4. Market Assessment

4.1. The global market for wheelchairs largely focuses on high-income markets and is largely fragmented

The global market for wheelchairs was estimated between US$4.0-4.5 billion23 in 2018 with the United States and Western Europe accounting for about 40% and 20%, respectively. Manual wheelchairs make up about 60% of the sales revenue globally and are projected to grow 6% year-on-year. The powered wheelchairs segment is projected to grow faster at 15-20%.24

The supply landscape is relatively fragmented with the five largest manufacturers controlling less than 50% of the global mobility market. In the United States, 218 different companies, representing over 400 different product lines, have registered wheelchairs with the US Food and Drug Administration (FDA). Leading global players are: Invacare (USA), Sunrise Medical (Germany/USA), Ottobock (Germany), and Permobil (Sweden).

4.2. Reimbursement policies drive product selection, pricing and ultimately profitability for suppliers to HIC markets

The payer landscape in HICs is dominated by public insurance systems that represent 80% or more of the market (Figure 4). Public pressure against the rising costs of health care has prevented a rise in reimbursement rates. Furthermore, a more consolidated payer landscape in HIC markets has spurred competitive tendering. This combination - along with a growing production cost - has eroded profit margins, resulting in market consolidation, increased focus on controlling cost and shifting to more commercially attractive segments.

4.3. Global manufacturers mostly enter into LMICs through distributers, but this adds costs

The production of active wheelchairs for HICs is highly customised and localised, which limits the product range that could be provided cost-effectively in LMICs. Suppliers, such as Invacare, Sunrise or Permobil, have a limited presence in LMICs and mostly operate via local distributors. Custom ordered products are imported from manufacturing sites that are commonly based in Europe, North America or China. The final price offered to LMIC buyers increases due to high shipping costs, and in some cases, import duties. Small volumes and limited competition among distributors further raises the price. As it can be a lengthy and challenging process to obtain custom wheelchairs, local distributors often limit their wheelchair offering to those that can be easily obtained and warehoused to serve the largest number of people – leading to a higher volume of standard wheelchairs available.

In some countries, wheelchair manufacturers must work with local distributors to supply wheelchairs via the national tender. Distributors' margins increase the cost to the payer by 15% or more, yet they often do not provide additional services that could not be provided by the manufacturer.

4.4. There is limited public funding for procurement and provision of wheelchairs in LMICs; where procurement within the public sector exists, it is often fragmented and/or erratic

Generally, LMIC governments allocate insufficient and/or variable financial resources for the procurement and provision of wheelchairs. In some cases, resources are drawn from specific ministry or department budgets such as social welfare, education and defence, however, the funding is typically insignificant and fragmented. For many countries, whether the funding is coming from the Ministry of Health or another government entity, the amount spent on wheelchair provision is negligible.

A small number of LMIC governments procure wheelchairs directly and provide them through facilities and programmes under health, education, and/or social welfare ministries/departments. In these instances, wheelchairs are typically tendered for at the country or regional level, generally based solely on cost. Procurement and distribution or provision is often fragmented across different ministries, which leads to a variety of challenges, including: no single ministry having complete oversight on procurement and provision within government or across partners; different ministries have differing levels of infrastructure or human resources to deliver and maintain wheelchairs; some ministries lack the supply chain or logistics capacity to effectively deliver products appropriately, which leads to a mass distribution model, whereby one wheelchair type is given out with limited service; different ministries have differing mandates on the population served and therefore some populations are left behind.

4.5. As the primary global manufacturers do not focus on LMICs, NGOs have filled the gap to design, produce and provide wheelchairs that are appropriate for use in LRS

As outlined above, the leading global suppliers have limited interest in LMIC markets due to low and erratic funding and demand, a reliance on a distributor network that is often poorly developed in LMICs, and a need to develop products with specific design features for use in LRS. Various NGOs and faith-based organisations (FBOs) fill that gap and deliver low-cost, manual wheelchairs that are specifically designed for LMIC environments.

