Agfa moves to integrate Sterling’s products, operations

August 1, 1999

Agfa moves to integrate Sterling’s products, operationsSterling’s iiSys line will be discontinued in favor of ImpaxAgfa is making progress in its integration of Sterling Diagnostic Imaging. The PACS and film giant, which

Agfa moves to integrate Sterling’s products, operations

Sterling’s iiSys line will be discontinued in favor of Impax

Agfa is making progress in its integration of Sterling Diagnostic Imaging. The PACS and film giant, which completed its acquisition of Sterling in May (PNN 6/99), has begun the process of integrating product lines and delineating infrastructure for the combined firms. In the first phase of the integration, Agfa announced its management team in June (PNN 7/99). Proceeding with product decisions, Agfa has elected to focus on its own Impax product line, bypassing Sterling’s iiSys technology effort. Sterling’s iiSys product family included components from ISG Technologies, Image Devices, and Access Radiology.

“Sterling customers over time will migrate to Impax, and will be able to do so without a substantial investment,” said Bob Cooke, vice president of Agfa’s North American Impax operations.

Agfa’s decision to emphasize Impax was not unexpected, in light of the technology’s long and successful track record in the market. In addition, Agfa in April launched Impax Technology, a jointly owned PACS software company with Mitra Imaging (PNN 5/99). Impax Technology is charged with developing Agfa’s PACS software.

Agfa and Sterling executives believe that integration of the product lines will progress smoothly, due to adherence to standards such as DICOM, Cooke said.

Sterling PACS customers would migrate to Impax’s upcoming R4 launch, which is expected to be available for all customers in September.

R4 adds a number of capabilities to Impax, including the ability to manage cardiology data. Both cardiology and radiology information system extensions for Impax have been included, allowing users to perform or augment functions typically employed by a RIS, for example. R4 adds a Windows NT-based workstation package to Impax, although the new version can also run in a Sun Solaris environment (PNN 1/99).

Impax R4 is now shipping to government clients. One recipient, Walter Reed Army Medical Center in Washington DC, is close to placing its system into clinical use, Cooke said. The site purchased a large-scale PACS under the U.S. military’s Digital Imaging Network-Picture Archiving and Communications Systems (DIN-PACS) project (PNN 1/99).

Although iiSys will not be retained, Agfa will continue with Sterling’s popular iiLinx print network family. With over 3000 installations, Sterling’s iiLinx installed base also represents a significant PACS sales opportunity, Cooke said.

Meanwhile, Agfa’s own PACS efforts continue to progress. The company has recently received orders totaling $9 million from two sites, including Worcester Medical Center in Worcester, MA.

Agfa’s worldwide PACS operations will continue to be based out of Agfa’s Toronto location, headed by Patrick Artinoff. North American operations will be managed by Cooke. Further infrastructure and product availability plans are expected to be completed by the end of the summer, said Ernest Waaser, senior vice president for North America. Waaser previously served as COO for Sterling.

Agfa/Sterling integration decisions have ramifications in the traditional media sectors as well. Agfa estimates that the combined businesses maintain approximately a 40% market share in the North American film market, rivaling Kodak’s position following its acquisition of Imation’s medical imaging business (PNN 1/99).

Worldwide, Agfa/Sterling has a slightly lesser position than its North American share. Sterling’s film operations were not as extensive in the European market, where Agfa maintains a strong position.

Agfa has elected to base its imaging media business out of Sterling’s Greenville, SC, location. Sterling’s Brevard, NC, manufacturing facility will continue, and most of Agfa’s media will be supplied by that site.

“Agfa had the greater mass in the digital arenas, while Sterling had a significantly larger presence in film and hard copy,” Waaser said. Agfa’s Bushy Park, SC, site serves as a finishing facility, and the company’s Mortsel, Belgium, facility will provide film for the rest of the world.

Agfa and Sterling recently received a three-year film contract from Consorta, a healthcare group purchasing organization owned by 13 Catholic healthcare delivery systems. The value of the deal was not disclosed.

Spin-offThe Sterling acquisition isn’t the only big corporate move Agfa has completed lately. Agfa Gevaert was spun off from Bayer on Jan. 1, becoming a wholly owned subsidiary. A public stock offering for Agfa was completed on June 4, with about 50% of Agfa’s shares sold to the public. Agfa’s stock now trades publicly on the Brussels and Frankfurt stock exchanges. Bayer retains about a 35% position in Agfa.

Agfa executives believe the spin-off will benefit the firm, allowing Agfa more control over its own future. Agfa and Bayer had experienced culture clashes throughout their corporate marriage, and the pharmaceutical company had reportedly not invested as heavily in Agfa as it has in some of its other businesses (PNN 10/98).

“We now have the ability to make our own investment decisions, rather than being forced to compete for precious R&D and capital resources within another company,” Waaser said.