January 2001

With the pending acquisitions of Agilent Technologies Inc.’s (Palo Alto, Calif.) Healthcare Solutions Group (HSG of Andover, Mass.) and ADAC Laboratories Inc. (Milpitas, Calif.) for a combined $2.1 billion, Philips is investing a substantial amount of money to become — in the words of Philips Medical Systems Chairman Hans Barella — “a total solutions company in healthcare.”

With the additions of HSG and ADAC, the transactions of which are projected to close in Q1, Philips Medical Systems would become a $5 billion company. The majority of Philips’ sales would be in North America, followed by Europe and the Pacific Rim and Asia, in that order.

The announcement of ADAC’s proposed sale to Philips came within a month of ADAC signing deals to divest its Health Care Information Systems (HCIS of Houston) division. The bulk of HCIS was sold to Cerner Corp. (Kansas City, Mo.) for $6 million, while HCIS’ Cardiology Systems Group was sold to Camtronics Medical Systems (Hartland, Wis.), a subsidiary of Analogic Corp. (Peabody, Mass.), for an undisclosed amount. Both transactions closed in November.

Barella told Medical Imaging that ADAC’s divestiture of HCIS was not a prerequisite to Philips’ proposed acquisition of the nuclear medicine company. He added that Philips had “no interest” in ADAC HCIS’ RIS products.

Both Barella and ADAC Chairman and CEO R. Andrew Eckert told MI that ADAC’s plan to sell HCIS was in motion before Philips expressed an interest in acquiring ADAC.

One of Philips’ primary interests in ADAC is the company’s PET imaging product line, which includes the C-PET Plus dedicated PET scanner. ADAC’s involvement in nuclear cardiology also is a benefit to Philips’ reputation as a leading worldwide cardiology company. Barella estimates that Philips makes one of every two cardiology X-ray systems installed around the world.

With Agilent’s HSG, Philips would gain one of the leading companies — if not, the No. 1 company — in cardiac ultrasound. Agilent’s HSG has annual sales of $1.5 billion and more than 400 healthcare products that cover patient monitors, ultrasound, resuscitation, information management and related services.

On another company note, Jack Price, president of Philips Medical Systems North America (Shelton, Conn.), told MI that the company’s plans to move from Shelton to the Bothell, Wash., campus of ATL Ultrasound by the end of this year are moving along “very well.”

He added that Philips currently is working through the organizational aspects of the move. To date, Philips has not formally offered its Connecticut employees positions in Bothell. Price said those offers are likely to come in June 2001.

He added that the company expects one-third to one-half of its Connecticut employees to make the move to the ATL campus. There are 380 employees in Shelton.

In one study, researchers found that using computers to double-check mammograms can increase the detection of cancers by 20 percent. The findings are based on mammograms of 12,860 women. In general, radiologists are estimated to miss approximately one-in-five breast cancers.

Timothy W. Freer, M.D., director of the Women’s Diagnostic & Breast Health Center (Plano, Texas), who presented his findings Tuesday at RSNA, said cancer signs can be very subtle, and computer-assisted detection (CAD) helps doctors recognize signs, such as minute calcium deposits, subtle masses or changes in tissue make-up.

Study participants were screened at Freer’s clinic and 49 unsuspected cancers were detected. All of these cases were in early stages.

Radiology’s next frontier is molecular imaging, so forecasts Ralph Weissleder, M.D., director of the Center for Molecular Imaging Research at Harvard University (Cambridge, Mass.).

Traditional imaging techniques, such as MRI, CT and ultrasound, rely on physical and physiologic parameters as the main source of contrast for disease detection and characterization. Molecular imaging, Weissleder said, builds on these and other imaging techniques and is aimed at exploiting specific molecules as the source of image contrast.

Weissleder sees molecular imaging techniques providing earlier detection of disease before phenotypic changes become apparent, characterizing disease more rationally and assessing the efficacy of targeted treatments at the molecular level.

In RSNA news, R. Nick Bryan, M.D., Ph.D., was installed as RSNA’s president-elect. Bryan is the Eugene P. Pendergrass professor of radiology and chairman in the department of radiology at the University of Pennsylvania Health System. Bryan has served as chairman of the RSNA board of directors for the past year.

Immelt, president and CEO of GE Medical Systems (GEMS of Waukesha, Wis.), will succeed Welch when Welch retires at the end of 2001.

At 44, Immelt was the youngest of the candidates and long considered by industry and GE analysts as the favorite to replace Welch.