A variety of NGOs provide quality, context-appropriate wheelchairs. These wheelchairs are often priced between US$150-350, are designed in line with the WHO Guidelines and are tested and certified for quality. The wheelchairs are considered context-appropriate because product design takes into consideration:

• AFFORDABILITY. Products are designed and produced to ensure low cost (i.e. material, manufacturing partner/facility, etc.). Large range of adjustability of each products also allows for a reduced total cost to meet diverse needs of users.
• THE ENVIRONMENTAL FACTORS AND USE CONDITIONS in LRS to ensure durability and reliability to avoid premature failure. Wheelchairs used in rough terrains are subjected to greater wear and tear than those designed for smooth roads.
• THE LIMITATIONS OF MAINTENANCE CAPACITY. Most users in LRS cannot afford the cost of frequent repairs including replacement parts, maintenance and repair services and transportation. These wheelchairs were designed for long useful life and minimal repairs.
• THE RELATIVELY EASY LOCAL REPAIR BY MAKING USE OF WIDELY-AVAILABLE REPLACEMENT PARTS. Users could use parts that are available locally in bicycle shops, motorcycle shops, and hardware stores, such as bicycle wheels, tires and tubes and locally-sourced wheel and caster bearings.

NGOs typically have full control over the value chain from product design to service provision. In most cases, the NGOs are structured as social enterprises and will contract third-party manufacturers. Income from wheelchair sales is used to support wheelchair access programmes. Such a model allows the NGO to raise funds for overhead and operational costs while keeping a minimum margin and therefore reducing the price of the final product. In addition to providing wheelchairs and services to users through their local service partners, they also sell their products to donors, other NGOs, and, on occasion, governments.

Volumes from NGO social enterprises for appropriate products are limited and they mainly supply products through donor-funded organisations within the same network. One NGO suggested that higher volumes could enable significant improvements on manufacturing economics. However, low overall demand and fragmented market in LMICs, characterised by fragmented, parallel funding and supply siloes, inhibit the potential for these efficiencies to materialise. In addition to NGOs, the largest FBO donors of wheelchairs for LMICs, LDS Charities and Free Wheelchair Mission (FWM), have designed and produced their own products. These two FBOs are discussed in the next section.

Some social enterprises have attempted to fill market gaps through a cross-subsidisation model. These social enterprises have designed products for users in both HICs and LMICs by considering the profile of users in HIC that are typically brand-conscious and performance-sensitive as well as the environmental condition in LMICs. The product is then offered at differential price points to allow larger margins gained from HICs market to subsidise sales in LIMCs market. Despite this promising model, these enterprises are still limited by lack of capital, limited brand awareness to buyers in one or both markets, competition with insurance markets and low volume.

Other smaller and relatively new NGOs or social enterprises continue to enter the market, indicating that there is no shortage of innovation in the space, particularly for paediatric wheelchairs; however, market potential for uptake of innovation uptake remains limited.

4.6. Charitable organisations that donate product dominate funded wheelchair demand in LMICs

Most wheelchairs in LMICs are donor-funded with delivery models ranging from organisations distributing refurbished wheelchairs with limited services to mass distribution campaigns to organisations providing quality appropriate wheelchairs with services that meet WHO Guidelines. Regardless of the model, almost all chairs are delivered at little or no cost to the user.

FWM and LDS Charities are the largest donors of wheelchairs in LMIC. Large, independent funding sources and higher volumes allow them to have full control over the design, manufacturing, transportation, and inventory management of the primary products that they donate, while also reducing cost per wheelchair provided. To achieve higher volumes and the lowest possible cost, these groups are supplying a limited range of product.

FWM has improved the design and quality of their basic chair in recent years and is looking to better link their distribution campaigns to referral networks for those with more complex seating needs. FWM is interested in increasing their training and service provision; however, investment has been limited due to their commitment to donors to deliver the highest number of wheelchairs within their funding envelope.

