CTI Inc. (Knoxville, Tenn.) was founded in 1983 and wasted little time in making its first two acquisitions in 1984. In January, the company purchased the ECAT positron emission tomography (PET) scanner business of EG&G Ortec (Oak Ridge, Tenn.). Later that year, the company bought a stake in The Cyclotron Corp. (Berkeley, Calif.).

The two acquisitions set the stage for the development of a new ECAT PET scanner, beginning in 1985, and the foundation for CTI’s cyclotron business. In November 1986, CTI acquired the rest of The Cyclotron Corp., converting it into CTI Cyclotron Systems.

In 1986, CTI partnered with Siemens Medical Systems Inc. (Iselin, N.J.) on two fronts which would greatly shape CTI as the company it is today. Siemens agreed to distribute CTI’s ECAT scanner and formed a joint venture with CTI to create CTI PET Systems Inc. (CPS of Knoxville).

CTI Inc.
810 Innovation Drive
Knoxville, Tenn. 37932
tel. (865) 218-2000
fax (865) 218-3000


1983: CTI is founded in Knoxville, Tenn.
1984: CTI acquires ECAT scanner business from the former EG&G Ortec (Oak Ridge, Tenn.); CTI acquires cyclotron personnel and technology from The Cyclotron Corp. (Berkeley, Calif.).
1986: CTI acquires the remainder of Cyclotron Corp.; CTI signs distribution agreement with Siemens Medical Systems (Iselin, N.J.) for the ECAT scanners.
1988: CTI and Siemens jointly create CTI PET Systems Inc.; Mitsui Corp. invests in CTI. The investment helps to form CTI Services Inc.
1996: CTI Services enters into a joint venture to form P.E.T.Net Pharmaceutical Services LLC; CTI buys Syncor International Corp.’s (Woodland Hills, Calif.) stake in P.E.T.Net.
1999: CTI acquires Advanced Crystal Technology Inc. (Rockford, Tenn.) from Nihon Kessho Koogaku Co. Ltd. (Japan).
2001: Marconi Medical Systems Inc. (Highland Heights, Ohio) sign agreement to distribute CTI’s dedicated PET scanners under the brand name Magellan.

Key Management


Terry D. Douglass, Ph.D

President, CTI PET Systems

Ronald Nutt, Ph.D.


Michael E. Phelps, Ph.D.

Vice President of Finance/CFO

Michael K. Templin

Vice President of Marketing and Sales

Fred Stuvek Jr.

P.E.T.Net Pharmaceuticals President/CEO

Mark S. Rhoads

CPS is operated as an independent company, with CTI owning 50.1 percent and Siemens controlling 49.9 percent, and manufactures the line of ECAT scanners for both CTI and Siemens. The scanners also are distributed through Marconi Medical Systems Inc. (Highland Heights, Ohio) under the brand name Magellan.

CTI’s expansion within the PET market continued in 1996, when the company entered into a joint venture to form P.E.T.Net Pharmaceutical Services LLC to accelerate the availability of PET radiopharmaceuticals. Today, P.E.T.Net distributes radiopharmaceuticals from 25 pharmacies in the United States and from one facility in London.

In 1999, CTI grew again with its acquisition of Advanced Crystal Technology Inc. (ACT of in Rockford, Tenn.) from Nihon Kessho Koogaku Co. Ltd. (Tokyo). Since 1986, ACT has supplied CPS with bismuth germanate (BGO), a scintillator material used in the detectors of PET scanners. The assets of ACT today form CTI Detector Materials.

The other segment of CTI’s business is CTI Services, which specializes in services that augment cyclotron, chemistry and tomographic products. The offerings include facility design and planning, installation, and applications support. CTI Services also manufactures and sells radioactive sources for use in attenuation correction and calibration for PET centers.

CTI handles service duties for PET products marketed and delivered by CPS and Siemens in the United States with 27 direct field service engineers.

The company predicts that it will have sales of approximately $300 million in 2002, with 70 percent of those sales coming from the United States. New PET imaging providers and mobile PET companies account for approximately 70 percent of CTI’s annual sales, with the remaining 30 percent coming from hospitals.

Principal Products
The cornerstone of CTI’s product distribution strategy is its line of ECAT scanners, beginning with the entry-level ECAT ART all the way up to CTI’s premium ECAT Exact HR+. CTI estimates there are more than 350 installations of ECAT scanners worldwide for applications, such as oncology, neurology and cardiology.

The ECAT ART is designed as an entry-level PET scanner, featuring slip-ring technology, patented transmission and scanning technology, and 3D acquisition and reconstruction. In the middle tier is the ECAT Exact, installed in approximately 175 fixed sites and mobile settings worldwide. At the high end of the market is the high-performance ECAT Exact HR+, which is used primarily for clinical and research PET applications.

Also in the PET scanner line is the ECAT Accel for faster, whole-body oncology imaging. Accel’s LSO-based (lutetium oxyorthosilicate) crystal detector technology is designed to achieve count rate performance and quality PET images above any other scintillator material on the market. A whole body scan can be completed in approximately 20 minutes.