Immelt became the head of the $7 billion GEMS in January 1997. He began his career with GE in 1982 and, following a brief assignment with corporate marketing, held a series of leadership roles with GE Plastics in sales, marketing and global product management. Immelt joined GE Appliances in 1989 as vice president of consumer service and in 1991 was named vice president of worldwide marketing and product management.

He rejoined GE Plastics in 1992 as vice president and general manager of GE Plastics-Americas Commercial Division. A year later, he was named vice president and general manager of GE Plastics Americas.

Joseph M. Hogan, 43, will fill Immelt’s shoes at GEMS as president and CEO. Hogan has served as executive vice president and COO of GEMS since June.

Hogan joined GEMS earlier this year as vice president of global e-business. Previously, he had been president and CEO of GE-Fanuc Automation North America Inc. since Feb. 1998.

In a company statement, Welch described Immelt as “a natural leader,” adding that Immelt is “ideally suited to lead GE for many years.”

The news of Immelt’s succession was not unexpected, according to financial analysts. Last July, when he and two other GE executives were being publicized as possibilities for Welch’s post, a Reuters poll of nine analysts and GE watchers had six of the observers predict Immelt as the favorite.

Under Immelt, GEMS has grown through numerous acquisitions and product launches, feeding the demand for medical imaging and patient monitoring equipment.

In his four years at GEMS, Immelt helped orchestrate nearly two dozen acquisitions, including the recent purchases of SMV (Sopha Medical Vision of Buc, France), Lunar Corp. (Madison, Wis.), OEC Medical Systems Inc. (Salt Lake City), Elscint Inc.’s nuclear medicine and MRI holdings (Haifa, Israel), Marquette Medical Systems Inc. (Milwaukee) and Diasonics Vingmed Ultrasound Ltd. (Haifa).

The agency’s decision on “soft-copy” reading is a boost for GE Medical Systems’ (GEMS of Waukesha, Wis.) Senographe 2000D full-field digital mammography system. Soft-copy reading clearance came some 10 months after the FDA’s clearance of digital image review on film, which allowed GEMS to begin marketing the Senographe 2000D in the U.S.

The GE Senographe 2000D displays patient images in 10 seconds after an exposure, providing technologists quick verification of correct patient positioning.
GEMS has installed more than 35 systems in the U.S. and expected to install 60 systems before the end of 2000.

Quantum Medical Imaging LLC (Ronkonkoma, N.Y.) debuted at the 86th annual meeting of the Radiological Society of North America (RSNA), unveiling its line of Q-Rad radiographic systems and accessories.

Many of Quantum’s 28 employees worked for the former Trex Medical Corp. (Danbury, Conn.), including Quantum President and founder Scott Matovich, a 19-year veteran of the medical imaging industry.

At RSNA 2000, Quantum showcased its Rad-X high-frequency radiographic systems, which include the Quiet Lift elevating, float-top table, Verti-Q vertical wall stand, and the specialized Verti-Q Tilt universal single receptor system for use with a mobile table.

“Our main target is imaging centers, clinics and hospital emergency rooms,” said Matovich. “Our equipment will range from $40,000 to the mid-$90s, depending on the configuration [and] size of the generator.”

Quantum also displayed its line of INDi XL series generators, which range from 20 kilowatts (kw) to 80 kw.

The INDi XL series is shipping, as Quantum develops its next-generation of generators — the Odyssey HF series with LCD display and Quest HF series generators. Quantum plans to begin shipping its Odyssey and Quest units by the end of the first quarter of 2001.

Quantum’s 30,000 square-foot manufacturing center on Long Island opened in October and shipped $500,000 worth of equipment in the first month of operation.

As the company gets rolling, it anticipates that 40 percent of its sales will come from international markets and 60 percent from the United States, with sales totaling $1.5 million in 2000.

“Next year’s goal is $7 [million] to $8 million [in sales],” added Matovich. “We are expecting in the next two to three years to get to $25 million, just in core products alone.”

In other news, Quantum has entered a distribution agreement with Canon Medical Systems (Irvine, Calif.). The pact will allow Quantum-manufactured radiographic systems to be upgraded to digital utilizing Canon’s digital radiography bucky sensor unit system, the CXDI-22.

The digital upgrade is available on Quantum’s Q-Rad radiographic line.

Well, it happened. Thanks, in part, to the introductions of its DirectView CR 800 system, DirectView DR 9000 and DirectView DR 5000 digital radiography systems, Health Imaging says digital revenues will account for approximately 55 percent of revenues in 2000.

