The supply side to procurement in a health market: competition and innovation in hip implants. CCP Working Paper 20-1.

Davies, Charlotte (2019) The supply side to procurement in a health market: competition and innovation in hip implants. CCP Working Paper 20-1.

Full text not available from this repository. (Request a copy)

Abstract

Most research on procurement of medical devices focuses on buyer behaviour e.g. in the UK, purchasing strategies by the NHS. This paper is a rare case study of the other side of the market. We investigate competition in the artificial hip implant market in England and Wales, using National Joint Registry data for 2005-18. The analysis is in three parts. We first proceed as would a competition agency, by assessing the nature and structure of the market. We find a highly concentrated duopolistic market structure, in which there has been no significant entry or exit, except a merger between the much smaller 3rd and 4th largest suppliers. Viewed through the eyes of a competition economist, such a structure might be indicative of weak competition. However, concentration is not necessarily synonymous with low competition: it might be that technology dictates that only a small number of firms can survive profitably in the market, but that there is still the cut and thrust of competition leading to forever changing identities of the leading firms. In the second part of the paper, we address these possibilities in two ways, using a novel exploration of market share dynamics and an international comparison. On dynamics, we find an important difference between the two sectors of the market: in traditional cemented prostheses, there is little evidence of any share mobility amongst firms. Indeed, the only discernible change is that Stryker, already the dominant firm, has steadily further increased its market share over time. On the other hand, the uncemented sector has exhibited much more share mobility. Interpreting the uncemented sector as a comparator, this suggests the need for further investigation of the cemented sector. This conclusion is also indirectly reinforced by an international comparison of market structure, from which the most striking feature is the much larger market share of Stryker than in any other European country. In the third part of the paper, we explore the performance of the firms concerned, using innovation as the measure. We find only limited evidence of the emergence of new brands of implants - the smaller suppliers have had little success in introducing new brands and the two main suppliers appear to have concentrated on updating their existing brands. There is also little evidence of competition from generic brands, (in contrast to the picture in many parts of the pharmaceutical sector). Looking to the future, our findings are not necessarily conclusive evidence of a weakly performing, anti-competitive market, but they are sufficient to justify further more micro-survey research to identify the preferences and practices of the main players: surgeons, hospital procurement and the suppliers themselves. The need for such research is heightened by the fact that contemporary policy advice increasingly advocates that cemented prostheses should be preferred, especially for older patients.

Item Type: Article
Faculty \ School: Faculty of Medicine and Health Sciences > Norwich Medical School
Related URLs:
Depositing User: LivePure Connector
Date Deposited: 02 Sep 2020 23:56
Last Modified: 02 Sep 2020 23:56
URI: https://ueaeprints.uea.ac.uk/id/eprint/76744
DOI:

Actions (login required)

View Item View Item