CTI – through CPS – is set to launch a new product this fall. The combination PET-CT system is called Reveal and features either BGO- or LSO-based detector crystal technology. The PET-CT system will combine functional and anatomic imaging and perform a whole-body scan in approximately 15 to 20 minutes, or about half the time of conventional dedicated PET systems.

The Reveal has received FDA 510(k) clearance and several beta units are set to ship this fall to clinical settings.

CPS has been working on new tomographs using LSO-based crystal detector technology for about four years and has exclusive right to the scintillator material. CTI produces LSO from a facility in Knoxville and a site in Orlando, Fla.

The PET-CT system is a concept CPS has been developing through its partnership with the University of Pittsburgh Medical Center (UPMC). In June, CPS and UPMC unveiled the first patient images from its newest PET-CT system, using CPS’ ECAT Exact HR+.

CPS and UPMC have collaborated for the past three years on validating the concept of PET and CT with more than 270 clinical scans. UPMC clinical trials were directed by David Townsend, Ph.D., co-director of the center’s PET facility.

CTI currently is in the process of launching its Power Solutions Network, an Internet-based tool to provide information about PET to patients, physicians and healthcare providers. As of press time, CTI was scheduled to launch the network at five beta sites on or about Dec. 1.

The patient portal will provide information about PET to consumers, while the physician portal is designed for referring physicians, covering detailed information on PET, case studies, and CME credits for referring physicians. A provider portal will offer information a PET center may need to help manage its operations, as well as a direct connection to P.E.T.Net to automatically order radiopharmaceuticals and track the order.

Chief Competitors
CTI competes primarily with GE Medical Systems (GEMS of Waukesha, Wis.) and ADAC Laboratories, a Philips Medical Systems Co. (Milpitas, Calif.) in the PET market. Even though it has a partnership with Siemens Medical Solutions through CPS, CTI also considers Siemens a competitor for the sale of PET systems, as it does Marconi.

In its July report on the nuclear medicine market, research firm Frost & Sullivan (San Jose, Calif.) estimated that PET equipment sales accounted for 41 percent of the entire nuclear medicine market in 2000. Of that 41 percent, the report estimated that CTI held the greatest market share with approximately 18 percent, followed by GEMS with 16 percent and ADAC with 7 percent.

CTI Believes
CTI believes it has all the necessary ingredients under one roof to compete more than adequately in the PET and molecular imaging markets.

With PET scanners from CPS, radiopharmaceuticals from P.E.T.Net, cyclotrons from CTI Cyclotron Systems and ancillary PET services by CTI Services, the company is positioning itself to offer a total PET package for healthcare providers.

With all its ducks lined up in a row, CTI held a coming-out party in June at the annual meeting of the Society of Nuclear Medicine (SNM of Reston, Va.). The purpose was to promote its business units, its affiliation with CPS and not be shy – unlike many OEM suppliers – about extolling CPS’ distribution agreements with Siemens and Marconi.

“We saw that as a strength, as we shifted our strategy to be that, rather than the technical supplier of PET products and services,” says CTI President Terry D. Douglass. “We saw new entrepreneurs trying to develop new PET centers and they needed more capabilities than just to buy a scanner.”

To solidify its foundation in the PET and molecular imaging market, CTI also is building P.E.T.Net into a full-service PET radiopharmaceutical company, combining P.E.T.Net’s radiopharmaceutical manufacturing and distribution capabilities with a newly developed R&D arm.

With 25 centers with cyclotrons across the country, P.E.T.Net plans to open seven more sites before the end of this year. The strategy is to increase that total to 60 U.S. sites over the next three years.

“When we hit the number [60],” says P.E.T.Net President and CEO Mark S. Rhoads, “we will be within driving distance of most of the United States.”

P.E.T.Net’s lead R&D facility opened in June. The 11,000 sq. ft. LA Tech Center (Culver City, Calif.) is operated in collaboration with the University of California-Los Angeles (UCLA) School of Medicine. The facility has two cyclotrons, which will distribute FDG (fluorodeoxyglucose) in the area and supply radioisotopes and tracers to PET providers.

P.E.T.Net also is constructing a molecular imaging research center with the University of Louisville (Ky.). The facility will be located at the university’s Brown Cancer Center and is scheduled to open early next year. Among its offerings, the center will provide in vivo chemical and biological evaluation of pharmaceuticals in development and will house the state’s first PET-CT imaging system and cyclotron. P.E.T.Net also will establish a radiopharmaceutical manufacturing and distribution center on the site.

P.E.T.Net has signed letters of intent for additional R&D centers with Columbia Presbyterian Medical Center (New York City), M.D. Anderson Cancer Center (Houston), Indiana University (Bloomington, Ind.), Technical University of Munich (Germany) and the Gray Labs (United Kingdom).