Shipments of Health Imaging’s DR products began in September to installations in the U.S. and Europe. The CR 800 shipped in August.

“It has been an important internal goal, because it proves to ourselves that we can make that transition,” said J. Michael McQuade, president of Kodak’s Health Imaging unit. “It also proves we can do it not by substituting digital for analog, but by having digital growing more than the analog business.”

McQuade — who became president of Health Imaging in October when Martin M. Coyne was promoted to manage Kodak’s consolidated commercial business, which includes Health Imaging — now oversees Kodak’s mix of DR, CR, analog and film products.

In 2001, Health Imaging says it expects to introduce more than 50 new products, approximately 75 percent of which will be digital. The division also anticipates double-digit sales growth from its digital portfolio of products and service in 2001. Twenty percent of sales will come from digital and analog products the division did not have 24 months ago.

While packaging CR and DR together may have “seemed illogical at first,” McQuade said, the move was correct.

“There are some folks who will tell you that CR is here until DR proves itself effective,” he added. “We think there are places where CR will always be the right choice — and not only in portables. I think there are lot of people for whom a $100,000 CR system will be the right way to do digital capture for a long time to come.”

Kodak also is venturing into the ASP (application service provider) arena with a pilot project at Cedars-Sinai Medical Center (Los Angeles) for an enterprise-wide PACS. Initially, the project will provide image distribution for authorized referring physicians within the medical center. Kodak expects to expand the model to include image distribution outside of the facility and its affiliated organizations to authorized referring physicians and possibly to off-site image storage services.

“We are partnering with Intel [Corp. of Santa Clara, Calif.] on a secure ASP server network that will provide the ability to do all the PACS at Cedars-Sinai through the distributed Intel system,” added McQuade. “We think there is going to be a significant place for ASPs in the industry. I am not sure that I would jump on the bandwagon that says everything in the world will go ASP. I think it will be another financing and distribution method that will be very important.”

In CR, McQuade said that Kodak’s pending acquisition of Lumisys Inc. (Sunnyvale, Calif.) for $39 million holds several market opportunities. Lumisys’ digitizer business allows Kodak to offer digitizers to facilities making the transition from analog to digital. The deal also would add a table-top CR system to Kodak’s portfolio, helping the company expand into the low-end of the CR market and complement Kodak’s CR 800 in the mid-tier and CR 900 in the high end.

Even with its emphasis on DR, CR, PACS and RIS, Kodak remains committed to its film business. McQuade said that Kodak’s film business is “very strong” and does not expect a significant, immediate impact from the FDA’s recent clearance for soft-copy reading of digital mammograms.

“I think in the short term it will add credibility to digital mammo in what is a very early market,” McQuade opined.

Agilent Technologies Inc.’s (Palo Alto, Calif.) Healthcare Solutions Group (HSG (Andover, Mass.) is stepping into the lightweight, portable ultrasound market with an eight-pound unit that resembles a computer laptop.

Agilent is targeting a March 2001 release for its works-in-progress OptiGo to coincide with the 50th annual Scientific Session of the American College of Cardiology (ACC).

The company’s goal is for physicians to incorporate the OptiGo into routine exams, as one would use a stethoscope, filling — in the company’s words — “the gap between the modern stethoscope and traditional cardiac ultrasound.”

Agilent is positioning OptiGo as a way for physicians to screen for potential health problems at the first opportunity, rather than send patients to another clinician or another site for a more time-consuming, more expensive procedure.

The SmartScore Pro software package was unveiled by GE Medical Systems (GEMS of Waukesha, Wis.). SmartScore Pro is designed for GEMS’ LightSpeed CT scanner for non-invasive scans of the heart and coronary arteries. The calcium scoring software in this new product has been enhanced as well, with input from clinicians and technologists. The program includes integrated reports for doctors and patients that include all related heart disease information, such as patient history, diagrams, calcification data and more.

The new program also features prospective gating acquisition, a technology that activates the dose only during the heart’s resting phase. The end result is a lower overall dose for the patients with fewer images.

In ultrasound, GEMS unveiled tissue tracking, a new feature available only in the company’s VividFiVe cardiovascular ultrasound system. The program includes the ability to quantify the systolic movement of the heart wall. This allows clinicians to view real-time left ventricular function using tissue velocity image-based and color-coded quantitative tissue overlays to show changes in different regions of the heart. The goal is to provide a better tool for measuring heart motion and wall thickening than prior methods that were more subjective and relied heavily on the expertise and opinions of the echocardiologist.

