Marconi Medical moves to distribute PET systems from Siemens supplier

Marconi Medical Systems has entered the PET market-not with products of its own making but with ones built by the same company that supplies industry leader Siemens Medical Solutions. The agreement, announced in mid-May, allows Marconi to distribute, market, and service dedicated PET systems from CTI PET Systems (CPS), a joint venture between Siemens and Knoxville-based CTI.

In the process, the exclusive supply arrangement for PET scanners between Siemens and CPS has ended. Siemens, which holds a 49% stake in CPS, participated in and agreed with the decision to break the exclusive arrangement and allow the joint venture to partner with Marconi.

“We still have a supply agreement in place with CPS,” said Randy Weatherhead, vice president of marketing for the nuclear medicine group of Siemens. “The difference is that the CPS board of directors (on which Siemens executives sit) decided it was best for the shareholders and the growth of PET if CPS products were sold through multiple channels.”

Expanding distribution channels to include competitors has served Siemens well in the past. In nuclear medicine, Siemens supplies its E.CAM gamma camera to Toshiba America Medical Systems for rebranding as T.CAM. The new arrangement involving PET products is expected to have a similarly positive effect on the company.

“Different companies have different clients, and their sales organizations sometimes cover different parts of the market,” Weatherhead said. “Through multichannel sales, we expect to sell more CPS products than if we went through just one channel.”

The agreement will bring three dedicated PET systems into the Marconi fold, bearing the family name Magellan. They will be differentiated by individual product names that have yet to be determined. The three systems, in Siemens nomenclature, are the flagship Accel, featuring a premium-performance lutetium oxyorthosilicate-based detector, and the HR+ and Exact 47, two scanners based on bismuth germanate detectors.

The systems, ranging in price from $1.3 million to $1.8 million, will be officially introduced at the June annual meeting of the Society of Nuclear Medicine in Toronto. Although the official launch is still weeks away, the company has already begun telling customers about the products, according to Jim Fulton, vice president of nuclear medicine product strategies and cardiology for Marconi.

The products fill a gaping hole in Marconi’s lineup, Fulton said. The company has long offered a range of gamma cameras, including ones capable of positron imaging, but no dedicated PET products.

“We have been inundated with requests from Marconi customers for us to provide a dedicated PET scanner,” Fulton said. “That is the number one reason behind our decision-to meet the needs of Marconi customers.”

The market is growing rapidly, up to 25% annually, according to industry estimates. But even with rising demand, development costs would have precluded Marconi from getting into the market.

“You have to look at where to spend your R&D dollars,” Fulton said. “If you can (get into the market) through a partnership, then both you and your partner will most likely be better off. We chose CTI because we believe them to have the leading PET technology.”

Marconi was on the short list of possible partners, according to Weatherhead, who explained that only a handful of medical imaging equipment vendors have a global reach and all but two of them-Toshiba and Marconi-already offer PET products. Weatherhead did not comment on why Marconi was chosen over Toshiba or what, if any, effect the rumored sale of Marconi Medical would have on the partnership (see Commentary).

The deal has been in the works for the better part of a year. The companies involved, CTI, CPS, Siemens, and Marconi, were close to an agreement late last year. An announcement was planned for the annual RSNA meeting. But “hiccups” developed in the days leading up to the meeting, according to Fulton, and the companies elected to put off making a final decision until later. Fulton would not elaborate.

The expanded distribution comes at a time when PET sales are being driven by the growth of procedures addressing cancer, heart disease, and neurological disorders. For much of their history, PET manufacturers had struggled with annual worldwide unit sales typically in the single digits. Buoyed by expanding Medicare reimbursements and recognition of the modality’s clinical value by third-party payers, PET product sales will hit more than $200 million worldwide this year, according to industry estimates.

Utilizing Marconi sales channels could boost annual sales further. But in the end, customers will be choosing among the same products at Marconi and Siemens, and the entry of Marconi-branded PET products could make the sale of Siemens products more difficult. Not so, according to Weatherhead. More than just scanners are involved in the sale of imaging equipment, he said. Peripherals such as computers and hit their operating systems and software programs, training, service capabilities, existing sales relationships, and a range of other intangibles enter into purchase decisions.

“Siemens has been living and breathing PET for over 20 years,” he said. “Our infrastructure and our experience are unique.”