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SonoSite upgrades tiny Titan to extend ob/gyn capabilities


One-time maverick ultrasound manufacturer SonoSite continued its relocation into the clinical mainstream this month with the expansion of ob/gyn capabilities for its Titan ultrasound scanner.New ob/gyn calculations and measurement capabilities were

One-time maverick ultrasound manufacturer SonoSite continued its relocation into the clinical mainstream this month with the expansion of ob/gyn capabilities for its Titan ultrasound scanner.

New ob/gyn calculations and measurement capabilities were displayed at the meeting of the American College of Obstetricians and Gynecologists. They will begin shipping this week on new Titan systems and as upgrades for the installed base via CompactFlash card.

The 36,000 obstetricians and gynecologists in the U.S. generated more than $170 million in revenues last year. Most are in private practice, and the specialty constitutes the third largest clinical user of ultrasound in the country. This segment is also rapidly increasing its use of handheld ultrasound systems and could account for a third of such systems in use by 2010, according to industry analysts quoted by SonoSite.

SonoSite president and CEO Kevin M. Goodwin describes this specialty as an "anchor market adopter" of the company's technology from the outset.

"Their input has been critical as we developed Titan and this latest upgrade to address their needs for a high-performance system that was robust enough to travel with them from patient to patient," he said.

But ob/gyns were not the primary targets for the lightweight ultrasound scanners Goodwin and others envisioned five years ago when SonoSite was spun off from its parent company ATL. Back then, SonoSite strategists were aiming to change the practice of medicine by putting ultrasound in the hands of general practitioners. Company pundits predicted these hand-carried systems would eventually be as ubiquitous as stethoscopes. Traditional medicine won out, however, with its reliance on reimbursement and the need to justify equipment purchases with a viable revenue stream. Now SonoSite is seeking to win acceptance for hand-carried systems among more traditional users of ultrasound. Education will be a major focus of these efforts.

The company has purchased the assets of an ultrasound education company, Chicago-based Windy City Ultrasound, and recruited its cofounder Ted Nielsen to be SonoSite's director of global education.

"While the acquisition (of Windy City Ultrasound) is not material in financial terms, education will be a key component of our strategy, as we expand into new markets," Goodwin said.

The other major component is the development of technology. Titan represents the most advanced version of SonoSite's hand-carried ultrasound technology, based on a set of three proprietary ASICs (application-specific integrated circuits) that minimizes size and weight while offering diagnostic-quality images and quick response. The 7.7-pound system allows for a 12-second boot up. It can be carried from place to place or deliver point-of-care connectivity through its mobile docking system, which allows the user to connect to the healthcare provider's internal and external IT systems. Its modularity enables the addition of any hardware and software, including chip sets being developed by SonoSite.

The company is working on a next-generation chip set called Gen 3.

"We anticipate a fourfold performance increase," Goodwin said. "Release is anticipated around mid-2005."

SonoSite's success in capturing the attention of users of conventional ultrasound is underscored by the 15,000 units of various types it has sold worldwide since 1999. Leading the charge toward increased revenues is Titan, whose sales are being driven by new cardiology capabilities, exhibited earlier this year at medical conferences worldwide, and the ob/gyn expansion just announced. Sales of the product accounted for nearly half of the first quarter's total revenue, which grew 37% to $23.5 million compared with $17.2 million in the first quarter of 2003.

The surge in revenues was not enough to turn the company's red ink to black, but the fiscal situation is improving and prospects are bright. The company cut its net loss to $1.4 million compared with $2.6 million in the first quarter of 2003, which ended March 2003. International revenues grew 60% over those for the first quarter of 2003, propelled in part by strong year-end hospital demand in the U.K. and Japan, whose fiscal years ended March 31. Momentum in Japan is expected to build through efforts by SonoSite Japan.

SonoSite Japan has recruited an experienced executive to manage the subsidiary and Japanese operations, while contracting with Sonic Japan, a nationwide ultrasound management company, to manage and support the dealer network being established to support the SonoSite customer base. The subsidiary will introduce Titan to the Japanese market at the annual meeting of the Asian Federation of Societies for Ultrasound in Medicine and Biology to be held in Tochigi, Japan, on May 17 to 22.

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