Operating Room

Three players still dominate surgical glove market

by Curt Werner

When the time comes to talk about standardization and finding allies among physicians, one of the product areas that is likely to make those physicians battle back is surgical gloves. No wonder. For surgeons to do their life-saving work, they must wear gloves each day that offer them a distinct feel, comfort and grip while giving them confidence that their job is being done correctly and safely. For all the multi-million dollar equipment found in the modern operating room, the surgical glove is, to borrow a phrase, where the rubber meets the road.

Satisfying tough demands from surgeons regarding surgical gloves is no simple matter. Nor is doing it cost-effectively in a highly competitive industry segment. Manufacturing processes are much more difficult and costly for surgical gloves than for their cousins, examination gloves. Those factors go a long way toward explaining why just three surgical glove manufacturers hold near complete domination over the market. 

The exam glove market should not be confused with the surgical glove market. In the former, literally scores of suppliers large and small (some actually call themselves manufacturers when in reality they are distributors or dealers) vie for thin slices of market share and compete mostly on price, selling items that cost less than a dime. Surgical gloves cost ten or twenty times more than exam gloves, are designed for longer wear, sensitivity and fit and are of much higher quality, among other significant differences.

The three surgical glove powers are Ansell Professional Healthcare, now based in Red Bank, NJ, after moving its headquarters from Massillon, OH, last year; Cardinal Health, McGaw Park, IL; and Regent Medical, a British-owned firm based in this country in Norcross, GA. By most estimates, approximately 93 out of every 100 pair of surgical gloves sold in the U.S. are manufactured by one of these three. More precisely, generally accepted fourth quarter 2002 figures for total surgical gloves give Regent and its popular lines of Biogel gloves the lead with a 36.3 percent share, followed by Cardinal and its several brands at 31.8 percent and Ansell, which acquired the surgical glove unit of Johnson & Johnson a few years ago, holding a 25.8 percent U.S. share.

A slew of other companies are battling for the remaining market share. Among them are Sempermed USA, Palm Harbor, FL; Maxxim Medical, Clearwater, FL; Medline Industries, Mundelein, IL, and Kimberly-Clark Professional, Roswell, GA, a company that “re-launched” its Safeskin surgical glove line earlier this year with hopes of eventually breaking the three-company logjam at the top. 

As for dollars, the latest figures from IMS provided to Healthcare Purchasing News by Cardinal Health place the U.S. market for surgical gloves at $302 million, with $211 million of those sales coming from acute care facilities. The remaining $91 million came from alternate site facilities, including a growing market in surgicenters and so-called surgical hospitals. The latter category includes facilities that are designed for stays of no longer than 72 hours and are generally used for simpler procedures that usually lead to fewer complications than the full-scale surgical procedures performed in acute care hospitals. The IMS figures show 385 million units sold in this country, with some 68 percent used in hospitals. The market is growing in the low single-digits, 2-3 percent annually, though there is some fluctuation from year to year, and what growth there is in the market today remains relatively modest by most standards, and is naturally tied to the number of surgeries performed.

In a highly competitive market, there could soon be a major change at the top. This spring, blaming sluggish sales, SSL International, the UK corporation that produces Dr. Scholl footwear and Durex condoms, announced plans to sell its Regent Medical division (which includes the Hibistat germicidal product lines as well as Biogel gloves). As this is bring written in early May, no deal has been announced and no potential suitors have emerged for Regent, but the speculation among glove-makers is tantalizing. For its part, SSL says it plans to use the proceeds of the sale “to reduce debt and invest in the development of the consumer business.” But until a buyer steps forwards, a development that could redraw the lines in the surgical glove market or herald the entry of a new player, the market moves along as is.

Regent Biogel still tops the market
For the past few years, the market for surgical gloves has been edging in the direction of powder-free non-latex products, and that development is continuing today. The market leaders have capitalized on the trend as they seek new technologies that simulate the feel of natural rubber latex while retaining the safety of a synthetic glove product. Recent sales slowdown aside, Regent Medical appears to have capitalized the most over the years from surgeons’ demand for powder-free non-latex gloves. The company, in fact, produces no other type glove. “We were the lone voice in the wilderness calling for powder-free surgical gloves,” says Dan Manley, vice president of marketing for Regent. The company entered the U.S. market in the early 1990s. He believes that today, the shift to powder-free non-latex “continues and may have accelerated” while reporting volume growth for powder-free products and stronger growth rates for non-latex versions on a smaller base.

In a tight economy, pressure from hospitals to cut costs has been relentless, and unrelenting on glove makers just as it is on manufacturers in other segments. But cost is not a place where Regent or the other players want to compete. That places heightened pressure to spend more on research and development, along with parallel pressures to offer something new to users. Regent has devoted funds to improving the fit and feel of its surgical gloves. Its most recent product launch was the March debut of the Biogel Skinsense PI. Calling the new product, which augments an earlier Skinsense line, “a significant breakthrough in surgical glove technology,” Manley says the new synthetic glove closely mimics a natural rubber latex product. “Synthetic glove users used to complain about a ‘dead’ feel, like the feel you get from kitchen gloves,” says Manley. “The new glove addresses that complaint. Users love them because they are similar to natural rubber latex.” The Skinsense PI is the third adaptation of its synthetic latex glove.

