Canon bases digital radiography stategy on foundation of OEM and distributor sales

February 21, 2005

Nearly a decade has passed since Canon Medical Systems installed its first digital radiography system. Since then, the company has installed about 1700 flat-panel detectors around the world, nearly a third of them in the U.S.

Nearly a decade has passed since Canon Medical Systems installed its first digital radiography system. Since then, the company has installed about 1700 flat-panel detectors around the world, nearly a third of them in the U.S.

"Globally, we hold about 45% of the market share," said Jose Alvarez, a marketing specialist for Canon.

The company achieved that position through a strategy that includes supplying flat detectors to x-ray system manufacturers such as Virtual Imaging, which also distributes the Canon products. In the U.S., supplier agreements account for about half of Canon's sales. The other half come mostly from flat-panel upgrades for installed analog units, although some revenues accrue from contracts with the federal government and national account sales to hospital and imaging chains.

Through the years, the company's portfolio has evolved two top-selling products: the CXDI-50G, a 14 x 17-inch imaging area flat detector designed for portable digital radiography, and the 17 x 17-inch CXDI-40G, which was designed for digital general radiographic applications. A third product, the 9 x 11-inch CXDI-31, is a niche product for neonatal, veterinary, and other applications.

The CXDI-50G differs from the CXDI-40G panel in its portability. It can serve as a single-plate solution for rooms where the detector is used as if it were a film bucky being transferred from the upright stand to the bucky table and back again as needed. Features include three-second imaging, lightweight design (11 pounds), and the ability to capture images from nearly any position or angle. The panel, which began shipping 18 months ago, has been integrated into a wide range of room configurations, including some with equipment from Toshiba and Quantum Medical Systems. Roughly two dozen GE AMX 4 portable x-ray units have also been retrofitted with CXDI-50G panels.

The CXDI-40G is built to integrate with ceiling-suspended, multipositioning units and upright wall stands, as well as universal and radiography/fluoroscopy tilting tables. The product fits into systems offered by Virtual Imaging and Quantum.

When upgrading film-based systems, Canon digital sensors replace the film buckys of analog units. The CXDI-40G is installed onsite by removing the bucky and replacing it with the 40G. With the portable CXDI-50G, the panel is combined with a bucky developed by Virtual Imaging, replacing the existing bucky.

Other companies may upgrade their own technology, but Canon is one of the few that can upgrade virtually any manufacturer's x-ray room, Alvarez said.

"Because DR is our main focus, it is easier for us than for other companies that focus on a broad range of products," Alvarez said. "That focus helps us to both concentrate on and better understand the needs of that niche market."

This might give Canon an edge over GE, Philips, and Siemens, but it doesn't explain its success against firms such as Swissray. According to Alvarez, the company's decision to focus on its core product, detector technology, largely accounts for its success against the competition.

Canon achieves an economy of scale by manufacturing its own flat panels, giving it complete control over pricing. The company has a long history of working with amorphous silicon - on its printers and copiers - which provided the base from which to launch its medical imaging arm. Having the equipment in place to work with amorphous silicon gave Canon a huge advantage, enabling it to keep costs down, Alvarez said.

"That gives us an edge in the area of cost-effectiveness," he said. "We have a facility in Japan that is dedicated solely to manufacturing flat panels. That has given us the economy of scale that we need."

Alvarez ascribes some of the company's success to its philosophy: kyosei, which means "living and working together for the common good." Canon believes it must foster good relations with its customers, the community, nature, and the environment in order to be successful. To that end, Canon is working to eliminate hazardous materials in its products in an effort to make them as environmentally friendly as possible.

Other examples of kyosei include Canon's involvement with the March of Dimes, the Yellowstone Park Foundation, and various programs designed to help authorities locate missing children.

Canon's greatest challenge may come not from competitors but from outside DR. Computed radiography has slowed the adoption of DR, Alvarez said. Nowhere is the argument for CR stronger than for its use in portable x-ray imaging. But in challenge Canon has found opportunity.

"The CXDI-50G came into a niche market that CR controlled," Alvarez said. "Now, with technology such as this, facilities have an alternative."

In Canon's corporate mind, the CXDI-50G gives it an edge over its competitors, largely because of its portability and its ability to integrate with existing products, he said.

"We're the only company that can interface with existing portable systems," he said. "The CXDI-50G provides flexibility that the other manufacturers don't offer."