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HME consolidation on the way

HME consolidation on the way

MEDTRADE - The HME industry has reached the early maturity stage of its growth cycle, which means provider consolidation is on the short-term horizon, financial specialist Wallace Weeks told Medtrade attendees yesterday morning. During his presentation “Outlook for HME: 2004-2008,” the president of the Melbourne, Fla.-based Weeks Group used camera lens terms to analyze the next five years - wide angle looked at the big picture, while telephoto surveyed specific markets within HME. From the wide angle perspective, the HME industry is following a growth cycle that occurs in all industries: emergence, growth, maturity and decline. “The HME industry is in early maturity right now,” Weeks said. “As a result there will be consolidation to the point where three companies will control 50% of the market.” Currently, the top four providers represent about 14.6% of the $18 billion HME market. Weeks said. They are: Apria, with revenues of $1.25 billion; Lincare, $961 million; American HomePatient, $353 million; and Liberty Medical, $307 million. “I'm not saying these companies will be the ones that will have 50%,” he said. “But these are the biggest ones today.” Weeks' telephoto view shows the strongest markets over the next five years to be respiratory, mobility, diabetic supplies and infusion. His projections show respiratory will grow from $4.5 billion to $4.9 billion; diabetic supplies from $2.7 billion to $4.7 billion; mobility from $1.3 billion to $1.6 billion; and infusion from $4.8 billion to $5 billion. COPD and sleep therapy will drive respiratory growth, while the obesity epidemic will fuel diabetes management. Diabetic footwear should be a key product line in the future, Weeks said. HME sales channels will continue to widen beyond HMEs and retail pharmacies into direct mail, the Internet, benefit managers and manufacturer-direct lines over the next five years, he said.

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