Regent was scheduled to launch another glove this spring. Known as Optifit, the new gloves aimed at wearers of newer lines of surgical gowns that are made with impervious materials. Optifit gloves are designed to prevent the kind of “slip-down” of gloves that commonly occur with these gowns.

As much as they disdain competing on price, surgical glove manufacturers are forced to respond to price pressures. So thanks to tough market competition and hard-nosed bargaining by group purchasing organizations average selling prices for surgical gloves have been flat or even in decline. Manley believes that the price slump has slowed, however, and that the decline in the powder-free segment “has stopped.”

Cardinal sales surge
Although it holds second place in the surgical glove market, there are few manufacturers in any segment more imposing than Cardinal Health. No longer known in most markets as Allegiance and tracing its roots to powerhouse Baxter International and before that American Hospital Supply, Cardinal is as competitive as any outfit around and, in constant search of more market share, is unafraid to launch a range of new products in the many markets it touches, including med-surg and pharmaceutical distribution. 

With Regent for sale, watch for Cardinal to nip even closer at that company’s heels as it seeks to close the roughly four-point market share gap. “Our business is exploding,” says Jeannie Thomas, the company’s vice president of marketing for medical gloves. “We now have the highest growth rate in the industry and a big part of that is with our new products.” According to Thomas, Cardinal’s surgical glove sales are growing at a rate four times that of the rest of the market with venerable brands such as Duraprene and newer ones like Esteem leading the way.

Thomas says that sales of synthetic surgical gloves surged by 65 percent in 2002, a rate she says is double that of the rest of the category. However, unlike Regent, the company still produces a large supply of powdered surgical gloves to meet trailing demand. Although Cardinal has released no new powdered surgical glove products, Debra Schotz, a company spokesperson, says that despite the big move in favor of powder-free, approximately half the overall market still uses powdered gloves.

Thomas says there is still “pent-up demand” for quality synthetic surgical glove products. Cardinal is, of course, ready and willing to meet that demand even as hospitals steel themselves for the higher prices on newer synthetic products like the new Esteem glove. Patient and worker safety are winning out over price considerations. “Customers don’t seem to be overly concerned about price because they see other advantages to using latex-free products,” says Schotz. She says that some hospitals are moving house-wide to the new Esteem glove.

Thomas says that prices for powdered latex gloves have decreased for the last few years and that even more recently, prices in that segment have fallen further as users drift toward powder-free non-latex gloves and competition grows in the powdered glove segment to fill the vacuum.

Yet, despite the talk and the hype about synthetics, changes in surgeons’ gloving habits are slow, and more than 90 percent of users still don natural rubber latex gloves. “People are not as willing to change their surgical gloves,” says Thomas, which is one reason why the market stacks up the way it does and few companies are willing to make the investments necessary to enter it.

Tough times behind it, Ansell senses better days ahead
The fact that market share in a physician preference segment like surgical gloves is so precious and so difficult to win makes the market slump that has hit Ansell Professional Healthcare even tougher to take. The company, which acquired the glove unit of Johnson & Johnson a few years ago, has shed several points in the last two years. Donna Hatcher, a former Cordis and Boston Scientific executive who was recently named Ansell’s business development manager, acute care, admits the state of affairs is harsh. But she is quick to point out that Ansell is working hard to reverse the fortunes of a glove brand that still has plenty of respect among surgeons.

Before its recent difficulties, Ansell had just under a 30 percent share; that number has since slipped to under 26 percent. Why? “Supply has become our main issue,” Hatcher concedes. “But we are rapidly coming back.”

So deep was the slip that the company has embarked on some radical steps to remedy the situation. Chief among them was scuttling its old headquarters in Massillon, OH, last year and moving almost everything to Red Bank, NJ, not far from New York City. “We feel it is more effective and more efficient to have our corporate headquarters in one spot,” she says. Ansell operated its consumer lines, consisting mainly of condoms, from Red Bank before the move. The reorganization also swept out old management and brought in new, including freshly named executives in supply chain operations, global marketing and science and technology. “We are looking ahead and moving forward,” says Hatcher. “Clearly our biggest chore is making sure our supply situation is straightened out after our transition period of moving to New Jersey.”With all those new faces in place and the new plant open and running, next on the agenda is revitalizing the brand. “We have an extremely diverse product line, including both exam and surgical gloves,” says Hatcher. The J&J acquisition grew the business, but so did the earlier acquisition of the Perry glove line, and the company now boasts a stable of surgical gloves with names such as Dermaguard, Derma Prene, Encore and Micro-Touch.

Like its competitors, Ansell sees growth in its powder-free surgical glove sales, so it’s not surprising that the company has dispatched clinical specialists across the country to spread the gospel of powder-free products. But also like its competitors, Ansell has been dogged by low prices, which are good news for hospitals, but not exactly the vaccine a recovering company like Ansell needs. Says Hatcher, “The glove industry is trying to get its arms around appropriate pricing for gloves that offer the next step beyond latex. But we are very sensitive to our customers’ needs and to the basics of offering gloves that have maximum protection and maximum sensitivity. We have new talented people, have fortified our infrastructure, changed our communications with our customers and we are seeking to expand our markets. I have to say that I’m bullish on Ansell.” 

HPN

June