First Research US Industry Profile

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Medical Equipment & Supply Wholesalers
SIC Codes: 5047
NAICS Codes: 42345
Last Quarterly Update: 7/22/2019
Companies in this industry distribute professional medical equipment, instruments, and supplies to physicians, hospitals, and extended care facilities. Major companies include Henry Schein, McKesson Medical-Surgical, Owens & Minor, and Patterson Companies (all based in the US), along with OneMed (Sweden), Yamashita Medical Instruments (Japan), and EBOS Group (Australia).
Worldwide, major markets for medical equipment and supplies include the US, Japan, Germany, France, the UK, Italy, and China. National distributors generally participate in international markets either through their foreign subsidiaries or through joint ventures with local companies. The medical equipment wholesale industry has been consolidating; many companies are gaining footholds in overseas markets by acquiring companies in targeted international markets.
The US medical equipment and supplies distribution industry includes about 10,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $200 billion.
Competitive Landscape
Pressure to control health care expenditures is intensifying price negotiations for wholesalers and prompting customers to consolidate. Many customers belong to group purchasing organizations (GPOs), which help negotiate bulk pricing. Loss of a major GPO relationship can have a significant impact on sales.
Besides competing with peers, distributors compete with manufacturers to sell products to end users. Highly complex and expensive equipment, such as MRI machines, is sold by manufacturers' salespeople. Competition with product manufacturers and other distributors is based on price, customer service, breadth of product line, and value-added services.
Large companies have economies of scale in purchasing, as well as highly developed infrastructure that allow for efficient distribution. Small companies can compete effectively by specializing in a product line or by serving a local market. The US industry is concentrated: the top 50 companies account for about 75% of revenue.
Competitive Advantages:
Efficient Logistics Networks - The efficiency of a wholesaler's distribution operations has a major impact on profit margins, as the ability to raise prices is limited. Cost-control efforts can be boosted through IT and automation programs for inventory and logistics management.
E-commerce Capabilities - Traditional wholesalers face growing pressure from internet-based competitors. Providing easy-to-use, convenient tools that make inventory tracking and ordering easier for consumers can give suppliers a competitive edge.
Strong Manufacturer Relationships - Wholesalers depend on the ability to fill invoice orders in a timely fashion, and they ensure product availability through strong relationships with manufacturers. Some distributors may rely on a small group of manufacturers for all supply needs.
Companies to Watch:
Henry Schein is a top distributor of dental supplies in the US, providing a full range of branded and private-label equipment, furniture, disposables, and anesthetics. The company also provides goods for physicians and other health providers and is expanding its software-based service offerings. Internationally, the company has established subsidiaries and affiliates in about 30 countries.
Owens & Minor supplies US hospitals with surgical dressings, syringes, procedure trays, gloves, and thousands of other essential medical supplies. The company offers products from 1,100 manufacturers as well as its private-label MediChoice line. It also offers supply chain and packaging services in the US and Europe. O&M is utilizing technology and data connectivity to improve efficiencies in its distribution operations.
McKesson Medical-Surgical, a division of pharmaceuticals supplier McKesson, operates 35 distribution centers across the US serving doctors, clinics, surgery centers, nursing homes, and other medical facilities. In addition to offering some 150,000 private-label and branded supplies, the company provides continuing education and consulting services.
Products, Operations & Technology
Major products include medical and surgical instruments and equipment (about 55% of revenue); supplies (about 25%); and orthopedic and prosthetic appliances ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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