GE plans Soviet venture for CT scanner assembly

October 9, 1991

GE-CGR signed a preliminary agreement in February with VNIIEM,a central Soviet industrial ministry, for a Moscow-based jointventure to assemble, sell and service CT Max 640 scanners. GE is proceeding with the preparatory phase of this ventureand hopes

GE-CGR signed a preliminary agreement in February with VNIIEM,a central Soviet industrial ministry, for a Moscow-based jointventure to assemble, sell and service CT Max 640 scanners.

GE is proceeding with the preparatory phase of this ventureand hopes to begin operations by the end of the year, said StevenC. Riedel, president and CEO.

"We are progressing through the final Soviet approval.While it is a little confusing who is approving what, we are makingprogress," he said.

Uncertainty created by the shift of political and economicpower from the Soviet center to the republics raises questionsabout who the appropriate authorities are. Despite the unstablepolitical situation, however, Soviet collaboration with westernmedical imaging vendors continues.

GE's Soviet joint venture, which will be majority-owned bythe U.S. firm, could eventually evolve the same way as YokogawaMedical Systems, GE's Japanese medical joint venture, Riedel said.GE originally imported all of its technology into Japan. YMS nowexports components and scanners globally.

"We don't know how far we can go along the same routewith our partner in the Soviet Union. Clearly, we want to havea commitment in that market," Riedel said. "The Russianrepublic is 100 to 150 million people. It will be as big as theJapanese market someday, and we are viewing it similarly. We arestarting a long-term process to become established there and havethe Soviet Union as a part of our global network of joint venturesin medical systems."

GE Medical Systems of Milwaukee acquired France's Thomson-CGRfour years ago to form GE-CGR (SCAN 1/20/88).

PHILIPS MEDICAL SYSTEMS of the Netherlands also has a servicejoint venture in Moscow. It is negotiating with several institutionsto transfer unfinished technology into the country through a collaborativeproduction agreement, said Hans van Bree, PMS president and CEO.

"If you want a position in a country the size of Russia,you cannot do this by sending equipment over the border and gettingpaid for it. You have to involve Russian labor, Russian materialsand, ultimately, Russian technology to build up a base,"van Bree said.

Philips' service collaboration is with a hospital chain. Thatventure is not threatened by changes in state authority, he said.

Siemens initiated a joint venture in 1989 with the SovietMinistry of Health to service the vendor's medical equipment inthe Soviet Union. The German vendor's Soviet business is stillon track, according to Peter H. Grassmann, group executive forSiemens Medical of Germany.

"We must assume that purchasing patterns (in the SovietUnion) will decentralize. However, the different republics alreadyhave health authorities, and some have prepared themselves quitewell. They were often intermediate (agencies) that forwarded productrequests to be packaged into larger orders by the (central Soviet)ministries," Grassmann said. "We are now dealing moredirectly with them. We have not seen a cutoff in the normal flowof business."