By all accounts, providers working the nebulizer market can expect steady growth in coming years. Studies have shown that the incidence of asthma and chronic obstructive pulmonary disease is on the rise. And as more people are diagnosed with these diseases, the demand for nebulizers to treat them will continue to increase, say industry observers.

"The general outlook of this market is very positive and very strong," says Ray Zielinski, Invacare's senior product manager for sleep and aerosol. "And I think it's going to continue to grow. I don't see any other more efficient, more effective or more cost-sensitive way of delivering these treatments."

Other industry manufacturers and analysts agree that the nebulizer market should continue to expand for the next few years. But while Mountain View, Calif.-based Frost & Sullivan estimates that market growth should reach an annual compound rate of 3.6 percent (see table), some manufacturers are even more optimistic, predicting that the market should increase 6 to 8 percent per year-if not as much as 10 to 20 percent.

Despite the expected growth, manufacturers concede that the road ahead is not free of obstacles. One significant roadblock, they say, is price erosion. The price of nebulizers, report some manufacturers, has fallen by about 50 percent, driven down by reimbursement cuts and increased competition-particularly from an influx of imported nebulizers.

"The deterioration of prices has come about in the last few years because there are so many competitors," says Janice Kreitzer, global aerosol product manager, Sunrise Medical. "A lot of new companies are coming into the market-including a lot of foreign units-and some of them may be cheaper but not as good. Still, you have to compete with them because they reallyhit you when it comes to price."

Manufacturers predict the market will shake out as customers reject some of the cheaper imports because of problems with quality. As a result, they say, foreign companies will either leave the market or improve the quality of their products.

"We're going to get to where we can be reasonably competitive with the import market because it's going to equal out somewhere," says Gregg Gaskins, vice president of sales and marketing, Nidek Medical. "We will find equal ground over the next three to five years where most U.S. companies will be somewhat comparable to the overseas market."

In the meantime, domestic companies say they are responding to price deterioration by becoming more cost-efficient in production.

"One of the biggest challenges right now is being cost-competitive," says Rick Thiele, product manager for respiratory supplies, Mallinckrodt. "Many manufacturers have moved production outside the U.S. to take advantage of lower labor costs. We also look at material costs, looking for materials that cost less but still perform as well."

Other asthma-treating devices, such as metered-dose inhalers and dry-powder inhalers, are also of concern to those in the nebulizer market. Still, while MDIs and DPIs do affect nebulizer sales, manufacturers say the impact is not too great because such products are not primarily targeted to children and elderly people, who often find nebulizers easier to use and more effective.

"When MDIs and DPIs first came out, people said they were going to wipe out compressor nebulizers," says Kreitzer. "But they didn't. And it basically comes down to the fact that manufacturers haven't developed one that can easily be used for a cross-group of people."

Despite the market's challenges, a new trend is emerging in nebulizer sales: Over the past several years, a number of HME providers have gotten pharmacy licenses so they can sell the unit-dose medications used with nebulizers.

"When Medicare cut reimbursement for nebulizers, a lot of dealers stepped back and decided not to push nebulizers anymore," says Kreitzer. "But then they started looking at their total business again because they could make money with unit-dose medications. It's gotten to the point where if they're not marketing unit-dose medications, I doubt the dealers are going to be out there strongly marketing compressor nebulizers."

Tony Altamore, sales and marketing coordinator, Impact Instrumentation, West Caldwell, N.J.; Dan Fleming, senior product manager, Bird Products, Palm Springs, Calif.; Gregg Gaskins, vice president of sales and marketing, Nidek Medical, Birmingham, Ala.; Janice Kreitzer, global aerosol product manager, Sunrise Medical, Somerset, Pa.; Kelly Lama, senior product manager, Respironics HealthScan Asthma and Allergy Products, Cedar Grove, N.J.; Ralph Spang, executive vice president of sales and marketing, Contemporary Products, Portland, Maine; Rick Thiele, product manager for respiratory supplies, Mallinckrodt, Hazelwood, Mo.; Gary Troilo, director of marketing, Pulmonetic Systems, Colton, Calif.; and Ray Zielinski, senior product manager for sleep and aerosol, Invacare, Elyria, Ohio

TO SAY THAT HOME ventilator manufacturers are optimistic about the future of their industry niche is an understatement.

"We believe that the home ventilator market is probably one of the fastest-growing respiratory segments in the U.S.," says Gary Troilo, director of marketing, Pulmonetic Systems.

Mountain View, Calif.-based Frost & Sullivan reports that the ventilator market should grow annually at a compound rate of 13.5 percent through 2006 (see table on page 48). Most manufacturers agree with that projection, although some expect annual growth rates of nearly 20 percent.

According to manufacturers, several factors will drive this growth. First, the increase in the elderly population is boosting demand for ventilators. And at the same time, health insurance companies are continuing to cut hospital reimbursement, forcing patients to be discharged even if they will need ventilation at home.

"In terms of equipment, clinicians nowadays feel more capable of managing medically demanding patients at home," says Dan Fleming, senior product manager, Bird Products. "And quite possibly we didn't have as many ventilator patients at home before because there wasn't the reimbursement drive to get them home. So certainly I'd say that the demand is increasing."

In an attempt to address the demand, manufacturers have developed ventilators-which traditionally have been used only in critical-care settings-that are more appropriate for home use.

"Technology is rapidly advancing, and there is now an extremely competitive focus on this marketplace, much more so than three or four years ago," says Fleming. "It was an underserved marketplace, and there had not been the trickle down that is traditionally seen with other technologies in home care. For a long time, the care that could take place at home was very limited, but the technology has advanced to such a state that home care ventilators have gotten much better in the past couple years."

Simultaneously, manufacturers have also been developing home ventilators that are much simpler to use. "The level of sophistication in the home is much different than in the hospital, where you have trained respiratory therapists," says Troilo. "Manufacturers have been forced to design user interfaces that are intuitive and easy to use, not only for the care provider but also for the family at home so that the ventilator can be easily manipulated."