Siemens Medical Systems Inc. (Iselin, N.J.) announced the availability of HeartView CT, a technology that allows for non-invasive cardiac imaging that includes visualization of soft plaque. The program is designed to work with Siemens’ Somatom Volume Zoom and Somatom Volume Access CT scanners.

The new program uses an electrocardiogram signal to synchronize the acquisition and/or reconstruction of data to produce virtually motion-free images of the heart, company officials claim. The feature can be used to detect early coronary artery calcification in a single-breath hold exam without the use of contrast agents or dye. Using HeartView with contrast agents allows one to identify stenosis and/or soft plaque in a scan that is highly reproducible.

In MRI, Siemens provided information from a study at Northwestern University Hospital (Chicago) using its Magnetom Sonata, a dedicated cardiac MR scanner. The results show great promise for advanced cardiac MR applications, the company said.

Researchers found that delayed enhancement of contrast-enhanced MR is a specific indicator of irreversible ischemic injury. The studies further showed that MR can be used to predict whether regions with abnormal myocardial contraction will improve following a revascularization procedure.

Acuson Corp. (Mountain View, Calif.) introduced new features for its Sequoia echocardiography platform called Tissue Equalization Technology (TEQ). Users can push one button and obtain information on whether ultrasound echoes are coming from soft tissue or artifacts and immediately correct brightness for any soft tissue scan. The advances include Cadence Contrast Agent Imaging (CCI) for continuous imaging of contrast agents with minimal bubble destruction.

Epix Medical Inc. (Cambridge, Mass.) pulled the wraps off a study that showed it is possible to produce detailed images of arterial plaque and apparent vessel wall inflammation using a single MR exam and its MS-325 contrast agent. Clinical investigator, Jeffrey H. Maki, M.D., Ph.D., from the University of Washington, presented the results of the study at the AHA conference.

“We were able to see dramatic areas of arterial wall enhancement and adjacent plaque using MRI performed with MS-325 as compared to standard MR angiography,” he said. “We believe this enhancement relates to inflammation within the vessel wall and are hopeful this technique may lead to new ways to visualize inflammation and perhaps to characterize different types of atherosclerotic plaque.”

Bracco now has exclusive worldwide rights to the Dyax technology for the development of medical imaging products, including the right to develop and commercialize existing Dyax imaging product leads in the areas of inflammation, cardiovascular and oncology. Bracco also acquires all patents, libraries and know-how related to phage display technology, as well as future improvements and new technologies.

Phage display technology identifies proteins, peptides and human monoclonal antibodies, which bind tightly to diagnostic and therapeutic targets. Its applications are specific to the pharmaceutical and biopharmaceutical industries.

Bracco will pay Dyax a $3 million licensing fee up front, plus an additional $3 million annually in research funding over the next three to five years. Dyax also will receive development milestones and royalties on product sales.

Michael Tweedle, president of Bracco Research USA Inc. (Princeton, N.J.), opined that Dyax’s phage display technology is the “premier biodiversity discovery platform. Our collaboration with Dyax is a major step in our concerted pursuit of new technologies to enhance our R&D capability and business base.”

“Through this collaboration, Dyax now has a strong strategic partner that we believe can most effectively exploit our technologies in the medical imaging field,” said Dyax CEO Henry Blair in a prepared statement. “Bracco has the market strength, scientific capability and strategic vision to fully capitalize on the unique opportunities for revolutionary imaging products presented by our phage display technology.”

CryoGuide is a software-controlled ultrasound planning and mapping system designed to allow a surgeon to visualize the target tissue in 3D, facilitating more precise placement of the probes used to freeze and destroy the tissue.

Endocare President and CEO Paul Mikus said the clearance of the system is an “important step in the evolution of modern cancer therapeutics.”

He added that Endocare believes the planning, control and precision from CryoGuide will accelerate the acceptance, training and use of cryoablation for prostate cancer treatment. It also will enable Endocare to apply similar integrated treatment systems to a new class of targeted cancer treatments using cryoablation, as well as other treatment methods.

Targeted cryoablation is the use of cryoablation, the application of extreme cold to destroy tissue, in combination with ultrasound and temperature monitoring to precisely destroy cancer cells.

According to Mikus, the ability to accurately visualize a tumor and guide probe placement will shorten the training process for surgeons and accelerate the number of trained cryoablation surgeons in the United States and abroad.

