Price and Market Trend Analysis Review of the Exam Gloves in 2011
12/10/2011 - Written by the Medical Exam Glove team
The price for medical gloves remains tied the costs of raw materials such as latex along with a weak US dollar currency. In contrast to 2010, the worldwide demand for exam gloves subsided in 2011 due to the absence of an epidemic fear. As we enter 2012, we can expect the overall demand to normal by increasing at the 8-10% rate which was prior to the outbreak. In the absence of a strong US dollar and without a decline in the price of raw materials, we can expect the overall price for exam gloves to creep higher. In 2012, look for a stronger demand for nitrile gloves as more and more healthcare facilities substitute latex gloves for latex-free alternatives.
In 2010 the medical glove industry experienced an uncommon surge in demand for exam gloves due to the outbreak of H1N1 flu virus. As countries worldwide purchased a larger amount of exam gloves to contain the Swine Flu, there was a shortage of gloves available causing manufacturers to increase production to meet the demand. According to MIDF Research, Top Glove, the largest exam glove manufacturer located in Malaysia, reported running their production at 90% utilization rate in 2010 (versus est. 70% in 2009). Luckily the H1N1 pandemic did not spread to the extent initially feared; however, reports of H1N1 influenza losing its effectiveness suppressed the overall demand for exam gloves. As there is a lag between glove manufacturers' production line meeting the demand of exam gloves, there was an over-supply of exam gloves in early 2011. In spite of this, the overall demand for medical gloves will steadily grow as demand within developing countries increase at a higher pace.
Although latex gloves still maintains the highest market share of medical exam gloves, nitrile gloves will see the most success as hospitals focus on shifting to a latex-free environment. With more cost effective nitrile exam glove options available to consumers, the higher price for nitrile is no longer out of reach. In addition, it is more likely for the price of latex gloves to continue to rise as the price for raw material natural rubber latex steadily grows. Don't expect latex gloves to go away just yet. Although in developed countries the demand for nitrile gloves is increasing, the preferred exam gloves of choice for developing countries are primarily latex gloves. The preference of latex gloves is more attributed to the lower price point compared to nitrile gloves. As developing countries mature, we can fully expect them to substitute latex gloves with nitrile gloves.
As for the US dollar, the currency still remains weak and it is anyone's guess how 2012 will fare considering it is an election year. The most important events to keep track of will be how well Europe is able to stabilize its economy. As currency is an uncontrollable variable to the cost of manufacturing medical gloves, we can only hope for a stronger dollar.
In summary, the most significant news within the medical glove industry for 2011 is the normalization in the growth rate of exam gloves. With the exam glove market growing at a rate of 8-10%, don't expect the price of exam gloves to fall in 2012. Considering how the cost of raw materials will remain high, the best we can hope for is that the US dollar strengthens; however, we should be wary of a lag period for any price movement to occur. What we need is a sustained period of a stronger US dollar to assure manufacturers that the currency strength is not ephemeral. As for exam glove preferences in 2012, expect more hospitals to transition from latex gloves to nitrile gloves in developed countries with an increased global demand for exam gloves due to stronger growth rate of developing countries.
- Hamzah, Zulkifli. Equity Beat - Briefing Note. MIDF Research. January 13, 2010.
- Goh, Nicole. Asia Pacific Equity Research. J.P.Morgan. July 26, 2010.
- Top Glove. Annual Report 2011. Top Glove Corporation Berhad. 2011.
- Hartalega. Annual Report 2011. Hartalega Holding Berhad. 2011.