Swissray looks to build digital future for customers

Swissray looks to build digital future for customers

Firm provides digital x-ray, PACS offerings

Swiss x-ray vendor Swissray International sees its digital x-ray technology as a vehicle for change, both for the radiology market in general and for the company's own prospects. The vendor hopes that its AddOn-Multi-System will enable it to make the transition from small manufacturer of conventional x-ray systems to global player in the digital radiography and PACS markets.

Swissray has its roots in another company, Teleray, which was founded in 1984 in Switzerland. In its early years, Teleray provided a number of conventional radiography products, including Atlas, an x-ray system suitable for both upright and recumbent imaging. In 1986, Teleray opened a German office and began expanding its operations into other European countries, as well as the Middle and Far East. Teleray was renamed Swissray in 1988.

While Swissray had secured a role as a niche player in the conventional radiography segment, company executives believed that future growth depended on its ability to develop new innovations. After evaluating the market, the company decided that a digital radiography system would be its ticket to the big time. In 1991, Swissray began work on its AddOn-Bucky CCD-based digital detector. While the bucky design and engineering were undertaken by Swissray engineers, the company also partnered with other firms for such components as optics.

As development commenced on AddOn-Bucky, Swissray began to grow its conventional x-ray business. The company signed an OEM agreement in 1993 with Philips Medical Systems to provide the Dutch multimodality vendor with complete conventional radiographic systems under the Philips label. Swissray continues to manufacture systems for Philips.

In 1995, Swissray chose to expand to the lucrative U.S. market and acquired a controlling interest in a U.S. company traded on the NASDAQ stock exchange. Renamed Swissray International and based in New York City, the firm now serves as the global corporate headquarters for Swissray. European operations continue to be run in Hitzkirch, Switzerland, however.

That year also saw the first introduction of AddOn-Bucky at the European Congress of Radiology and at the Radiological Society of North America meeting. AddOn-Bucky is a 17 x 17-inch, 12-bit detector with a 2.5K x 2.5K pixel array, and yields 4096 gray levels and a resolution of 3 line pairs/mm, according to the company. Four overlapping CCD cameras are employed to ensure that no image data are lost, said Ueli Laupper, vice president of international sales and marketing.

Swissray originally intended to sell AddOn-Bucky as a retrofit to x-ray systems in the field, but the company changed that strategy, for several reasons. First, Swissray officials believed that a single, integrated system that could perform both standing and recumbent studies would be cheaper for customers than installing digital retrofits to both wall stand and table-based x-ray systems. The company also believed that the detector's image quality might suffer if it were integrated with older components over which Swissray had little control. Questions about service responsibilities, as well as the ergonomic benefits of a complete system, also played into the decision, according to the firm.

As a result, Swissray debuted Add-On System at the 1996 RSNA meeting. The unit, a complete multipurpose C-arm x-ray system, has since been renamed AddOn-Multi-System.

Building infrastructure

In preparation for the launch of AddOn-Multi-System, Swissray in 1997 built a corporate structure necessary to support its entry into the market. In February, the firm purchased Empower, a Glen Cove, NY-based distributor of x-ray equipment and medical supplies. Renamed Swissray Empower, it now serves as a New York regional office for Swissray.

In May, Swissray launched Swissray Healthcare, a capital equipment planning and technology management division based in Gig Harbor, WA. Swissray Information Solutions, also based in Gig Harbor, was launched in July. With PACS veteran Michael Baker at the helm, the unit provides PACS planning and systems integration services.

In October, Swissray acquired substantially all of the assets of Service Support Group (SSG), a radiology equipment sales and service company based in Gig Harbor. Swissray renamed the firm Swissray Medical Systems (SRMS), a division that now serves as the sales, service, and marketing arm for the company. Swissray sells its products through its direct sales force to populous segments of the world, and relies on distributors to handle other areas.

SRMS also offers multivendor service to customers. In addition to helping to grow the business, the multivendor service helps to build a customer base to leverage for sales of AddOn-Multi-System, Laupper said.

In the process of building its organization, Swissray has drawn the attention of other firms. Independent service organization Serviscope of Wallingford, CT, filed suit against Swissray in October, charging that Swissray raided Serviscope employees and stole the ISO's trade secrets. That case is working its way through a New York state court.

