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MARKETS<br />
General market development<br />
The estimated global hearing instrument market growth in<br />
2005/06 was 5%–7%, of which 1%–2% stemmed from increases<br />
in average selling prices. Sales prices were increasing due to a<br />
strong high-end segment, which is driven by innovation, and<br />
a dynamic low-end segment, driven by the replacement of analog<br />
products by digital products. All key markets grew more or less<br />
in line with the above mentioned average market growth rate.<br />
Group sales by product type<br />
Both brands of hearing instruments, Phonak and Unitron<br />
Hearing, contributed to the expansion of sales. Behind-the-Ear<br />
(BTE) products remained very strong, supported by the new<br />
micro hearing systems for open fitting. In addition, wireless<br />
communication systems again delivered consistently high<br />
growth, demonstrating their solid market position.<br />
Group sales by geographic region<br />
The Phonak Group continued to increase its global market<br />
share as sales developed favorably in all key markets. The United<br />
States and the biggest Western European markets made the<br />
largest contribution to our growth. We also made progress in<br />
building up our market positions in Japan and China, even<br />
though our operations in these countries have not been established<br />
for very long and business volumes are still comparatively<br />
modest.<br />
Latest developments<br />
Thanks to our stronger sales organizations, intensified<br />
marketing efforts and excellent product offerings, the Phonak<br />
Group once again managed to attract many new clients and<br />
significantly expand its customer base. In 2005/06, sales to key<br />
accounts increased further as a result of closer cooperation<br />
with these industry players. We continued to ramp up our retail<br />
presence in China, a potentially huge market. Our purchase of a<br />
controlling interest in CAS Produtos Médicos Ltda., the Brazilian<br />
market leader in hearing instrument distribution, as well as<br />
a number of smaller acquisitions, significantly extended the<br />
geographic reach of our global sales network, as planned.<br />
Outlook<br />
The Phonak Group expects to outgrow the hearing instrument<br />
market once again, due to:<br />
- having a comprehensive product range, which is continuously<br />
rejuvenated<br />
- providing superior, innovative and easy-to-use products<br />
- extending its support and service offering<br />
- expanding its distribution channels<br />
In 2006/07, we intend to further strengthen our sales<br />
organizations and expand our distribution network in Eastern<br />
Europe, Latin America, India, and Asia especially.<br />
Markets<br />
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