Homecare Industry Update � Europe, Germany

This article from HME News may be of particular interest to the homecare industry in Europe and especially Germany where there are distinct similarities with the US concerning issues of pricing pressure, reimbursement and costs which have become increasingly important.

Adding fuel to the fire the classical �importers� into Germany (3rd biggest world homecare market) have been gaining share in certain categories as a result of low prices coming out of Asia � helped in addition by a strong Euro versus the US Dollar. Due to fierce competition in a reimbursement declining environment much of the lower cost benefits have had to be passed on to their customers. This has allowed some of these �lower profile� importers to assume a much bigger role and attract the attention of the bigger buying groups. At the same time they are improving quality, getting their product specifications right � and yes � building their company image and brand � and doing it well.

The other side of the coin is that the Euro has weakened considerably in just a few months � from above 1.30 to hovering around 1.20. What happens if and when the exchange rate goes back to 1.10 or lower? Will the customers accept price increases � not easily.

The barrier to entry for the buying groups has also been reduced and some customer groups have already sourced directly in Asia as opposed to Germany effectively potentially shortening the supply chain.

As the larger manufacturers get their Asian operations fully operational it will be interesting to see the impact in Europe�more to come on this�.