Sluggish sales persist in ultrasound market

February 26, 1992

Radiology ultrasound leaders ATL and Acuson both acknowledge thatthe ultrasound market tightened up last year. They differ, however,in interpreting how slow the market was and in what ways theirrespective positions changed. Both vendors say that product

Radiology ultrasound leaders ATL and Acuson both acknowledge thatthe ultrasound market tightened up last year. They differ, however,in interpreting how slow the market was and in what ways theirrespective positions changed. Both vendors say that product discountingcontinues but has not escalated.

Acuson created a stir in the financial markets earlier this monthwhen it predicted its first-quarter earnings would be flat from1991 to 1992, due to the sluggish ultrasound market (SCAN 2/12/92).

Acuson's earnings last year were relatively robust. Net salesfor the dedicated ultrasound vendor increased 19%, from $283 millionin 1990 to $336 million in 1991 (end-December). Net income rose22%, from $48 million in 1990 to $59 million last year (see graph).

"We think the U.S. ultrasound market was flat or down lastyear," president and CEO Samuel H. Maslak told SCAN. "Itwas influenced by the domestic economy and will continue to beinfluenced by the economy until (the U.S.) pulls out of recession.There is nothing in the economic news to make us feel 1992 willbe different as far as the recessionary outlook of the economygoes."

One reason Acuson believes the market slowed last year was thatATL reported a 3% drop in its revenues for the year. Diasonics,another top ultrasound competitor, did not break out numbers for1991 but acknowledged that it lost money in the modality (SCAN2/12/92).

ATL parent Westmark International reported a 4% rise in revenuesfor both its ATL and SpaceLabs subsidiaries in 1991, from $485million in 1990 to $505 million (see story, page 6). Net incomefor the year was up 23%, from $19 million in 1990 to $23 million(see graph). SpaceLabs contributed $225 million in 1991 revenue(up 14%) and ATL $280 million (down 3%).

The ultrasound market grew at least 8% last year, said ATL presidentand CEO Dennis C. Fill. While the vendor's revenues were downfor the year, most of the slippage occurred in the first six months,while ATL was introducing a major product upgrade. ATL's revenuesdropped 16% in the first half of 1991 (end-December) but gained11% in the second half.

Revenues from ATL's Ultramark 9 product line actually jumped 74%in the fourth quarter of 1991, Fill said.

"If the overall ultrasound market went up 8% to 12% as weunderstand it did last year and may be on the same trend thisyear, it is clear that we must be taking market share from somewhere,"he told SCAN.

Comparing quarterly results can be misleading, Maslak countered.Acuson introduced a major product upgrade in 1990, while ATL hadnot yet come out with its new technology. The high quarter-to-quartergrowth for ATL likely came from a fairly small base, he noted.

Neither vendor said there was much acceleration of discountinglast year despite the battle of new products and sluggish demand.

Aside from luminary installations, which are necessary to broadenacceptance of a new product, ATL scanners were not reduced inprice in 1991, Fill said.

"There is generally more competition in the ultrasound marketplace,but I don't think the rate of discounting has been a major factor,"Maslak said.

Acuson compared average discounts in December with the same monthin 1990 and saw only a slight increase, he said. However, customerswere more inclined to order scanners without all the bells andwhistles.

"We saw people looking for more conservative configurationson products," Maslak said.

BRIEFLY NOTED:

  • Increased acceptance of nonionic radiographic contrastagents in Europe has given a boost to that regional market, accordingto a report by Frost & Sullivan International of London. Europeancontrast agent sales were estimated at $218 million in 1990. Themarket should grow to $227 million by 1993 and $237 million by1996, predicted the report, entitled The European Market for MedicalImaging Contrast Media.

While low reimbursement levels retarded initial acceptance ofnonionic and low-osmolar agents in Europe, the new products earned$136 million in 1990. That figure is expected to grow to $154million by 1996. Sales of ionic agents in Europe, on the otherhand, are expected to drop from $42 million in 1990 to $38.9 million,or 16% of the market, in 1996.

Demand for MRI agents will grow the fastest in Europe, nearlytripling from $1.7 million in 1990 to a forecasted $4.5 millionin 1996, Frost and Sullivan said. German and French doctors purchasethe lion's share of all medical imaging contrast media in 1990,accounting for six out of every 10 sales in Europe.