PET rocks or Pet Rock?

Go back 30 years and you will find on the desks of otherwise sane people a rock sitting atop a block of wood inscribed with the moniker "Pet Rock." Introduced in August 1975 as a pet that made no mess and never misbehaved, the Pet Rock made a million sales, at $3.95 apiece, within six months of its release. Sales then proceeded to fall off the edge of the earth.

Unlike the Pet Rock, PET and PET/CT scanners have practical applications. But these medical scanners have one thing in common with their geological namesake-there's not much reason to buy more than one.

The average PET system in this country has a throughput of two to three patients per day. Considering that the latest PET/CTs can pump out brain studies in under 10 minutes and whole-body studies in a half-hour or so, the installed base has a lot of unused capacity.

Struggling with this market dynamic, CTI Molecular Imaging announced earlier this month that PET sales fell well below expectations in the third quarter with no relief in sight. The once evergreen landscape for PET has suddenly become cluttered with scanners, so much so that CTI has shut down its direct sales effort and may get out of the hardware manufacturing business all together.

Siemens-CTI's partner in the joint venture CTI PET Systems, which manufactures PET scanners-sent me a prepared statement in regard to CTI's financial woes: "While Siemens cannot make specific market projections, the company is confident about the clinical efficacy and importance of PET."

There could well be trouble ahead. This scenario-a spike in sales, rapid saturation, and then a sudden drop-has played out once before, in a product closer to home than Pet Rocks. The sale of bone densi-tometers shot through the roof when osteoporosis treatments appeared, then crashed a couple years later, when the high-performance densitometers that saturated the market to handle two or three patients a day easily absorbed the ramp up to 20 to 25 patients.

The question now is whether PET will follow in those footsteps. The 900,000 PET procedures likely to be performed this year in the U.S. could balloon to an annual rate of more than two million by 2010. But that will only boost the average patient throughput per installed scanner to four or five patients a day, still well below current capacity.

One might ask then, are PET sales rocking-or are they more akin to those of the Pet Rock?