Diagnostic Imaging Scan - March 25, 2008 - (Page 1) Business News For Medical Imaging “The Story Behind The Announcement” Business Briefs Week in revieW CT vendors were down but not out last year. Fed rate changes and CMS’ reversal on coronary CTA couldn’t have come at a better time. ✱ CT shipments plummet in 2007 ✱ Inconsistencies haunt ✱ GE poises to reenter C-arm ✱ Commentary: CT: Faster, CT shipments plummet in 2007 Recovery appears likely, but not until second half of year CT vendors took it on the chin last year. Revenues from the sale and shipment of CT scanners to customers in the U.S. plummeted last year between 15% and 18% from the previous year, according to industry executives. Total revenues were between $1.4 billion and $1.5 billion, and shipments to U.S. sites were down 11% last year to just 1650 units. “This was an exceptional downturn, one we haven’t seen for quite some time,” said Peter Kingma, vice president of CT at Siemens Healthcare. Underlying last year’s drop were shrinking sales to imaging centers due to reimbursement cuts coming from the Deficit Reduction Act, a maturing demand for 64-slice scanners, uncertainty about reimbursement for coronary CT angiography, and hesitancy to buy older technology in the shadow of a new generation of CT. These factors conspired to turn the fourth quarter of 2007 into the worst the industry has suffered through in recent years. Declining demand led to substantial price erosion, which has continued into this year. Depending on accessories and options, the street price of a 64-slice scanner today ranges between $1 million and $1.2 million. A 16slice CT, depending on configuration, commands between $500,000 and $600,000, according to industry executives. Shipments to U.S. sites in the fourth quarter CT units shipped to U.S. sites, 2003 to 2007 2000 2007 were off 28% compared with the yearearlier period. Unit sales fell 17%. Of greatest concern were flagging orders, characterized by a revenue drop greater than 25% in shipments and a unit drop of almost 20% compared with 4Q 06, according to industry estimates. The early weeks of 2008 looked like more of the same, but it now appears the bloodletting is over, according to executives from each of the four major vendors. Siemens and GE expect a flat market compared with last year. Philips predicts a flat or slightly higher market on growth primarily in the second half. Toshiba expects second half growth to propel the market as much as 6% or 7% higher than in 2007. “I am very optimistic and believe we will see a real reemergence of the marketplace in the next six to nine months,” said Gene Saragnese, vice president and general manager of global molecular imaging and CT at GE Healthcare. This optimism is being fueled by recent factors, including a cut in short-term interest by the Fed and a favorable decision by the Centers for Medicare and Medicaid Services for continued reimbursement of cardiac CTA. The market is still sluggish, but industry execs expect momentum to build, particularly in the second half of 2008, with the commercial release of the next generation of scanners generating 256 or more slices. Editor’s Note: Next week DI SCAN will describe the reasons behind last year’s fall in the CT market and explain the reasons 2008 will be better in analyses provided by industry executives. CT revenue from U.S. shipments, 2003 to 2007 $1.75 $1.5 (dollars in billions) 1.5 cardiac SPECT market pending FDA decision better, and (soon) cheaper For the first time in its history, Bristol-Myers Squibb Medical Imaging is operating as an independent company. With this change comes a new name, Lantheus Medical Imaging. The Massachusetts-based firm, acquired by Avista Capital Partners in January, will continue to provide medical imaging products for echocardiography and nuclear cardiology, namely the microsphere-based Definity and technetium products Cardiolite and TechneLite. Draxis Health, whose DraxisImage division sells technetium-99m kits and therapeutic radioactive isotopes, is on the block. The company said March 17 that it is currently in exclusive discussions that could result in its sale. The announcement was made in response to securities regulators, who noticed increased trading of the company’s publicly held common stock. A consortium of companies including Siemens Healthcare 1500 will construct the first particle therapy center in northern Germany. Siemens will plan 1000 and construct the particle therapy system, supply medical 500 engineering services for medical diagnostics to information technology, and carry out the 0 technical service and operation of the medical engineering systems. The center, whose construction 2000 1650 1400 1750 1850 1650 2.0 1.5 1.0 0.5 0.0 2.0 1500 $1.2 $1.3 $1.4 1000 1.0 500 0.5 0 0.0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Source: Consolidated industry estimates Source: Consolidated industry estimates Copyright © 1991-2008 CMP Healthcare Media Group LLC March 25, 2008
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