DI SCANexplains MR market strength

October 16, 2007

Editor’s Note: This is the second of a two-part series on the MR marketplace in 2007. The first, which appeared in DI SCAN last week, provided a market breakdown and 2007 projection.

Editor's Note: This is the second of a two-part series on the MR marketplace in 2007. The first, which appeared in DI SCAN last week, provided a market breakdown and 2007 projection.

Vendors long ago began planning for a steady decline in MR reimbursements. They designed products with built-in support for future upgrades and allowed for on-site enhancements, the sales of which would see them through the darker hours of a market downturn. At the same time, strategic planners at the major MR suppliers realized they would need an equivalent to the battery of slice-war weapons being unveiled by MR's nemesis modality, CT. That, of course, was 3T, positioned already in the early part of this decade as the new clinical high-field benchmark.

Both approaches have helped steady the keel of MR over the last couple of years, and this year has helped provide a soft landing at the same time CT was doing a sugar-rush crash.

Siemens' planners have long since accepted the fact that MR reimbursements would decline, said Jeff Bundy, vice president of the Siemens Medical Solutions MR division USA. Working to help customers meet those challenges, the company brought forward a steady stream of innovations, most notably the latest version of Tim T, its total imaging matrix. This iteration offers improved ordering, planning, processing, and distribution. Enhanced data capture during peripheral angiography is achieved through continuous table movement, an ability dubbed TimCT. Other vendors, having read the same writing on the wall, have taken action as well.

Philips Medical Systems at last year's RSNA meeting unveiled a high-field scanner that can be upgraded from 1.5T to 3T onsite. This product, Achieva XR, exemplifies a corporate strategy to support customers who want to upgrade - one that is now bearing dividends.

"What you see in the market is postponement of investments in new MR systems, and increased interest in upgrading existing systems, for which Philips is ideally placed, because we can upgrade even the oldest systems to the latest specs," said Conrad Smits, CEO of Philips MR.

This claim is shared by all major MR vendors, who have made upgradability a focus since the first scanners rolled off production lines in 1983.

"You have to have a strategy that allows the magnet to be there for 10 or 15 years," said Dave Handler, general manager of global MR marketing for GE Healthcare. "The magnet must have the right homogeneity so that you can upgrade the electronics and software to work together."

When budgets get tight, customers often turn to upgrades, Handler said.

"You sell a lot of upgrades because customers can upgrade systems for fewer dollars per unit," he said.

Vendors bolstered their bottom lines with upgrades in the first half of 2007. There was not a huge shift in that direction, Handler said, because new unit sales plugged along. The use of upgrade sales, but not an overreliance on them, has added balance to the industry.

Current demand for upgrades will wane, Smits said, when installed sites have squeezed as much as they can from their systems.

"You can upgrade only so long," he said. "There will be a pent-up demand that will break free."

Handler points to a historically steady growth in demand for MR, one that will continue if clinical techniques now in the offing, such as breast and cardiac imaging, catch on.

"As long as the clinical value and number of procedures continue to grow, the market will follow," he said.

When demand picks up, Philips will be ready. It is expanding its magnet-making capacity at its Latham, NY, facility, formerly owned by Intermagnetics General, which Philips acquired last year.

"We are ready for any indication that the market will pick up again," Smits said. "We hope it will be early in the next year."

Philips executives hope to turn at least some of the future demand into 3T sales. This segment has been challenging for vendors, who began talking up the virtues of the improved signal-to-noise ratio of 3T some five years ago. Back then, GE was promoting 3T as the new clinical high-field, and industry pundits believed cardiac imaging would fuel its adoption. Instead, it has been a succession of mainstream and advanced applications, such as breast imaging, that have stoked the fire. Many of the sales, however, are based on customer belief that 3T will provide the horsepower for future clinical applications and that, without it, sites risk being obsolete in a few years.

This has provided a steadily growing demand for 3T, while engineers have sought to make the 1.5T systems more responsive to patient comfort issues. The resulting wide-bore, shorter systems, outfitted with 8, 16, and 32 channels and improved gradients, have established the 1.5T as the imaging community''s workhorse. They also have collectively sounded the death knell for open MR, whose popularity has plummeted.

Philips is among the few companies still aggressively seeking customers for open MR, but its efforts are concentrated primarily on its high-end Panorama 1T. This scanner, released at RSNA 2004, is gaining traction, providing an old-school answer for sites looking for patient comfort and high performance.

Although Philips is today the only provider of a high-field open system, defined as generating a 1T magnetic field or better, that could soon change. Hitachi Medical Systems America could begin marketing its Oasis 1.2T scanner in the coming weeks or months. The system, recently cleared by the FDA, will offer the openness that has distinguished Hitachi low-field systems, but provides eight-channel high-field imaging.