U.S. market for digital x-ray booms on the shoulders of flat-panel radiography

June 13, 2005

Revenues for x-ray technology remained flat in 2004, holding to the pattern established in recent years. Last year, about $1.6 billion of new equipment was shipped to U.S. customers. These revenues were gained, however, on the shipment of fewer units.

Revenues for x-ray technology remained flat in 2004, holding to the pattern established in recent years. Last year, about $1.6 billion of new equipment was shipped to U.S. customers. These revenues were gained, however, on the shipment of fewer units.

The reason behind the diminishing demand for x-ray equipment is the widening adoption of digital x-ray technology. Digital imaging has taken hold not only in radiography but in every x-ray-related modality, including full-field digital mammography (see article, this issue).

"The market for digital x-ray technology is growing very rapidly, but a lot of film remains out there, as a lot of people use film and/or hard copy in conjunction with digital systems," said Scott Burkhart, business unit director, general x-ray, for Philips Medical Systems. "Still, I would say digital is becoming the dominant modality of choice."

The growth digital radiography experienced during 2004 is continuing this year. Expectations are buoyed by a pattern of steady demand, indicated by year-end shipments that conformed to the pace set in the first half of the year.

In 2004, more than 500 DR products were shipped to U.S. sites, compared with 360 units shipped the previous year, according to industry estimates. Revenues for 2004 reached $170 million - $45 million more than the previous year's total. (Estimates do not include computed radiography sales.) Orders received by vendors for DR units at the end of 2004 exceeded year-end sales by about 10%.

"The trends over the past couple of years make it obvious that the market is growing," said Regina Radtke, radiography segment manager, AX Division, for Siemens Medical Solutions.

DR equipment shipped last year totaled about 640 units, according to industry estimates. This represents 12% growth over the 570 shipped in 2003. The rise in the number of units was not matched one-to-one in revenue growth, however. Radtke estimated that revenue growth was only about 8% over the previous year.

"So, in terms of unit growth, last year was very strong, and growth continues to be strong," she said. "However, in the past 12 to 18 months, cost erosion has set in."

The market has reached a turning point that will benefit the makers of DR systems, according to Radtke. She cites an average growth of about 13% over the last few years versus a decrease of about 14% in conventional systems.

New, lower priced DR systems are helping to spur market growth. Philips has introduced the DigitalDiagnost VM for about $350,000. The system is part of Philip's flagship Digital Diagnost line, which offers single-plate or two-plate systems, as well as CR/DR integration.

"The DR market has exploded," said Philips exec Burkhart. "We've seen our own business double in the past year."

He expects the overall trend to continue, as customers get better acquainted with the technology. They are still trying to figure out what it's all about and understand why it's better than analog systems, he said.

In the past year, about four times as many table-based DR systems were shipped as chest units, which is in line with historical demand for analog systems. Substantially greater revenue, however, was generated by DR shipments than analog, as film-based units accounted for just $110 million in 2004 on the shipment of about 1520 units, according to industry estimates. This was about 170 units fewer than the year before.

One of the main drivers of DR installations is PACS, Radtke said.

"Hospitals go with DR installations because they are installing PACS, so those two are really linked," she said.

In hospital settings, PACS continues to grow at about 10% annually and is showing no signs of slowing down soon. PACS pricing has come down tremendously, so the smaller, community-type hospitals are in a position to afford these systems.

Radtke predicts 620 DR units will ship in 2005. This would represent an increase of about 13%.

"In terms of dollar volume, that will probably get us somewhere in the $220 million range," she said. "That represents a 9% growth rate. So I think growth will remain fairly stable."

Radtke pointed out that replacement of conventional radiography systems with digital units is not on a one-to-one basis.

"You see a decreasing unit number for the radiography market--conventional and DR combined," she said.

Demand eventually will level off, as the need to replace aging film-based units diminishes, though it could remain strong for quite some time.

While many of the larger hospitals are completing their transition to digital x-ray, midsize and small hospitals are lagging. The demand for new systems from these customers is expected to pick up the slack.

"We see a very strong demand continuing," Burkhart said. "As we go more mainstream, people are converting their radiology rooms to digital. You're looking at a very rapid, almost order-of-magnitude type of growth in digital technology."

Unit sales will never match those of analog units in the past, as digital systems offer improved productivity and, therefore, require fewer units to do the same work in a multiunit department.

In other x-ray areas, interest in C-arms declined slightly in 2004 as vendors sold just $300 million of such products compared with $315 million the year before (about 100 fewer units shipped in 2005 than in 2003). Demand for C-arms is expected to remain virtually unchanged.

"The U.S. market is around 1500 to 1800 systems," said Mark Lothert, Siemens angiography segment manager. "That is pretty well divided into basic orthopedic C-arms, mini C-arms used in outpatient centers, C-arms with cardiac capabilities, and C-arms with angio capabilities."

The shipment of vascular products and cardiac and angio systems remained virtually unchanged at about 800 units, yet total revenues increased to $830 million from $800 million. This mixed picture may be due to a continuing shift away from image intensifier products to those with flat panels.

"The flat-panel detector has realistically supplanted the image intensifier," said Daryl Johnson, marketing manager of radiography for GE. "There is a huge stable out there of image-intensifier-based rooms, and practitioners want to move quickly into the flat-panel environment. So the replacement of older systems has been accelerated."

This shift toward digital stretches across the industry. Lothert estimates that between 85% and 90% of angiography systems ship with flat detectors. This is slightly ahead of cardiac systems, he said. About 75% to 80% of those new systems ship with flat detectors.

"These are great times for vascular angiography, and it is really driven by the flat-panel technology," Johnson said.

Vascular imaging, although flat in recent years, is showing signs of growth. Vendors at the end of last year reported increasing backlogs for both x-ray angiography and x-ray cardiology systems.

This trend might be blunted, however, by the arrival of 64-slice scanners. These scanners will be especially useful in CT angiography studies, particularly those addressing the coronary vessels.