3M adds heft to position in PACSwith equity investment in Cemax-Icon

June 21, 1995

Investment could fulfill promise of PACS powerhouseLook for Cemax-Icon to rapidly expand its presence in the PACSmarket in coming months, thanks to a capital infusion from 3MMedical Imaging Systems of St. Paul, MN. 3M has taken an equityposition

Investment could fulfill promise of PACS powerhouse

Look for Cemax-Icon to rapidly expand its presence in the PACSmarket in coming months, thanks to a capital infusion from 3MMedical Imaging Systems of St. Paul, MN. 3M has taken an equityposition in the California firm and is building distribution andsupport of image management systems into the new partnership.

The companies are developing a division of labor in which Cemax-Iconhandles the technology while 3M provides sales and marketing muscle.3M staff will serve as account managers and Cemax-Icon specialistswill provide product integration expertise, according to Jim Wales,business manager of image management systems at 3M.

"Because of our equity position, we want Cemax-Icon tosucceed," Wales said. "We are putting Cemax-Icon specialistswhere 3M specialists would have been."

The equity investment and strategic operating approach wereannounced June 16, just four days after Cemax-Icon Inc. formallycompleted the merger that was announced in March (SCAN 3/15/95).The size of 3M's investment in Cemax-Icon was not disclosed.

In the next few weeks, Icon staff in Campbell, CA, will moveto the Cemax facility in Fremont, CA. By the third quarter, themerged company expects to have completely integrated product linesfrom the two companies. All products will be compatible with theACR-NEMA's DICOM 3.0 standard.

3M's investment comes weeks after Du Pont's decision to sellits Medical Products group (SCAN 6/7/95). Du Pont's decision toexit the diagnostic imaging industry has raised questions aboutthe ability of big film companies to succeed in electronic imaging.But Wales insists that his company's move should be seen as anindication of what film companies must do to succeed.

One difficulty film vendors face is the fact that most havetried to sell other companies' products, according to Wales.

"We did that for a while and we said, `This is crazy,"'he said. "We looked at this very carefully and decided thatit is best for us to be in a position of part ownership of a companythat is participating in the market. You need the flexibilityof a small company like Cemax-Icon."

Wales rejects the idea that the restructuring of 3M's PACSoperations may be a first step by the company to distance itselffrom the PACS market as Du Pont has done.

"3M is in no way getting out," he said. "Theopposite is true. We jumped in with both feet this time. We viewthis as a core business and have no intention of getting out ofit."

The relationship between 3M and Cemax goes back more than ayear, when the two established a supply agreement for PACS equipmentand services (SCAN 3/2/94).

"We have worked with Cemax to find different ways to operatetogether; we got the teams closer and closer together; we sharedtechnology," Wales said. "We have been able to avoidduplicating management, distribution and service."

But while Cemax-Icon has an excellent engineering group, Walessaid, 3M will continue to conduct its own R&D.

"Because of our laser business, we can't hand that tosomeone else," he said. "What we are doing through technologyexchange and cooperative efforts is to make sure we don't bothdo the same thing. "Wales predicts that as the year progresses,the fruits of those labors will be apparent. The two companieswill be proposing new ways for implementing PACS technology.

"Our intention is to allow customers to apply technologythat fits their flow of work rather than put in a system thatmakes them change everything suddenly," Wales said. "Ifthey want to start with teleradiology, fine. What we are goingto guarantee them is a migration plan."