Dialysis at Core of Future Medical Membrane Markets

March 1, 2006
Often, when we speak of the water and wastewater industry, we tend to focus on municipal utilities and companies that address industrial applications...

Often, when we speak of the water and wastewater industry, we tend to focus on municipal utilities and companies that address industrial applications, such as high-purity water for power generation, manufacturing semiconductors, etc. Frequently overlooked are more critical applications and market niches that may offer greater growth prospects. One of those is the medical arena, and specifically that which addresses today’s epidemic of diabetes. An intriguing aspect of this is many of the companies focusing on industrial water treatment devote considerable resources to medical markets.

According to Dr. Francine R. Kaufman, author of Diabesity, experts predict over a third of American children born in 2000 will develop diabetes in their lifetime. The $153 billion going to healthcare for people with diabetes worldwide is expected to more than double to $496 billion by 2025 as the number of sufferers grows from 194 million to 333 million. Diabetes is the most common cause of kidney failure, accounting for over 40% of new cases. About 17 million people in the United States have diabetes. Over 100,000 live with kidney failure and 400,000 suffer from end-stage renal disease (ESRD), which requires long term dialysis - or substitute filtering of the blood - for survival.

Now, here’s where water comes into play. Over 95% of all dialysis centers use water purification equipment to purify water for dialysis, which removes waste, salts and excess water from the blood before returning it to the patient. The key ingredient of these systems has become reverse osmosis (RO). RO has proven itself to be the safest, most reliable, and most economical method of purifying water for dialysis.

In hemodialysis, a dialysis machine and a special filter called an artificial kidney, or a dialyzer, are used to clean the blood. The dialyzer, or filter, has two parts, one for the blood and one for a washing fluid called dialysate. A thin membrane separates these two parts. Blood cells, protein and other important things remain in the blood because they’re too big to go through. Smaller waste products in the blood, such as urea, creatinine, potassium and extra fluid pass through the membrane and are washed away.

When hemodialysis started to be used regularly, over 20 years ago, many dialysis centers used water right from the tap. We now know certain contaminants in water supplies can cause severe complications in dialysis patients.

The basic components of an RO system are a prefilter, a pump and spiral-wound membrane elements. A typical water purification system for dialysis draws water from municipal water supplies and puts it through a water softener to remove calcium and magnesium ions, as well as small amounts of iron. After that, activated carbon is used to remove chloramine, chlorine, and trace organics. Next comes the RO, which typically removes 90-95+% of dissolved salts. RO also removes bacteria and pyrogens as well as organic molecules, which is why it’s usually chosen by dialysis centers.

It might seem odd to be writing of medical applications in a publication devoted to industrial water. But a closer examination of this market niche shows how the same approaches to industrial water treatment are addressing entirely new or different markets. The opportunity for companies traditionally focused only on industrial applications to evolve into these potentially higher margin sectors, utilizing the same processes and technology, should be viewed as very attractive.

A number of water industry companies are actively engaged in this rapidly growing business area. Among key players in this market segment are Akzo Nobel/Membrana, Asahi Medical, Baxter International, Fresenius, Hospal/Gambro, Kuraray, Millipore, Minntech, Pall, Toray, Terumo and Teijin, according to a report “Key Medical Membrane Devices for the New Millennium” by BCC Inc. Other larger corporations have emerged in the market as well through acquisitions, such as GE/Osmonics-Ionics-Zenon, Siemens/USFilter and ITT/PCI-Memtech (now Aquious).

Tragically, given the alarming numbers of overweight or obese individuals, and the aging of the population, the odds of diabetes and ESRD occurring are soaring. Along with those growing problems, the market for high-purity water treatment systems is growing dramatically. A number of the companies that are engaged in this business area are outlined in the chart shown below. This is in no way an all-inclusive listing, but merely highlights a number of the participants.

About the Author: Neil Berlant is Water Group managing director and first vice president at The Seidler Companies, a middle-market investment and investment banking firm in Los Angeles. He has been involved in investment banking since 1968 with specific strength covering the water and wastewater market segments. Contact: 800-840-1090 or [email protected].

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