Market for diabetes remains strong

Monday, May 24, 2010

As long as diabetes continues to be prevalent, the market for products and services represents a major opportunity for HME providers, manufacturers say.

Demand for testing supplies, skin and eye care products, footwear and compression hosiery continues to be steady and, according to vendors, has the potential to grow as diabetes remains an epidemic. Statistics show that close to 8% of the U.S. population has diabetes with approximately 1.7 million new diabetics added each year. That number is expected to swell to 37.3 million by 2050, with an annual growth rate of 6% to 7%, said Greg Bosco, vice president of sales and marketing for Milford, Mass.-based Invacare Supply Group.

"This growth will be fueled by continued demographic shifts with significant increases in the population of those that are obese and overweight, Hispanic and African-American and the senior population, all of which have historically experienced a higher level of diabetes than the population in general," he said.

Stephen O'Hare, president of Marietta, Ga.-based Pedors Shoes, acknowledges the upward trend in the number of diabetics, but believes the numbers could plateau or even fall sooner than expected.

"The age incidence of diabetes continues to trend downward," he said. "Market assessment is specific to what product or service you provide. Either way, however, there are more diabetics now than ever before."

Unhealthy lifestyles are driving the growth in diabetes demographics, but as the number of potential customers continues to grow, so will market competitiveness, said Frank Suess, president of Wellington, Fla.-based Prescriptions Plus.

"Only the large and financially sound will survive," he said. "Smaller providers will have to expand into other markets and other products."

Market entry

Given the favorable outlook for the diabetes market, HME providers serving other areas may wonder what is required to get involved in the business.

As Bryan Sowards, CEO of Titusville, Fla.-based Infopia USA, explains, "Some providers are leery to enter into new market segments because of the unknown factors related to reimbursements."

Even so, he contends "providers who have embraced and adapted to the demands of the diabetic market are experiencing success."

By Bosco's calculations, the number of diabetes providers has fallen from 105,000 to 89,400 over the past year due to companies exiting the market for various reasons. Yet the potential for profitability should serve as an incentive for others, he said.

"Most HME providers recognize diabetes as critical to continued growth and continue to aggressively pursue this market," he said. "Diabetes is one of the key categories that drives traffic and builds add-on sales for other categories with cash products."

Suess reasons that HME companies have historically overlooked diabetes as a revenue source because "they don't realize the recurring income stream a diabetic patient can provide." Conversely, he said the public doesn't see an HME retailer as the place to go for diabetic supplies.

"They tend to deal with their local drug store or with a mail order company," Suess said.

Pressure points

To sum up obstacles to market entry, Suess says: "You need the purchasing power to buy competitively, there is more competition and you have to spend more advertising dollars to attract patients."

O'Hare considers the primary barrier to be "ensuring complicity with provider regulations and the time and resources it takes." Because the HME industry has been under such intense fraud and abuse scrutiny, providers may be reluctant to pursue diabetes because they are "wary of inadvertently falling foul of regulations and the headaches that it causes."

To overcome the barriers, HME providers need to think about creating strategies that help patients care for themselves outside the realm of reimbursement, O'Hare said. hme