Otsuka plans entree into MRI with high-field unit, low-field price

August 28, 1991

Another Japanese vendor is targeting the U.S. for sales of high-quality,low-cost MRI systems, but this time with a twist: the MRI technologyand manufacturing base is American. Otsuka Electronics (USA) of Fort Collins, CO, will apply forFood and Drug

Another Japanese vendor is targeting the U.S. for sales of high-quality,low-cost MRI systems, but this time with a twist: the MRI technologyand manufacturing base is American.

Otsuka Electronics (USA) of Fort Collins, CO, will apply forFood and Drug Administration approval of a 1.5-tesla imager thisyear, said president Tim O'Sullivan. The system will use a SunMicrosystems computer platform and will be priced to compete head-onwith low- and mid-field MRI systems, he said.

The U.S. company will be supported in its MRI launch withfunds from its parent, Otsuka Pharmaceutical, a Japanese giantwith $5 billion in annual sales. Otsuka's MR technology will derivelargely from the firm's U.S. MR businesses, however, O'Sullivansaid.

Otsuka purchased Phospho-Energetics, a Pennsylvania small-borespectrometer firm three years ago (SCAN 5/25/88). This businesswas moved to Colorado and merged with Chemagnetics, Otsuka's MRsolids spectroscopy subsidiary, last year (SCAN 8/15/90). O'Sullivanwas hired away from Philips Medical Systems at that time to headup the unified Otsuka MR business. He had served as vice presidentof CT and MRI marketing at Philips.

Otsuka also owns a 20% interest in Magnex of Great Britainand Japan Magnet Technologies, a Japanese joint venture formedtwo years ago by Otsuka, Magnex and Kobe Steel. Kobe holds a controllinginterest in JMT (SCAN 10/11/89).

Although the 1.5-tesla MRI prototype is not quite complete,Otsuka has started to build its MRI sales force. John Ariatti,former MRI director of marketing for Toshiba America Medical Systems,has been hired as western regional sales manger.

Ariatti joins Len Platt, regional manager for the Southeast,and Larry Hanson in the Midwest, said Dale Grant, vice presidentof sales & marketing. All three regional sales managers werehired this month.

Otsuka is negotiating with two potential clinical sites tohouse the first 1.5-tesla installations, Grant said. The firmplans to show the unit as a works-in-progress at the RadiologicalSociety of North America conference in Chicago this December.

The systems should be well suited to satisfy the two majordemand trends in the U.S. MRI market, O'Sullivan said.

"There is a significant market need for low-cost systems,but also a general consensus among neurological specialists that1.5-tesla (field strength) is better. We know we can provide a1.5-tesla system at around the same price as the lower performanceunits," he told SCAN. The Otsuka MRI system should sell inthe area of $1.25 million, he said.

Since most of Otsuka's MR technology originated in the U.S.,the firm's growth in this market should follow a different coursethan other Japanese vendors. Toshiba, Shimadzu and Hitachi, forinstance, all started with imported MRI systems from Japan. Otsuka'ssystem, on the other hand, will be manufactured in the U.S. andmay actually be exported to Japan in the future.

"This is an American company with American managementthat knows the medical business," O'Sullivan said.

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