Norland and CompuMed take aim at growth in bone densitometry market

Firms jockey for 90% share held by Hologic and Lunar

Bone densitometry firm Norland Medical improved its prospectsin the booming bone measurement market by signing an equipmentfinancing agreement with Merck last month. Another bone measurementvendor, CompuMed, has also ramped up its efforts in the fieldby inking a deal to access an economical bone measurement devicemade by RadSource.

Norland, the Fort Atkinson, WI, maker of dual-energy x-rayabsorptiometry (DEXA) systems, said that its deal with Merck islike those between Merck and DEXA manufacturers Hologic and Lunar.Those deals reduce the financial risk of selling or leasing capitalequipment to small-sized healthcare providers, according to Norlandvice president of operations Ralph Theodore.

"Ours is very close to the pattern," said Theodore,who hopes the Merck arrangement will help thrust Norland intothe physician office market for bone densitometers. Norland offersa compact desktop system called pDEXA.

But Norland is not the only company gunning for the physicianoffice niche. About the time Norland was landing its deal withMerck, CompuMed of Manhattan Beach, CA, was announcing a letterof agreement that promises to put the company into head-to-headcompetition with Norland. On Jan. 18, CompuMed said that it hadreached an agreement with RadSource of Chicago to acquire rightsto a compact x-ray machine called OsteoView. Acquiring those rightswill increase CompuMed's penetration of the physician office marketand will boost the use of its OsteoGram bone density test, accordingto Rod Raynovich, president and CEO of CompuMed.

CompuMed last year licensed its OsteoGram technology to Merck(SCAN 9/13/95). OsteoGram consists primarily of a pocket-sizedwedge that, when imaged with the patient's hand by conventionalx-rays, serves as a means for gauging bone loss. The deal allowsMerck sales representatives to distribute the technology to physicians,which should boost sales of Fosamax, Merck's anti-osteoporosisdrug. By making the phantom-like device widely available to physicians,Merck hopes to increase the number of osteoporosis diagnoses and,consequently, orders for Fosamax.

Both the CompuMed deal and the arrangement between Merck andNorland are being administered by the Bone Measurement Institute,a nonprofit subsidiary of Merck. The institute runs the OsteoGramAnalysis Center, where x-rays made with CompuMed's bone phantomare interpreted.

In all, Merck now has four financial arrangements with vendorsof bone densitometry technology. The details of the Norland arrangementare confidential, but, as in the Lunar and Hologic deals, Merckhas agreed to provide a subsidy that will likely grease the wheelsfor healthcare providers to buy Norland's full-sized XR36 bonedensitometer, compact Eclipse model, and desktop pDEXA.

The Norland deal with Merck and CompuMed's licensing of a desktopx-ray machine could help both companies catch the rising waveof interest in the acquisition of bone den-sitometry equipment.This rise in popularity was tied to the release last fall of Fosamaxand shows no sign of weakening. Lunar and Hologic, which togetherhold about 90% of the bone densitometry market, have been theprimary beneficiaries of this trend, but smaller firms are profitingas well (SCAN 12/27/95).

"In the overall market, more new bone measurement deviceswere placed in the last three months (of 1995) than were placed(previously in) all of that year," said Jeremy Allen, presidentof the Bone Measurement Institute. "Also, since May, theaverage number of scans per machine has increased four-fold."

Norland and CompuMed are banking on the chance that desktopsystems will be a major growth area for bone densitometry sales.Norland already has its pDEXA on the U.S. market, having clearedthe device with the Food and Drug Administration last year. Mostsales of pDEXA to date, however, have been in Japan, Korea, andthe Pacific Rim.

CompuMed, which negotiated exclusive worldwide marketing rightsto RadSource's desktop x-ray machine, expects to begin marketingOsteoView in the U.S. in the third quarter of this year, aftervalidation by the OsteoGram Analysis Center. The device has alreadybeen cleared by the FDA.

"We believe OsteoView offers significant advantages overtraditional x-ray technologies, including lower costs, greaterease of use, and no special room or electrical requirements,"Raynovich said. "The advantages should make CompuMed's OsteoViewan attractive x-ray option among physicians, particularly in specialtieswhich have large postmenopausal patient populations."