Agfa builds digital future on analog past

March 28, 2001

Like many film businesses, Agfa is in transition from analog to digital. But unlike some competitors, only a small component of Agfa, about 5%, is oriented toward the general public. The rest is business to business, allowing Agfa strategists to focus on

Like many film businesses, Agfa is in transition from analog to digital. But unlike some competitors, only a small component of Agfa, about 5%, is oriented toward the general public. The rest is business to business, allowing Agfa strategists to focus on its graphics and medical groups.

"Our activities do not center around the profitability of film or viability of film," said John Glass, general manager for medical imaging business, "As film (use) diminishes, our profitability is still growing."

Agfa's strategy is to migrate its large base of film users to computed radiography, direct radiography, and networking. And in the process, enterprise-wide solutions will become better defined, Glass said.

This change in direction is helping to counterbalance a declining market for conventional radiographic film, which peaked in North America about two years ago and has since been declining at 3% to 4% annually, Glass said. Although conventional film use is going down in mature healthcare markets, volumes continue to rise in less mature markets of Europe, as well as in China and Africa.

Meanwhile, newer technologies such as laser film are growing in mature markets, as the number of CT and MRI procedures rises. How long this trend will continue is hard to say. Increased networking and soft-copy reading will eventually cut into the use of laser films, marking a shift in the role being played by hard-copy media, Glass said. Until the last few years, film had been used as a data capture device. Increasingly, hard-copy media are being used as output or reference devices. Traditional film is only one option. Others are paper and low-cost transparencies.

In short, Agfa believes hard-copy media are here to stay, and the company's organization reflects that realization. Agfa has broken its hard-copy medical media business into three segments: film, which includes the spectrum of films, processors, and film handlers; niche products, which are focused on specific areas such as mammography and dental imaging; and printers, whose sales have grown with the transition from wet to dry films and the growth in digital modalities.

Another major component of Agfa's medical business is CR and DR products. Computed radiography is an area on which the company has focused much of its effort, setting up supplier contracts with GE and Siemens, as well as selling direct through its own sales organization and under buyer contracts with group purchasing organizations.

Critical to the continued success of CR is the development of new technology. Glass noted that Agfa has come up with a new phosphor-based storage system, which improves image quality by two- to three-fold.

"CR can now compete directly with DR on image quality while offering lower cost-points for putting in a system for the customer," he said.

For those who want digital radiography, Agfa is partnering with Canon to provide flat-panel systems based on amorphous silicon detectors (SCAN 7/5/00). The idea is to provide a seamless package of CR and/or DR as part of a network that offers connectivity software and processing algorithms that improve productivity and workflow.

"Our expertise is input and output devices and networking. We're not going to be a DR plate manufacturer, but we will adapt that technology and build around it," Glass said, alluding to Agfa's decision not to buy the Direct Radiography component of Sterling Diagnostic Imaging.

In the wake of its merger with Sterling, completed in 1999 (SCAN 5/26/99), the company has retained much of the customer base of both Agfa and Sterling while realizing cost savings by coordinating sales and manufacturing efforts. The combined forces of these companies are being guided toward software products.

"We are shifting from box-based PACS to software and services, whether it is on- or off-site services or financing," said Robert E. Cooke, vice president and global general manager of Impax solutions.

Agfa believes the opportunity for growth that began in PACS is expanding outward into enterprise-wide networking solutions. Radiology and cardiology represent the top two opportunities because they generate the most images, Cooke said. Agfa has structured its product offerings to concentrate on these two, which together form the basis of an integrated image management approach, and introduced Impax for Cardiology at the recent ACC meeting.

Efforts in radiology and cardiology will extend to other areas in which visualization is important, Glass said, such as ophthalmology, endoscopy, and orthopedics. Breaking down the boundaries between departments and facilities is the ultimate goal.

The means for reaching this goal is improved productivity. New challenges to workflow, such as those presented by multislice CT, which generates huge volumes of data, will be met with software that allows analysis and soft-copy reading, Glass said.

"We see 3-D as part of the overall workflow and we plan to make tools that are easy to use and protocol driven, such that 3-D can be brought into the diagnostic process," he said.

© 2001 Miller Freeman Inc.
3/28/01, Issue # 1506, page 1.