Imaging distributor takes Lafayette line from E-Z-Em

E-Z-Em of Westbury, NY, agreed last month to sell its Lafayettebarium business to Barkley Medical Products of Anaheim, CA. TheFederal Trade Commission forced E-Z-Em to make the divestitureon antitrust grounds.

The firm is the dominant supplier of barium contrast for gastrointestinalimaging. E-Z-Em purchased Lafayette Pharmacal, its only majorU.S. barium competitor, in 1988.

Barkley expects FTC approval of the deal next month. At thattime, the firm will change its name to Lafayette Pharmaceuticalsand take over the barium manufacturing plant in Lafayette, IN,said Herbert A. Hoebel, president, CEO and founder.

Barkley already distributes barium produced by the Australianfirm Medefield and will continue to handle that line as Lafayette,he said.

The two firms will be the only U.S. barium suppliers. Foreigncompanies make up just a small percent of the American bariumcontrast market. Lafayette should have about 15% of U.S. bariumsales once the deal is complete, Hoebel told SCAN.

E-Z-Em took an $8.6 million charge against earnings in thefourth quarter (end-June) of fiscal 1990 in anticipation of thedivestiture. The firm expects to add the net sales price of $5.5million to working capital in the second quarter of fiscal 1992,less the amounts attributable to inventory, E-Z-Em said.

The takeover of the Lafayette plant from E-Z-Em marks Barkley'sentroeee into manufacturing, Hoebel said. The medical distributorwas formed in 1987. The firm will benefit from using the Lafayettename, which has been in existence since 1906, he said.

While Lafayette Pharmaceutical will maintain its headquartersin Anaheim, the firm will move its existing packaging equipmentto Lafayette and maintain a western regional warehouse in California,he said.

Although sales of barium GI contrast were hit hard by the onslaughtof CT and MRI over the last decade, they have picked up in thelast several years, partly because of increased use of CT bariumimaging. The U.S. market is growing by a few percentage pointsannually, he said.

X-ray GI studies are also receiving a boost in competing withcolonoscopy techniques because of the lower cost of the bariummodality, he said. Insurance companies are looking closer at payingan average $575 for sigmoidoscopy and colonoscopy exams versus$190 for barium, he said.

"The barium enema is a very effective tool. It is lesscostly and has a low reaction rate," Hoebel said.