Industry sluggishness impacts support for basic MRI research

May 4, 1994

Academic centers may benefit from outsourcingTight market conditions in the medical imaging equipment industrydo not bode well for business support of long-term radiology researchefforts, according to Dr. William R. Brody, director of the

Academic centers may benefit from outsourcing

Tight market conditions in the medical imaging equipment industrydo not bode well for business support of long-term radiology researchefforts, according to Dr. William R. Brody, director of the departmentof radiology at Johns Hopkins University in Baltimore.

All is not bleak, however. Academic research sites that fillthe need of vendors to outsource R&D activities could seea pickup in industry funding, he said.

Brody commented on radiology research prospects in March duringa presentation at the 1994 Society of Magnetic Resonance meetingin Dallas.

"A significant amount of money is expended by industryfor R&D. More of that is for development than research, butnonetheless there is somewhere between $150 million and $200 million(expended annually), representing 10% to 20% of MRI equipmentsales," Brody said. "As MR equipment sales drop, fundingsupport for R&D drops. It doesn't necessarily drop in exactproportion, but it does decrease."

Industry executives have indicated that their medical imagingresearch budgets are declining, he said. The average drop seemsto be around 20%, although some are increasing, while others haveremained level.

MRI manufacturers are curtailing support of long-range researchefforts the most, shortening their R&D time horizon, Brodysaid. Industry layoffs have hit R&D departments, resultingin a number of talented MR physicists and engineers entering themarket for independent research efforts.

"Many of those people move from the companies back toacademia," he said. "There will be increased numbersof people competing for a relatively fixed pool of NIH grants(in MR research)."

If there is a silver lining for academic MRI research efforts,it is that corporate downsizing is increasing the need for technologyoutsourcing by vendors. Part of this outsourcing shift might takethe form of contracted research, he said.

"Universities in general pay lower salaries to their peoplethan industry does. In addition, our overhead is lower in mostcases than it is at corporations," Brody said. "Thereare opportunities for universities to attract more industry R&Dwith the trend toward outsourcing and downsizing."

Academic departments may find themselves facing the same typeof consolidation pressures now threatening MRI vendors, he said.Those sites that can invest in top-notch equipment are the onesmost apt to tap declining funding sources.

"I think there is going to be consolidation of academicdepartments," Brody said. "The good departments thathave the resources to buy the 3- and 4-tesla magnets, the interventionalmagnets or the echo-planar upgrades, and provide the infrastructureto do the research will compete more effectively for NIH grantsthan those departments that lack the critical mass of market shareand capital to make the kind of investments required."