Elscint closes alliance with Magna-Lab

Elscint Cryomagnetics, the Oxford, U.K., manufacturing subsidiaryof Elscint Ltd., has secured production and international distributionrights for the Magna-Lab dedicated MR extremity scanner. The dealcompletes negotiations that were begun in 1994 (SCAN 12/14/94).

Under terms of a contract signed June 12, Elscint will manufacturethe Magna-SL for sales and distribution to customers in Europe,China, Australia, parts of the Middle East and Latin America,and other territories.

The terms cover a six-year period with automatic renewal everytwo years if minimum sales goals are met, said John Lombardo,director of operations for Magna-Lab.

Permanent magnets for scanners sold by Elscint will be builtat manufacturing facilities in Oxford. Scanner assembly will beconducted at its MR plant in Fort Collins, CO.

Magna-Lab will also build Magna-SL to support sales effortsin the U.S. and Japan. The company moved to a 15,000-square-footoffice/factory facility in Edgewood, NY, in May.

"The contract gives us worldwide sales presence throughElscint. We hope the relationship will strengthen over time toaid the development of the Magna-Lab platform through collaborationsbetween our engineers' work and their staff at Fort Collins andHaifa," said John Haytaian, Magna-Lab vice president of salesand marketing.

Magna-Lab employs a three-person sales force to cover the U.S.radiology market, and contracts with various distributors forthe U.S. orthopedic market. Beta Numerics, a medical marketingcompany with ties to Magna-Lab's board of directors, representsthe product line in Japan.

Magna-Lab completed extensive beta-testing of Magna-SL at sitesin San Antonio, TX, and Buffalo, NY, last year. Six of its backlogof nine systems are in production, Lombardo said.

As part of the contract, Magna-Lab received an immediate $250,000nonrefundable payment from Elscint to be applied against first-yearroyalties. The deal will generate at least $6.5 million in royaltiesfor Magna-Lab over six years if Elscint meets minimum sales guarantees,Lombardo said.

The two companies will collaborate on product development andproduction cost-reduction for Magna-SL. Under the agreement, Elscintis first in line for distribution rights to new Magna-Lab MRIproducts. The company is developing niche MRI scanners for mammography,spine imaging, and cardiac applications.