“We will have 10 to 12 of these technology development centers, acting as an outreach center to local pharmaceutical companies and other groups looking to use PET,” Rhoads adds.

With 50 percent annual growth in each of the last three years, CTI is enjoying healthy success in the burgeoning PET market. At the same time, this rapid growth must be managed correctly and internal expansion takes adequate capital.

“Fifty percent growth is a significant thing to handle, particularly with our size,” says Douglass. “We grew by 200 people last year and we’ll grow by 200 people this year.”

CTI has approximately 600 employees. Douglass sees the work force increasing to “about 840 by the end of 2002 and it probably won’t be as high as it should be.”

To help accommodate its growth, CTI currently is building a new 70,000 sq. ft. addition to its main facility in Knoxville.

With GEMS and ADAC in the PET market, Douglass realizes that CTI has – in his words – “some very large competitors that are worthy challengers for us. That is another thing for us to he concerned about.”

There are other market variables that may not be so easy for CTI to control, such as PET reimbursement rates as set by the Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Finance Administration).

While PET advocates have been successful over the last two years in gaining additional CMS reimbursement approvals for more oncology indications, the industry still asserts that reimbursement is warranted – and over due – for PET imaging to detect Alzheimer’s disease and breast cancer.

CPS President Ronald Nutt also is concerned that in time PET reimbursement could decline from its current average rate of $2,300 per procedure. If and when that happens, the reduced paybacks will prompt healthcare providers to push to scan more patients to cover lost revenues.

“One of our major goals is to get that imaging time down to less than five minutes for the whole body,” says Nutt. “If we can do that, we will be in the same ballpark as CT and MRI in terms of time for the patient on the couch. That will make a big difference, especially in the economics of PET.”

The PET market is growing rapidly, as evidenced in the July Frost & Sullivan report. The study sees the PET market expanding from $200 million in 2000 to $880 million in 2007, with PET equipment sales surpassing gamma camera sales perhaps as soon as next year.

“We are getting more PET systems out and that process needs to continue,” adds Nutt. “To fuel that [growth], we need a reasonable [reimbursement] rate until we have some of this new equipment available and can increase the patient throughput dramatically.”

With only 200 or so PET imaging sites in the United States and demand for PET services rising, better access to PET, especially for cancer patients, also is seen as a challenge.

“The biggest opportunity we need to address is making consumers and physicians aware of what PET can do, and then having the network set up where they can make a decision about having a PET study and then having that PET study done,” says Douglass. “It is still not an easy process to make a decision about PET.”

From P.E.T.Net’s perspective, building its nationwide network also is very capital intensive. Each site costs millions of dollars to develop and regulatory hurdles also must be overcome.

“What has limited our growth more than capital needs has been the complexity of locating a new site, getting it licensed, building it, installing equipment, and hiring a staff,” Rhoads says. “Each one of those steps has a great deal of complexity.”

While the labor supply throughout the healthcare industry is a concern, Rhoads says there aren’t that many nuclear pharmacists in the country and P.E.T.Net competes with other radiopharmaceutical companies for these specialists.

“If we didn’t have control over the cyclotron technology, I’d be concerned, because we would not be able to develop the drugs if we were just a radiopharmaceutical company,” Rhoads adds. “There is a tremendous amount of technical expertise and technology needed with the new chemistries and you need to build the cyclotrons correctly.”

CTI appears very well positioned in the PET market, as the imaging modality’s healthcare capabilities and market potential continue to slowly and surely capture the imagination of researchers, oncologists and referring physicians outside of nuclear medicine.

With the kind of market momentum forecast by Frost & Sullivan as one catalyst, CTI’s goal is to grow from a $300 million company in 2002 to a $1 billion company in five years.

“The market is growing at about that rate,” says Douglass. “All we need to do is maintain our market share. To get to the billion-dollar level, we only have to grow 40 percent per year.”

For P.E.T.Net, one primary goal is to establish a market position in each European country. P.E.T.Net will open its first foreign facility in the United Kingdom before the end of the year and has signed a letter of intent to open a site in conjunction with Technical University of Munich (Germany). P.E.T.Net is in similar discussions in several other countries.

“I would say that by 2005, we will have one or two sites in each one of the major countries of Europe,” says Rhoads. “We are looking for partners in Japan and the Far East. We are in discussions with several companies, but we don’t have anything definitive yet.”

CPS has mapped its strategy as a manufacturer and distributor through CTI, Siemens and Marconi and currently is seeking a fourth partner to bolster its standing.

CPS recently reorganized its sales force, splitting off its personnel to CTI and Siemens, allowing CPS to focus more on product and market development.

“We are in the process of developing a strategy to establish our identity and differentiate us from CTI and Siemens,” CPS’ Nutt says. “It will be in a way that it will reassure the other major imaging companies that we are, in fact, an independent company that we can be their supplier of PET systems.”

Nutt says CPS has not discounted the possibility of marketing its LSO-based crystal detector technology to competitors GEMS or Philips Medical Systems International B.V. (Best, Netherlands).