LDS Charities often complements their product offering by purchasing other wheelchair types to support local suppliers and fill gaps in need; however, their own branded products designed and produced in partnership with Colors ‘N Motion Inc. now consist of standard, urban active, and rough-terrain active wheelchairs.27

4.7. Local manufacturing to meet LMIC demand has been attempted and seen varying levels of success

Enabled by favourable government policies, incentives to manufacture locally, and the perception that wheelchairs are a low-tech product, several local manufacturers exist in LMICs. Their wheelchairs are at times designed for the local context and can be customised to match the user's needs, but the manufacturing process is often labour-intensive, expensive to initiate and requires materials or parts from abroad, which limits the ability to scale.

Local manufacturers come in different forms. Products from artisan local manufacturers, who build wheelchairs manually from a mix of locally sourced (metal tubing) and imported materials (wheels), are often seen as lower quality compared to imports. While these companies typically have a higher cost-structure compared to larger production sites, the proximity to the end-user and lower shipping cost as compared to international freight result in a supply chain that is more responsive to user needs. However, these companies appear to struggle due to low and erratic demand, resulting in low production capacity planning and utilisation and difficulties in sustaining production levels. Furthermore, they are hampered by low investment, training, available equipment, skills and quality assurance mechanisms, which all contribute to the cycle of low quality in production.

Prior to shifting some of its volume to medium and large-scale production through partnerships with contract manufacturers, Whirlwind Wheelchairs International (WWI) spent around 15 years focusing on an artisan model supporting the development of small-scale local wheelchair production in more than 40 countries. Many of the workshops are no longer operating, while some have survived and continue to produce wheelchairs for the community such as Kifas (Turkey) and Fundacion Bertha (Mexico). The main challenge has consistently been generating and maintaining demand to sustain the production levels. High political interest for local manufacturing by government rarely came with the support to procure the final product and to allocate public funding to purchase wheelchairs. Since most wheelchair users have low ability to pay, government financing for wheelchairs and supportive procurement policies (e.g. not solely based on the lowest cost; open to the non-commercial entity) are critical in ensuring demand for local production.

Local manufacturers that serve larger domestic markets, such as CE Mobility in South Africa, show that local manufacturers can be economically viable. Key success factors include: 1) quality and competitive pricing; 2) receiving support from the local government in the form of tender purchases; 3) selling both domestically and through regional exports; and 4) ability to provide a more diverse wheelchair product-offering than traditional imports while maintaining the supply chain responsiveness that is unavailable via the Artisan model.

4.8. While not heavily utilised in LMICs at the moment, localised assembly of component parts could support a cost-effective supply of appropriate wheelchairs

Bulk manufacturing of parts with regional assembly is the standard manufacturing model employed in HICs. In this model, wheelchair parts are manufactured at a centralised manufacturing site – usually in China – and then shipped to a warehouse or facility that is specialised to do final assembly of certain models (Figure 5). Given the pressure on profit margins, suppliers are optimising warehousing and production costs while maintaining the ability to offer a highly customised final product. One supplier suggested that an assembly approach reduces shipping costs to 25% of the total cost of shipping assembled products. Most assembly of lower-cost wheelchairs happens in China, while more expensive, high-end products are commonly assembled in Europe or North America, closer to the end-user.

Numerous NGOs & FBOs have developed an approach that involves ‘localised’ assembly of wheelchairs in LMICs:

• FWM is successful in keeping cost of product to a minimum by high volume and shipping bulk parts for local assembly. FWM achieves maximum quantities per container by boxing components separately (i.e. one box does not contain one wheelchair), which represents maximum efficiency in shipping logistics. The downsides of this model are: 1) assembly cost at the factory may or may not be significantly reduced, and 2) mass assembly of many wheelchairs requires immediate distribution of many wheelchairs or significant local warehouse capacity.
• MOTIVATION uses a model whereby a compactly boxed wheelchair, also known as a flat-pack, is assembled, inspected and adjusted by moderately trained personnel at the service centre. This is similar to the adult bicycle model in high income markets. In comparison: the bike shop adds cost, but product quality for the user is kept high due to the quality of final adjustment, and because the relationship to manufacturers by their dealer network ensures feedback loop on product quality communications.

