Picker boosts investment in PACS through OEM deal with Cemax-Icon

Vendor reportedly aims to be PACS market leader

Picker International last week stepped up its involvement in thebooming PACS market by securing a wide-ranging OEM supply anddistribution deal with software developer Cemax-Icon. While thedeal is hardly the first OEM relationship for either company,it reportedly signifies a major commitment by Cleveland-basedPicker to the PACS market.

Picker announced on March 11 that it had formed an alliance withCemax-Icon of Fremont, CA, that includes the global sales, service,and support of Cemax-Icon PACS products. Picker will distributethe products under the Cemax-Icon brand, including its AutoRad3.0 primary-read workstation and ArchiveManager 2.0 digital archive.The agreement is non-exclusive for both parties.

Of the five major multimodality imaging companies, Picker hasbeen one of the slowest to capitalize on the growth of PACS. Thecompany has demonstrated image management workstations at pastconferences, and is active in developing DICOM-based networksto connect modality scanners, but has otherwise kept a low profile.

Things began to change late last year when Picker formed an imagemanagement group to expand its position in PACS (SCAN 10/23/96).Leading the group as general manager is David Talton, a Pickerveteran who served most recently as manager of visualization andconnectivity in the vendor's CT engineering group.

As part of the group's formation, Picker folded into the unitdozens of engineers and salespeople who had been handling imagemanagement issues in other Picker divisions, including its PickerHealth Care Products imaging accessories unit, according to TimothyHansen, Picker executive vice president. The move should givePicker the increased focus it needs to be a viable PACS player.

"We have had a lot of business in (connectivity) in our variousareas, business that would come naturally," Hansen said."Those things are being consolidated into this new unit."

The image management group will begin integrating the Cemax-Iconproduct line with the image management products that Picker alreadyoffers, including its DICOM connectivity business and modality-basedworkstations, such as the Voxel Q computer for CT image processing.Cemax-Icon engineers will start training their Picker counterpartsimmediately, with a formal sales launch expected by mid-April.

The deal is a coup for Cemax-Icon, according to president andCEO Terry Ross, who himself worked for Picker in the early 1980s.In the past several years, Cemax-Icon has signed OEM agreementsto provide PACS software to GE Medical Systems, AT&T (nowLucent Technologies), Sterling Diagnostic Imaging, Imation, andKodak.

The Picker agreement may prove to be bigger than any of thosedeals. Unlike many of Cemax-Icon's other OEM partners, Pickerhas made a major commitment to purchase a certain undiscloseddollar amount of Cemax-Icon products over several years, Rosssaid. That commitment indicates that the vendor is serious aboutparticipating in PACS.

"Picker is committed to becoming not only a major playerin PACS and teleradiology, but the major player," Ross said."Its desire is to take significant market share quickly."

Cemax-Icon is not Picker's first PACS OEM agreement, however.The company has a relationship with Olicon Imaging of San Clemente,CA, that dates back to 1995. Like last week's agreement, thatdeal is nonexclusive, and Picker will continue to carry Olicon'sproducts in its catalog, according to Hansen.

But does the Cemax-Icon agreement indicate that Picker's ardorfor Olicon is cooling? Not according to Olicon executives, whopoint out that it is not unusual for companies to have multipleOEM agreements, especially in the PACS arena.

"Most of these deals are nonexclusive," said Dick Paulsen,Olicon CEO. "There are reasons why Picker would like to carryboth these lines. We have TAP (Teleradiology Archiving Program),which Picker likes a lot. There are differences between the companies."

Paulsen also pointed out that Olicon has done $1 million in businesswith Picker, and has another $9 million on the table in termsof bids for PACS projects.

In any event, if Picker follows through on its stated commitmentto the PACS market, its sales in the segment may grow quicklyenough to satisfy both Olicon and Cemax-Icon.

PACS could represent more than just a new market segment for Picker.While overall revenues from PACS sales are still dwarfed by thosegenerated by scanner sales, no multimodality vendor can affordto ignore image management in the coming years and prosper, accordingto Cemax-Icon's Ross. Having a PACS network installed at a hospitalwill give that vendor a built-in edge in leveraging modality scannersales to the site, Ross said.

"The network is becoming much more important. It will dominatethe different features between two scanners," he said. "Ifyou have a Siemens network, unless someone has a much better scanner,you will buy a Siemens scanner. "