UK healthcare spending is set to continue to increase by more than 7% per annum through 2008. The budget for 2005 was £84 billion which is equal to healthcare expenditure per capita of £1,436. This is bringing the UK closer to Germany and France regarding healthcare expenditure per capita. The Chancellor, Gordon Brown has previously stated that the 2007/2008 budget will rise to £105 billion, which represents a doubling of overall healthcare expenditure since 1997. This is critical to improving access to innovative medical technologies and the future product launch environment as well as the upgrading of services and healthcare technology in clinical settings.

The UK healthcare market comprises public, private and other services. The public market consists of NHS services which is over 80% of total UK healthcare service delivery. The private healthcare sector is approximately 13% of healthcare service delivery and is growing as a result of more partnering with the NHS to reduce waiting lists and offering patients more choice.

The NHS Confederation represents more than 90% of the organisations which comprise the National Health Service. Members include most NHS acute trusts, ambulance trusts, new foundation trusts, mental health trusts, primary care trusts (PCT's), special health authorities and strategic health authorities/boards in England, Wales and N. Ireland. IMD currently supplies every one of these organisations.

Technology drives a significant portion of clinical care, thus R&D, sales/marketing and production are the key value chain activities supporting commercial companies in the medical device sector. The UK market for medical device suppliers is composed primarily of multinational companies, although the current industry structure also includes specialty innovative small to medium size enterprises (SME's) providing products/services which offer new clinical benefits.

NHS Logistics was outsourced to DHL and is now operating as NHS Supply Chain. This contract came into effect in October, 2006. This will have an impact on procurement of NHS supplies. PASA is looking for better prices in commodity items. DHL will sub-contract procurement outsourcing to Novation, a US based group-procurement-organisation to find better value for money contracts and engage more hospitals to reduce local purchasing contract agreements. For local, low cost suppliers of substitute products, the DHL contract could also drive more volume to medical distributors with product/price advantages. IMD envisages exciting opportunities due to this new procurement procedure.