Shipping parts for local assembly might be especially suitable for large volume distribution in a locality that has a significant need but is currently not manufacturing other products of similar complexity. Opportunities may exist to learn from the above-mentioned approaches to explore how quality products can be delivered via the volume purchasing power and a value-engineering approach.

4.9. Generic suppliers that serve as contract manufacturers for NGOs and FBOs to produce quality wheelchairs may be able to supply LMICs cost-effectively but lack market visibility or scale

Wheelchair manufacturing has largely shifted to Asian countries, such as China, Vietnam and Taiwan. China's large bicycle industry together with an extensive and diverse supply chain, indigenous supply of raw materials, high investment in production technology and volume manufacturing infrastructure makes for a very effective production base.

Most NGOs and FBOs use contract manufacturers in China. These companies have the manufacturing capabilities and excess capacity that could be used to serve LMIC markets, but lack understanding on what products are needed in these markets, who the potential buyers are and the size and demand of the potential market.

4.10. Product standards and specifications for wheelchairs in LRS have been developed or are in development, but uptake to guide purchasing and design has been limited

The WHO Guidelines also include guidance on minimum product quality standards, based on the user need. Quality standards provide requirements, specifications and guidelines to ensure products are designed and manufactured appropriately. In the WHO Guidelines, governments are encouraged to develop and adopt national wheelchair standards based on ISO 7176, the international standards for wheelchairs that evaluate the product's safety, durability, performance and product dimensions.

However, ISO 7176 does not test for factors typical for LRS such as rough terrain and environmental conditions, such as high humidity, exposure to water and sand, and high temperature that differ from HICs. Premature failures of wheelchairs in LRS may be due to shortcomings in product regulations, quality standards and testing. The community recommended that more rigorous standards be developed for wheelchairs in LRS as they are subject to these unique environmental and use conditions.29

To improve reliability and usability of wheelchairs in LRS and guide product design, ISWP developed and published the Design Considerations for Wheelchairs Used in Adverse Conditions. 30 The document was created to complement the WHO Guidelines by providing more detailed information in designing wheelchairs for adverse environment and common pitfalls to avoid. In addition, ISWP developed protocols and equipment to test casters, rolling resistance and corrosion for adverse conditions, labelling it the ISO-Plus, but no specific pass/fail thresholds have been determined as of now.

While documents exist to guide design for LRS products, the acceptance and adoption by the wider community has been limited. Different interpretations of minimum quality standards has led to a spectrum of products that are designed with varying degrees of quality considerations. For example, Motivation has its own Product Assessment Tool that was developed in collaboration with Humanity and Inclusion (HI) and APDK. These differences limit the visibility to suppliers on what is appropriate for LRS. Building consensus among key stakeholders, in particular in the developing world, on minimum accepted quality standards that can be translated into country's national standards, could enhance market participation, while ensuring optimal performance and durability.

At the moment, most LMICs include limited specifications in their tenders, often even restricting the request to a single word, such as “wheelchairs”. As a result, these countries may buy products that are not appropriate for their settings or for the users and lack desirable product features, including quality. The WHO, under the GATE Initiative, is developing Assistive Product Specifications (APS) for all assistive products listed in the Priority Assistive Products List,31 including wheelchairs. The APS should be adapted to the local context and aims to serve as a set of objective specifications to support procurement and guide suppliers about market needs. The APS for wheelchairs should be available in late 2019.

4.11. A lack of clarity on the ideal products required to serve the highest proportion of the population, as defined by a PPP, contributes to a fragmented market space.