In PACS, Swissray at the 1997 RSNA meeting rounded out its product portfolio with the announcement that it would partner with EMED to sell the San Antonio-based firm's PACS and teleradiology technology as Swissray PACS by EMED (PNN 1/98). Since Swissray's SwissVision workstation for handling AddOn-Multi-System data is compatible with the DICOM 3.0 and HL-7 standards, no integration work was necessary between the two product lines, Laupper said. Negotiations with several sites for combined PACS/AddOn-Multi-System sales are under way, he said.

Company differentiation

Despite the threat of competition from established vendors such as GE Medical Systems, Sterling Diagnostic Imaging, and others in providing digital radiography systems, Swissray believes its emphasis on radiography will help win over customers.

Since Swissray is a smaller company than some of the other modality players, it also has the capability of fashioning individual maintenance and service agreements to meet the specific needs of its customers, Laupper said.

Swissray also believes that its ability to provide a complete digital solution, ranging from PACS technology to systems integration services, will be an attractive quality for end users. In fact, Swissray officials believe that the utility of AddOn-Multi-System is greatly maximized when it is bundled within a PACS network.

Next in the product pipeline for Swissray will be dedicated chest and trauma x-ray systems employing AddOn-Bucky. The units are slated for release this year.

Although the company does have access to flat-panel digital detector technology, it currently has no plans to bring it to market. Although most companies are developing digital detectors using flat-panel technology like amorphous silicon and amorphous selenium, CCD-based technology is used in many other industries, produces excellent image quality, is easy to service, and is quite reliable, Laupper said.

"For the foreseeable future, we are convinced that CCD is the right way to go," he said.

Future prospects

Although Swissray won the race to become the first company to release a completed digital x-ray system, it faces several challenges, not the least of which is achieving market acceptance for a technology that is considerably more expensive than conventional radiography systems. It will also have to contend with several larger companies that possess greater customer awareness, distribution channels, and marketing prowess than Swissray.

But interest is growing in digital solutions, and by being the first to get clearance for its system, Swissray should merit consideration by customers seeking a digital radiography system. The ability to provide a wide range of PACS technology and services should also strike a chord. By aggressively marketing its PACS solutions alongside AddOn-Multi-System, Swissray just may find a place for itself in the tough U.S. medical imaging market.

Swissray International
200 East 32nd St., Suite 34-B
New York, NY 10016
212/545-0095
fax: 212/545-7912
www.swissray.com

Swissray Medical Systems/ Swissray Healthcare/ Swissray Information Solutions
5775 Soundview Dr., Suite 103A
Gig Harbor, WA 98335
253/853-6444 (SRMS, SRHC)
253/858-6795 (SRIS)
fax: 253/858-2777 (SRMS, SRHC)
fax: 253/853-6767 (SRIS)

Management
Ruedi Laupper, chairman, president, and CEO, Swissray Intl.
Ueli Laupper, vice president of international sales and marketing, Swissray Intl.
Kenneth Montler, CEO, Swissray Medical Systems (service and sales)
Michael Harle, CEO, Swissray Healthcare (technology management program)
Michael Baker, CEO, Swissray Information Solutions (digital integration and implementation management)

Stock trading
NASDAQ Stock Exchange as SRMI
52-week NASDAQ high $3.56 (2/14/97)
52-week NASDAQ low $0.94 (10/21/97)
As of 1/16: $1.22

Financials
First-quarter fiscal 1998 revenues: $5.3 million
First-quarter fiscal 1998 net income (loss): ($193,000)
Earnings per share (loss): (1)
Market capitalization: $26.6 million
Total assets: $27 million

Product lines

• AddOn-Bucky digital detector
• AddOn-Multi-System multipurpose digital x-ray system
• SwissVision postprocessing workstation
• Swissray PACS by EMED
• DSI/DSA upgrade, spot imaging, and digital spot angiography upgrade
• Swissray mobile imaging system, C-arm

Product distribution
Direct sales, although the company is open to OEM relationships.

Long-term strategy
Swissray provides a comprehensive package of digital systems, services, and consulting to allow customers to proceed to filmless radiology.