Douglas O. Chinn, M.D., a urological surgeon who helped design the CryoGuide system, said the technology eliminates much of the subjective nature of probe placement during a procedure.

The Merge ExamWorks+ product will be offered to customers interested in a Philips Intera MRI system. ExamWorks+ is a 12-inch, flat-panel, integrated PC that supplements the DICOM-compliant Intera with workflow features, such as modality work lists and performance procedure steps. As a result, an Intera MRI with ExamWorks+, when connected to a fully functional RIS (radiology information system) or PACS (picture archiving and communication systems), provides customers with seamless workflow integration in their hospital or healthcare facility using standard DICOM interoperability functions.

In July, Merge signed a long-term distribution agreement that allows Philips Medical Systems to supply the Merge ExamWorks product as part of Philips’ BV300 mobile surgical C-arm.

Acquisition-related charges prompted a net loss for Hologic Inc. (Bedford, Mass.) in its fiscal year, ending Sept. 30. Revenues increased to $93.7 million, up from $84.1 million in FY99, on the strength of new product introductions. Hologic posted a net loss of $18.6 million, compared with a net loss of $3.7 million in FY99. Excluding acquisition-related charges, the net loss for FY2000 was $10 million. In FY2000, Hologic’s Direct Radiography subsidiary generated revenues of $5.98 million, while the business unit posted an estimated net loss of $13 million. Excluding that net loss and acquisition-related charges from its purchase of Trex Medical Corp. (Danbury, Conn.), Hologic would have reported net income of approximately $3 million in FY2000. Hologic’s core business of bone densitometry and mini C-arm imaging were profitable in all four fiscal quarters.

General Electric Co. (Fairfield, Conn.) remains on target to deliver earnings of approximately $12.7 billion in 2000 — so said Chairman and CEO John “Jack” F. Welch in a meeting with analysts last month. Welch added that GE expected to report approximately $130 billion in revenues, up 17 percent from 1999. Year-end results are expected in mid-January.

The adoption of new accounting principles adversely affected revenues and earnings numbers at Advanced Magnetics Inc. (Cambridge, Mass.) in its fiscal year, ending Sept. 30. Revenues declined to $4.1 million, compared with $7.4 million in FY99. The company also posted a net loss of $11.3 million, compared with a net loss of $4.4 million the previous fiscal year. The net loss for FY2000 includes a charge of $7.4 million related to the company’s decision to adopt new Securities and Exchange Commission accounting principles.

GE Medical Systems (GEMS of Waukesha, Wis.) has named Dan Kerpelman as general manager of global diagnostic X-ray. Kerpelman most recently served as general manager of global quality and Six Sigma, where he led GEMS’ Six Sigma quality initiative around the globe. Kerpelman came to GEMS in 1988, holding various positions in engineering and services. In 1993, he was appointed manager of logistics in Europe, the Middle East and Africa. In 1996, he was appointed region services manager for Italy, Turkey and Greece. In 1998, he became general manager of global service technology operations.

Marconi Medical Systems Inc. (Highland Heights, Ohio) has appointed Gerard Ranasinghe as vice president of the Asia-Pacific region, which includes China, Japan, Indian, Australia and Southeast Asia. Ranasinghe has been with Marconi for 12 years, serving in positions such as vice president and acting manager of Marconi’s MRI business, and director of global customer administration.

Philips Medical Systems North America (Shelton, Conn.) has named Wade Binford as vice president and general manager of the company’s Integrated Clinical Solutions (ICS) department. Binford takes the newly created position after serving most recently as vice president of marketing. Henk Valk becomes vice president of marketing, replacing Binford. Valk comes to the U.S. operation after serving as Philips Medical Systems’ regional director for the Middle Eastern, African and Turkish markets.

Bob Brannon and Skip Amiot have joined the Scottish 3D medical visualization company Voxar Ltd. (Edinburgh). Brannon has been appointed vice president of North American sales, with responsibility for Voxar’s U.S. software sales growth, business development activity and the management of new regional sales teams in Florida, Kansas and Colorado. Brannon began his career with Siemens Medical Systems (Iselin, N.J.) and spent six years with Cemax-Icon (Fremont, Calif.). Amiot will serve as vice president of international business development with a region covering Asia Pacific, Southern Africa and Latin America. He previously worked for Kodak’s Cemax-Icon for 10 years. Voxar also appointed Jacqueline Edwards as global vice president of marketing. She has more than 16 years global brand and product development experience across the healthcare and financial sectors.