including spectroscopy, functional MRI, and arterial spin labeling, complement the molecular information of PET. Simultaneous PET/MRI also allows doctors to follow tracer distributions over time and combine quantitative molecular PET information with information on cellular densities, flow, and perfusion, including data obtained from advanced MR-based spectroscopy, diffusion, and perfusion studies.
The development of a fully integrated PET/MRI system is technologically challenging. It requires not only significant modifications of the PET detector to make it compact and insensitive to magnetic fields but also a major redesign of the MRI hardware. Indeed, PET/MRI has the potential to broaden horizons in the emerging field of molecular imaging, because complementary anatomic and biologic information is obtained and synergisms of both modalities can be expected. The novel imaging technology may not enter clinical routine before its impact on diagnostic accuracy has been proven and the effect on therapy management and cost-efficiency has been considered and validated.
Incessant introduction of new and advanced products, investment in modernization of diagnostic imaging centers, development of new radiotracers, increasing use of SPECT and PET scan results, alpha radio immunotherapy-based targeted cancer treatment, rising incidence and prevalence of cancer and cardiovascular diseases, strong product pipeline, and growing demand for nuclear medicine procedures in the emerging market are lucrative opportunities for nuclear medicine devices.
The exorbitant cost of hybrid scanners puts them out of the reach of small medical imaging clinics and rural setups, making them affordable only to multispecialty hospitals and larger clinical setups. With companies building most systems through in-house research and looking for a quicker return on investment, increased government funding for product development could reduce the cost of advanced hybrid imaging platforms.
Developing alternative fusion platforms - optical imaging with PET - will also help hybrid imaging solution providers decrease the overall cost of systems. In addition, factors including stringent regulatory guidelines, shorter half-life of radiopharmaceuticals, competition from conventional diagnostic procedures, growing adoption of refurbished diagnostic imaging equipment, and hospital budget cuts act as a challenge for the market.