Agfa Matrix benefits from combined efforts

Two years after the acquisition of Matrix by Agfa-Gevaert of Belgium(SCAN 12/14/88), medical imaging film and equipment sales arerising for the Agfa Matrix division of Agfa. The company's annualU.S. medical film sales have risen at a rate about twice the 6%industry average over the past two years. This growth has occurredeven though Matrix--an electronic imaging pioneer--did not bringfilm products to the new company, said Agfa Matrix president GeraldWagner.

Although the market for CRT-based multiformat cameras has saggedunder the onslaught of laser printers, Agfa Matrix has benefitedfrom the large installed base of Matrix cameras in U.S. hospitals,he said. The company sells both laser and CRT-based cameras.

Agfa Matrix could benefit significantly over the long run bykeeping its hand in the CRT camera field. As technology improvesand demand for lower cost distributed units grows, so might thedemand for CRT cameras, he said.

Matrix was predominantly an OEM supplier of electronic medicalimaging equipment. Agfa-Gevaert Rex, on the other hand, had asales and distribution force in the U.S. to handle its film andfilm-handling equipment products but was looking for ways to grow.Agfa Matrix now sells the combined medical imaging product linedirectly to hospitals while maintaining the Matrix OEM sales andservice business, Wagner said. The new unit also manufacturesmedical imaging products for worldwide distribution by Agfa.

Agfa Matrix sales and marketing functions have been consolidatedinto Agfa headquarters in Ridgefield Park, NJ, while technicaland service functions are based at the Matrix facility in Orangeburg,NY. The medical imaging business has been enhanced by its tiesto other business units within Agfa and Germany's Bayer Group,Agfa's parent company, Wagner said.

"As part of the Bayer family, we can offer more attractivepackages to hospital groups," he said.

Rather than tacking Matrix onto Agfa's worldwide medical imagingbusiness, Agfa Matrix was formed into a division of a reconstitutedAgfa Corp. in the U.S. Agfa in the U.S. has about $1 billion inannual revenues and employs 5000 people. It is a subsidiary ofBayer USA.

Although Agfa reports to Bayer in the U.S., the vendor continuesto coordinate global medical imaging efforts. Wagner is also managingdirector of equipment technology for the technical imaging businessunit of Agfa's worldwide business. He heads up both R&D andmanufacturing of medical imaging systems and coordinates a totalmedical R&D staff of over 300 individuals, he said.

According to Wagner, several factors may have combined to increaseAgfa Matrix sales more than the sum of the two previous businesses:

• Increased motivation of the sales force. Agfa Matrixrepresentatives aren't merely selling boxes of film to their hospitalcustomers. They can point to the Matrix equipment found in mosthospitals as a sign of their company's broad product range andestablished presence.

• Hospitals are searching for system solutions ratherthan the purchase of single products for their imaging departments.Group purchasing by multiple hospitals is also on the rise. Theother businesses within Agfa and Bayer help Agfa Matrix offerhospital customers more cost-effective, one-stop shopping alternatives,he said.

• The combination of service forces has provided AgfaMatrix with both a first-line (final customer) and second-line(OEM) service capability.

THERE IS LIFE IN THE CRT MARKET, despite competition from lasercameras, Wagner said. Laser devices are glamorous but expensive.They are valuable to an imaging department--particularly in high-throughputsituations--but are not the only hard-copy answer. Hospitals shouldbe free to use the technology that best meets their own needs,he said.

Similar technologies, such as photocopiers and computers, haveevolved from expensive centralized devices to smaller personalizedunits. Medical imaging cameras could follow this trend, as hospitalssearch for convenience and low prices, Wagner said.

CRT devices also have some intrinsic advantages over lasercameras, which could be enhanced through product development efforts,he said.

"It seems more reliable to deflect an electron beam ina vacuum without any moving parts rather than a light beam byuse of high-speed mirrors or other mechanical devices. Also, youdon't have dust in a CRT," he said.

The trend to decentralized equipment is a factor in the filmprocessing field as well, where Agfa developed a compact versionof its Curix processor. Demand for the smaller unit has been briskas the number of decentralized imaging sites increases in fieldssuch as mammography, he said.

MORE MULTI-YEAR BINDING CONTRACTS are being signed between hospitalsand film/camera vendors. This could be either a good or bad trend,Wagner noted. Discounting of equipment in order to lock in yearsof film sales might be disadvantageous to a hospital if a betterfilm alternative comes along later. Cooperative approaches tohospital imaging needs, however, can benefit both the vendor andcustomer, he said.

"Binding is good as long as it is accompanied by jointefforts. A system supplier might agree to provide optimum imagequality (at a particular site) or help with management and logistics.Special rates on service might be arranged in exchange for long-termcontracts. This (type of cooperation) makes sense. It createsa feeling of co-ownership," he said.

Cooperation between hospitals and vendors can also help reduceproduct costs over the long run, Wagner said. Vendors requirehigher profit margins when the business is risky. If sales canbe made more predictable over certain time periods, vendors maytrim margins and reduce the price to their customers, he said.

BRIEFLY NOTED:

• Medstone International of Irvine, CA, formalized its decisionto focus company growth in areas outside of lithotripsy with theestablishment of Cytocare, a new parent company. Cytocare willconcentrate its efforts on commercializing new, non-capital-equipmentmedical products. Medstone International will continue as an operatingcompany to sell and service kidney-stone-blasting lithotripters.

Medstone suspended its gallstone lithotripsy research programlast year due to delays obtaining Food and Drug Administrationmarketing approval and sagging prospects for the biliary blastermarket (SCAN 12/12/90).

"Initial projects in proprietary biologicals and smallmolecule pharmaceuticals are linked to Medstone's customer baseof urologists. Our lithotripters treat over 6000 cases of renaldisease per year, and there are attractive medical and economicopportunities in new drug therapies for chronic urologic disease,"said chairman Errol Payne.

• The status of EDAP's U.S. organization is unclear. TheFrench lithotripter firm did not display its wares at the 1990RSNA meeting and Robert Reeders, general manager of the U.S. companybased in Westford, MA, was rumored to have left the firm. Repeatedcalls placed by SCAN to the Westford office--and taken by an answeringservice--have not been returned. EDAP's French headquarters alsofailed to respond to inquiries.

• Victoreen, the radiation monitoring firm that took onnew owners last year (SCAN 10/24/90), has opened a service andcalibration center in Munich. The service center will functionunder the auspices of Victoreen GmbH, the company's German subsidiary,which was also formed last year.

Victoreen's European sales have helped the company maintaina 25% annual growth rate since 1989, said president Michael J.Kirchoff. The firm's enhanced service capability will help Victoreentake advantage of business opportunities in a unified EuropeanCommunity, he said.

• Technomed International of France acquired the medicallaser division of Micro-Controle this month. Micro-Controle, alsoa French firm, builds Nd:Yag medical lasers used in minimallyinvasive laparoscopic surgical procedures. Technomed will addthe Multilase lasers to its product line of ESWL and laser lithotripters.Market prospects for biliary ESWL lithotripsy have been dampenedby the growing popularity of laparoscopic cholecystectomy forthe removal of gallstones.