Analogic prepares OEM strategy for launch of unique CT scanner

March 2, 1994

This CT on wheels can plug in almost anywhereImaging subsystemsupplier Analogic has designed an innovative mobile CT systemthat could overcome power and siting constraints in emerging scannermarkets around the world. The Peabody, MA, based

This CT on wheels can plug in almost anywhere

Imaging subsystemsupplier Analogic has designed an innovative mobile CT systemthat could overcome power and siting constraints in emerging scannermarkets around the world. The Peabody, MA, based technology firmplans to form a single strategic OEM partnership for sales andservice of the scanner in most geographic markets, according toBernard M. Gordon, Analogic chairman and president.

A major exception to this OEM strategy is the potentially hugemarket of the People's Republic of China. Analogic's as-yet-unnamedCT system on wheels (see picture, page 7) will be sold in Chinathrough Analogic Scientific, a joint venture company (SCAN 12/14/88and 12/28/88). The scanner will likely be modified by the Chinesecompany to meet the specific needs of that market, Gordon said.

Despite use of Analogic's name and equity, Analogic Scientificis considered a separate affiliate by its U.S. partner. Salesfrom the Chinese joint venture are not consolidated with Analogicsales in financial statements of the NASDAQ-listed U.S. company.

"We are primarily an OEM engineering and manufacturingcompany. It is not our intention to supply end users with medicaldiagnostic equipment," Gordon told SCAN.

Development of a complete medical system is nothing new forAnalogic, he pointed out. For instance, the company has builtcomplete ultrasound systems in the past, including the first soldby GE a dozen years ago. All of Siemens' initial patient monitoringbusiness -- including the factory -- was also developed by Analogic.The company is best known, however, for the supply of componenttechnology, such as integrated MRI power systems and digital acquisitionsystems for CT.

What is new is the design of Analogic's lightweight CT system,profiled extensively in the firm's 1993 annual report. The systemhas not yet been approved for market by the Food and Drug Administrationin the U.S.

The scanner -- including the entire gantry, computer and powersystem -- weighs only 800 pounds. Its table adds about another300 pounds, Gordon said. "The gantry, complete with computingsystem and power system, weighs less than most existing powersystems alone," he said.

Because the scanner is sufficiently lightweight and rolls onwheels, it can be taken into the emergency room, surgery or evena patient's room, Gordon said.

The CT unit was also designed to utilize a wide spectrum ofpower sources and to function within hostile environments. Theimaging system can withstand a broader range of temperatures andhumidity levels than existing CT technology, he said.

"It can literally work in your living room if you plugit in. We don't recommend that, but it can," he said.

The scanner's portability and durability open two potentialmarkets worldwide:** The system may create new markets for basicCT imaging in areas of the world where siting conditions are variableand harsh; and** In North America, Europe and Japan, the scannermay broaden and open up new niche applications for CT, such asin trauma imaging and real-time surgical guidance.

Analogic also expects the scanner to be in demand as a low-costbackup imaging system in developed CT markets. Despite some premiumfeatures, it is not expected to encroach on the market for existinghigh-end CT systems, Gordon said.

The CT scanner is designed as a continuously rotating systemthat will perform spiral scanning, he said. This will be spiralscanning, though, with a twist: the patient on the table willnot move. How exactly this is accomplished the company is notsaying.

Another premium feature of the CT system is its highly efficientmAs utilization, which is derived from the scanner's unique geometry,optimized filtering and detector design among other factors, Gordonsaid. Better image quality at lower mAs levels can allow for reducedradiation dose to the patient.

While Analogic expects to form an exclusive OEM relationshipfor the scanner outside of China, the firm may utilize the technologyin other subsystems it provides to its OEM customers, he said.

There has been a trend over the last seven years of increasedtechnology outsourcing among medical imaging OEMs, which is acceleratingunder health-care cost containment pressure (SCAN 2/16/94). Oneresult of this trend is increased integration of subsystems, Gordonsaid.

"Many of the machines built in the past were assemblagesof almost semi-independent subsystems," he said. "Tobuild more cost-effective machines requires greater integrationof the subsystems."

This will not be the case with all imaging technology, however.With MRI systems, for instance, the cost of the magnet makes upsuch a large portion of the total cost that there is less roomfor external suppliers to introduce efficiencies through systemintegration, Gordon said. This leaves less leeway for the OEMsto cover their marketing costs and earn a profit.