Toshiba America strategy focuses on key modalities in U.S. markets

January 22, 2003

Strategists plan imminent move into PET and PET/CTToshiba America Medical Systems has begun living up to its name. For much of its existence, this Japanese-owned company, based in Tustin, CA, reflected Japanese thinking more than a

Strategists plan imminent move into PET and PET/CT

Toshiba America Medical Systems has begun living up to its name. For much of its existence, this Japanese-owned company, based in Tustin, CA, reflected Japanese thinking more than a U.S. approach. But that is no longer the case. Toshiba's corporate infrastructure has changed over the last few years to realign business units in the U.S. and Japan and adjust strategic planning for the multinational conglomerate.

"In the past, Toshiba was very focused on the Japanese market, which is the second largest market in the world and one in which they have been dominant," said Ed Lodgek, senior vice president and general manager of Toshiba America. "But, with the international and economic changes, Toshiba is concentrating a lot more on the U.S. Consequently, some of our products are specifically designed to meet the needs of the U.S. market."

A guiding principle of modern Toshiba strategy is listening to the customer, understanding customer requirements, and aligning the company's technology to those requirements, according to Lodgek. Toshiba's success in applying this principle is exemplified in its Aquilion Multi 16 CT scanner.

"We have the fastest scan time and the most flexibility of any multislice CT," he said.

The company is advancing in lockstep with customers' needs in other areas as well. In MR, Toshiba has enhanced its midfield open product to deliver high-performance scans through the addition of more powerful gradients. In radiography/fluoroscopy, Toshiba has come out with a platform compatible with a direct capture flat-panel detector, which will be shipping later this year.

Toshiba, like its competitors, may be drawn forward technologically, taking the next logical step in each modality. But Lodgek described Toshiba's approach as much more than that. Toshiba is stretching its platforms to achieve multiple price points suitable for different customers in the U.S. and in markets around the world.

The range depends partly on varying reimbursement and partly on demand for applications. An example is Toshiba's latest redirection in MR strategy to develop an ultracompact high-field MR scanner (see story, page 5).

"We expect that particular product to help us drive right into the core of the largest part of the MR business," he said. "This is where we want to be, and this product will allow us to leverage the organization we have put together to drive the top line."

People as much as technology will determine the success of this product, he said. Under Lodgek, Toshiba has revamped its marketing organization in the U.S. with an emphasis on putting leaders into key management positions in the field. These managers apply sales fundamentals: They identify and track opportunities, then administer the processes that follow up on the best prospects.

"There is no magic formula," he said. "You just need the right people in the right places to make it happen."

But there are challenges ahead, and customer perception is a big one. Despite its contributions in midfield MR, for example, Toshiba is not regarded as a major provider of high-field scanners. Company strategists hope to alter that perception with the introduction of the rebranded and enhanced midfield offering, dubbed Ultra, which delivers image quality equivalent to that seen on higher field opens. The near-term goal is to create the impression that Toshiba engineering can produce a high-performance MR scanner at a better value point than its competitors. The company will follow up with the release later this year of a high-field scanner built around an ultracompact magnet supplied by Oxford Magnet Technology, based in the U.K.

These objectives are part of a broad goal to grow sales at or greater than the rate of growth for the market. Toshiba America is on track, with sales demonstrating annual growth of 20%, Lodgek said. This is well above the average growth of the marketplace, which means Toshiba is gaining market share.

The biggest gains are being achieved in CT, and they are expected to increase with commercial release of the company's 16-slice scanner. Toshiba America executives expect an even greater response when the company shifts into high gear with the release of its next-generation high-field MR scanner.

These individual improvements have an effect on the whole of Toshiba's sales efforts that exceeds the sum of the parts. Demonstrating a commitment to high-field MR, for example, will give the firm a head start in selling midfield systems, Lodgek said.

"It demonstrates a commitment and underscores that we are a real player," he said.

The company will get another boost when Toshiba's flat-panel x-ray products begin routine shipping later this year. The company will release a 14-inch detector to support general-purpose and interventional studies and a nine-inch detector for cardiac cath. These detectors do not rely on scintillation, as do some other flat-panel fluoroscopy detectors. Instead, they detect x-rays directly, thereby providing an edge over competing systems, Lodgek said.

"The direct capture technology will help provide better image quality," he said. "This will allow us to gain some share."

Another opportunity is ultrasound, in which high-performance platforms have grown from in-house R&D. As in MR and CT, the company is making a major investment in the continued development of this technology.

Unlike some competitors, Toshiba did not need to acquire these technologies, which kept it from participating in the merger mania that characterized the late 1990s and early 2000s, Lodgek said. In areas where the company lacked a core competence, such as PACS and nuclear medicine, Toshiba found partners to fill in. Toshiba's T.cam is a slightly modified version of Siemens' e.cam. Toshiba customers who need PACS are satisfied with Agfa products. Those who need workstations can select Vital Images' Vitrea 2 software or hardware configuration. Toshiba has no plans to change its strategy in either area.

PET, however, is another matter.

"We are interested in functional imaging, and we are looking at some potential developments in that area," Lodgek said.

Toshiba could soon announce a program to move into PET as well as PET/CT. Discussions are under way with companies that could provide PET detector technology. A partnership with CTI is one option but probably not the leading one.

"There are companies that have developed PET detectors that are not well known in a commercial sense that are looking for infusions (of capital) or would be open to a potential acquisition," Lodgek said.

The ultimate goal would be to add PET as a core competence and to develop this modality, possibly in concert with CT, to meet the needs of the medical community. Marketing would be directed at end users, based on the specific capabilities of the product and their advantages over competing products. Lodgek is not impressed by marketing aimed at patients and has no plans to redirect the company's efforts.

"We will not try to mass market our products. We are not going to spend money on television, trying to get patients to go in to see doctors and demand that they have a certain type of exam when in fact it might not be necessary," he said. "We go to the end users. We say, 'Here is our product. We can compete with anyone and then some.'"