Different NGOs and FBOs have different views on the trade-offs between quality and cost, which in combination with the need for various types and sizes, contributes to a high proliferation of stock keeping units (SKUs; a term that refers to a distinct type of item for sale).

Preferred product profiles (PPP) for different types of wheelchairs that would be appropriate for use in LRS can rationalise demand and increase market transparency. Similar to a target product profile used in drug development, a PPP that contains preferred criteria and specifications for a product that is appropriate for LMIC markets can, when backed by funders, provide strategic guidance to product design wheelchairs. While the WHO Guidelines give providers and programme managers a framework for product selection, there is no mechanism to evaluate products against the criteria in the WHO Guidelines. The APS will help buyers with procurement, but don't include guidance on the desired price points and specific performance standards for LRS conditions.

An opportunity exists to define a PPP for each of five product groups that providers should be able to choose from: 1) standard wheelchair; 2) active urban wheelchair; 3) active dual use/indoor-outdoor wheelchair; 4) active rough-terrain wheelchair; and 5) wheelchair with postural support. All products should be available for both adults and children.

4.12. To address the challenges of a fragmented market landscape, USAID funded the development of a global distribution hub of context appropriate wheelchairs

A distribution hub may help address challenges faced by buyers and service providers in LMICs including product variety and size of order offered by individual suppliers, extensive lead times, and high logistical burden. Distribution hubs may support the increase in market visibility of appropriate, quality products and increase affordability of products by acting as a consolidating agent or pooling mechanism to take advantage of economies of scale through larger volumes for supplier. A distribution hub can benefit suppliers by serving as a global distributer that de-risks market entry for new products and supports marketing, sales and logistics, as well as providing a platform to expand market reach for suppliers.

Consolidating Logistics for Assistive Technology Supply and Provision (CLASP) is a USAID-funded, UCP Wheels for Humanity managed global consolidation or distribution hub launched in 2015. Through a consolidation hub in China, CLASP enables buyers to make large or small orders of mixed products and sizes, delivering mobility devices that best suit users' individual needs. It purchases, warehouses, consolidates and transports assistive products from a number of manufacturers and ships them directly to service providers (Figure 6). This mechanism allows buyers, from NGOs to governments to donors, increase access to preferences as they are able to make large or small orders of a variety of wheelchairs and related products from diverse manufacturers versus buyers purchasing a minimum number of one type from one supplier, while also reducing lead times as products are supplied from the warehoused stock.

CLASP includes an international competitive bidding process for the different products that are included in its portfolio. Through its Product Advisory Council (PAC), which is comprised of users, clinical and technical experts, CLASP evaluates the specifications, quality, price and function of products and makes recommendations for inclusion in the mechanism. The PAC sets a minimum threshold for each criteria for inclusion in the product catalogue. This criteria is shared with product suppliers and designers, which may influence quality improvement and product design in the longer term. The inclusion of the PAC process has helped limit perceived conflicts of interest and standardised the product selection process. Through its Committee of Suppliers, CLASP is able to increase market information for suppliers, including sales and product performance data. This data combined with feedback from the PAC may support suppliers to identify gaps in the market as well as product design and quality deficiencies to improve product quality and increase innovation.

While CLASP exemplifies the advantages of a global distribution hub to building and supplying demand for optimal, quality product, it has not been without challenges. CLASP buyers are primarily NGOs and USAID-funded programmes and procurement volumes have been low. Additionally, CLASP has seen limited success in accessing and responding to government tenders due to tender regulations and practices. The low procurement volumes limit availability of working capital to purchase products for warehousing and limits the ability of CLASP to take full advantage of pooled volumes and economies of scale. For example, as CLASP is not the exclusive distributer for suppliers, suppliers have sold directly to buyers below the manufacturer suggested retail price offered by CLASP and therefore, CLASP is perceived as having more expensive products.