Esaote and Bracco exhibit closer ties with joint booth at ECR conference

Bracco is now majority owner of Italian vendor

The increasingly close corporate bonds between Italian medical imaging companies Esaote and Bracco were in evidence last month when the companies exhibited in a joint booth at the European Congress of Radiology in Vienna. The firms have been exploring new ways to take advantage of their closer relationship, which was cemented when Bracco bought a controlling 50% stake in Esaote in April 1998.

Bracco has owned a piece of Esaote since 1995, when the contrast agent developer bought a 15% share (SCAN 2/14/96). The rest of Esaote was owned by a combination of Esaote management, institutional investors, and common stock shareholders. The ownership structure was a legacy of Esaote’s 1994 management-led buyout of shares from its previous corporate parent, Italian industrial conglomerate Finmeccanica.

Bracco decided to increase its stake to 50% when Esaote’s institutional investors began looking to sell their shares. Since buying the position, Bracco has kept relatively quiet on its ownership status: The joint booth at the ECR meeting was the first time the companies have exhibited together, according to Adriano Sivieri, marketing manager for Genoa-based Esaote.

“We wanted to present a closer relationship,” Sivieri said. “In some cases, our relationship wasn’t always known everywhere.”

Few other changes have taken place at the company since the change in ownership. Esaote is still led by chairman Carlo Castellano, and other primary executives remain in place. The firms are cooperating in certain areas, particularly on optimizing contrast agents for medical devices. Bracco’s portfolio of ultrasound and MRI agents overlaps well with Esaote’s own technology, which is focused on the ultrasound and MRI segments.

Within a week of the ECR meeting, Esaote reported financial results for 1998 (end-December) that should have pleased its new corporate parent. The company reported that sales grew 25%, while its net income rose 10%. The company characterized the year as a success, especially given difficult market conditions in France, Asia, and the countries of the former Soviet Union.

For the year, Esaote reported sales of Lit 344 billion ($191.7 million), compared with sales of Lit 276.8 billion ($154.3 million) in 1997. The company reported net income of $4 million, compared with net income of $3.6 million the previous year. Sales of ultrasound systems grew 29% to $116.1 million, thanks to the addition of $28.1 million in revenues contributed by Pie Medical, which Esaote acquired from Philips Medical Systems of Best, the Netherlands, last spring (SCAN 4/29/98). MRI revenues for 1998 were $14.7 million, up 4%.

Among recent highlights for the company have been its agreement with Siemens for sales of the E-Scan/Jazz dedicated MRI scanners, a marketing deal with PSS World Medical covering sales of AU3 scanners in the U.S., and a deal to sell $3.3 million in ultrasound scanners to Russia.