Some people say goodbye, others farewell. I’ll choose farewell as I bid goodbye to the former Picker upon the recently announced acquisition plan by Philips Medical Systems (see News, page 10). While the current business documents refer to Marconi Medical Systems as the acquired company, thousands of medical imaging users will always prefer Picker, and won’t soon forget the color Picker Green too!

One of my most vivid Picker memories is the year at RSNA when the booths of Picker and Philips were purposefully placed next to each other, in anticipation of the original medical imaging mega-merger of the 1980s. The fall-out from the blowup of this deal challenged both medical imaging companies on both the revenue and profit lines, as the companies struggled to regain traction in the market for several years. GE and Siemens were only too happy to challenge each other for dominance in CT and MRI, where the action and major growth opportunities still remain 14 years later.

So, forgiving the past, what does the future hold for customers, suppliers and employees in the medical imaging industry, after this deal is completed? Let’s take a look.

Customers
Then there were three … plus a few outliers. GE, Siemens and Philips are standing together, apart from the rest, as full-line modality suppliers of state-of-the-art devices. Their service organizations reach not only every community in America, but literally every community in the world. Service represents an ongoing stream of revenues and profits that can never be underestimated in its value to these companies. So users of Marconi equipment worrying about ongoing service should relax a little — your revenue stream is valuable to Philips and they don’t want to lose you to GE or Siemens.

If you have a capital equipment purchase decision (this includes almost every radiology department in the world), you should plan for a price increase. The disappearance (via acquisition) of the mid-size players removes the competition that tended to keep price increases in check. That genie is out of the bottle, and your ability to negotiate lower prices will be highly challenged, unless you succumb to bundling. The big three have an appetite for increasing profits that can only be satisfied by current and future customers.

For capital equipment priced under $250,000, dealer/distributors that represent focused modality specialists will remain a competitive alternative to the big three.

Suppliers
“You can’t live with them, you can’t live without them.”

If you work for one of the big three, expect your sales targets to increase. You also should tune up your fastball, as you’ll be playing hardball day in and day out with your customers and

competitors. Making numbers has always been the unwritten rule, irrespective of the relative technology position or product performance/features of whatever you’re selling.

The pace of technology innovation and development, however, continues unabated in medical imaging, driven mostly by firms residing outside the big three. Many of these developments are evolutionary extensions of mainstream products, and the route to the commercial market almost always goes through the main OEMs. Do you risk having the OEMs establish a market and then reverse-engineer your products to take you out of the loop? Absolutely, and your business plan should reflect that reality. Remember, innovation has typically occurred outside these firms — keep on innovating, using the major firms to perform the heavy lifting of mainstream distribution for clinical applications.

Dealer/distributors should benefit, as medical imaging continues to move to specialty departments (non-radiology) for basic and applied modalities, which includes X-ray and ultrasound. This target is not the strong suit of the big three.

Employees
If you’re a service engineer, relax — your services are needed, in fact they’re in short supply, but don’t ask for a raise! R&D types should get their resumes on the street — these are dangerous waters, but your skills are needed by many smaller and niche firms. Sales and marketing always have their eyes on the next opportunity, so this development has almost no significance to them, other than a short-term surplus in the talent pool, which may be a nice benefit to the stronger dealer/distributors.

Finally, if you are a full-line OEM that is outside the big three, you may want to reconsider your business strategy — scale has become a strategic weapon in a market where product performance appears to be only a small differentiator in the final selection of a supplier.

Conclusion
In closing, many Picker alumni populated and trained the current generation of medical imaging professionals, and were found in places high and low throughout the industry. For the most part, these professionals knew this business extremely well, and were a great source of fun and inspiration in what looks occasionally to be a small fraternity, especially at RSNA time. To all of you who love that ’ole Picker Green, I hope you take pride in having been part of one of the longest running brands in medical imaging.

Doug Orr, president of J&M Group (Ridgefield, Conn.), consults with medical device companies in strategy and business development for emerging growth markets, notably radiology and cardiology. Comments and suggestions can be sent to dforr@aol.com.