Vendor consolidation reshapes RSNA exhibit floor despite strong market conditions in medical imaging

Digital x-ray, multislice CT, and PACS highlight new technology developments

A robust medical imaging market didn’t slow the growing trend toward consolidation among companies exhibiting at December’s Radiological Society of North America meeting in Chicago. Acquisitions caused several once-familiar names to either change their corporate ownership or disappear entirely from the conference’s technical exhibit floor. The moves occurred despite the fact that the U.S. medical imaging market posted its second consecutive year of strong revenue growth in 1998.

No fewer than five major acquisitions closed in the weeks prior to the RSNA meeting, keeping booth staffs busy changing signage and getting the word out. The deals included GE’s purchase of Marquette Medical, GE’s acquisition of Elscint’s MRI and nuclear medicine businesses, Picker’s purchase of Elscint’s CT unit, Kodak’s acquisition of Imation’s medical operations, and Access Radiology’s purchase of teleradiology firm EMED. Two other major deals that occurred earlier in the year were GE’s purchase of Diasonics Vingmed Ultrasound in April and Philips’ acquisition of ATL Ultrasound in September.

An uninformed observer might see the frenzied pace of mergers and acquisitions as a sign of trouble in radiology, but nothing could be further from the truth. Major vendors are reporting across-the-board growth in equipment sales, with some modalities on course to deliver double-digit growth rates by the end of 1998. The gravity-defying MRI market, for example, followed up a banner year in 1997 with another strong performance in 1998. Although final numbers are not yet in, some market watchers believe the U.S. MRI market could hit $1 billion in sales for the year, an all-time sales record.

So what gives with consolidation? There’s no easy answer, but there are some commonalities among the deals. In almost all of the major acquisitions reported in 1998, the vendors doing the buying were trying to round out their portfolios in areas where they were weak. In addition, the companies being acquired either had been experiencing profitability problems or were owned by corporate parents whose commitment to medical imaging was not strong (there were obvious exceptions, such as the cases of ATL and Marquette).

Whether the pace of consolidation continues is anybody’s guess. One side might argue that all the best bargains are gone. On the other hand, the spate of mergers and acquisitions has resulted in shifting power dynamics in the market. Some companies on the wrong side of these shifts might believe it’s necessary to join forces to find the scale required to vie more effectively with their bulked-up competitors.

On the technology side, developments in multislice CT gave proponents of that modality something to cheer about. New digital x-ray systems being launched by several companies succeeded in livening up one of radiology’s more staid modalities, while PACS continued its remarkable rise to prominence.