Siemens melds ultrasound in global consolidation

June 9, 2003

Siemens is radically altering the structure of its worldwide ultrasoundbusiness to build an autonomous and centralized company that cancompete head on with dedicated ultrasound competitors, accordingto Dave Croniser, vice president of marketing.

Siemens is radically altering the structure of its worldwide ultrasoundbusiness to build an autonomous and centralized company that cancompete head on with dedicated ultrasound competitors, accordingto Dave Croniser, vice president of marketing.

"We are centralizing the organization. This has entaileda major financial commitment on the part of Siemens. We want tofocus the business and make it an important part of what Siemensdoes. In order to do that, we need to be in a single organization,"Croniser said.

Siemens will shut down its Siemens Ultrasound (SUI) facilityin San Ramon, CA, following the merger of its Quantum MedicalSystems and SUI subsidiaries last year, he said. The German imagingvendor had originally intended to maintain its cardiac-focusedengineering effort in San Ramon as a separate office of the unifiedSiemens Quantum company, based in Issaquah, WA.

Manufacturing and sales and marketing functions had been shiftedto Issaquah from San Ramon in the initial consolidation effort(SCAN 12/4/91).

Ultrasound groups from both San Ramon and medical engineeringheadquarters in Erlangen, Germany, are being shifted to Issaquahin this second stage of consolidation. Erlangen engineers withsignificant transducer expertise are being transferred to theU.S., as are managers at all levels, Croniser said.

Lothar Koob, formerly head of worldwide MRI for Siemens, wasnamed earlier this year as president and CEO of Siemens Quantum(see story, page 6). Mark Schardt, who had been named presidentof the new company following the merger, will serve as seniorvice president and COO.

Another German executive, Kurt Ziegler, has been transferredfrom the Siemens lithotripsy business to serve as vice presidentof sales at Siemens Quantum. Robert Hubert will continue as vicepresident of U.S. sales.

"We are running the worldwide organization from here,"Croniser said.

SIEMENS QUANTUM WILL ALSO BUILD its staff through hiring in theSeattle area. The company may double in size over the next yearand a half, he said.

The vendor will be tapping Seattle's market for ultrasoundengineers following competitor Acuson's decision to abort plansfor an engineering center in that region (SCAN 2/26/92). Siemenswill, however, have to compete for engineers with ATL, anothermajor ultrasound firm based in the Seattle area.

Siemens' decision to centralize engineering in Issaquah isbased on logic similar to that of Acuson's decision not to runtwo geographically separate engineering groups: distance createsproblems of coordination and control.

"You can't maintain enough control over a fractured organizationto be as competitive as you need to be and to drive it as hardas you need to," Croniser told SCAN.

Such a major investment on the part of Siemens comes at atime when price competition in ultrasound is rigorous, he noted.The financial commitment of a major multimodality medical imagingvendor backed by its huge corporate parent will help Siemens Quantummaintain an ambitious product development effort despite the tightmarket.

"It allows us breathing room as we see the profits beingtaken out of products," Croniser said.

Despite the competition, ultrasound--and the U.S. ultrasoundmarket in particular--remains one of the fastest growing areasof medical imaging. Centralizing the worldwide business in theU.S. allows Siemens an opportunity to capitalize on this marketpotential, he said.

Siemens has separated its ultrasound company from Siemens MedicalSystems in Iselin, NJ, which has control over all other modalitiesin the U.S., he said. Siemens Quantum reports directly to bothErlangen and Siemens corporate headquarters in Munich.

Other multimodality vendors, such as Toshiba and Philips, havealso created separate operations for their ultrasound businessesin order to recreate the technological and market focus of theirsmaller, dedicated-ultrasound competitors.

"We are a separate, independent organization. That isone of the first steps that any major company has taken to becomesuccessful in ultrasound. We are totally autonomous. Being ableto move quickly and drive the organization harder and faster putsus in a better competitive position," Croniser said.

Although the Quantum 2000 high-end radiology ultrasound scannerhas had more success in the U.S. than Siemens' echocardiographyline developed at SUI, Siemens Quantum intends to maintain a wideapplications focus, he said.

"We will be focused on all major market segments. Thatis one of the reasons we are expanding the organization,"Croniser said.