Alliances Buoy Industry in Era of Shrinking R&D

GE, Advanced NMR Combine For 3-tesla MRI

Medical imaging vendors trying to maintain product innovationin an era of shrinking budgets are turning to strategic partnershipsto freshen their product lines. The latest example of such cooperationis a proposed agreement between Advanced NMR and GE Medical Systemsto build high-field 3-tesla MRI scanners.

The agreement's genesis came from clinicians who needed verypowerful magnets for functional MRI applications such as brainmapping, according to Joe Saldarini, sales and marketing managerfor Advanced NMR. GE agreed to build the scanner and enlistedAdvanced NMR's help.

The project is an extension of an MRI development relationshipbetween Advanced NMR and GE that reached fruition with InstaScan,a fast MRI upgrade developed by Advanced NMR for GE's 1.5-teslaSigna scanners. InstaScan improves system performance and extendsthe useful lifespan of the scanners (SCAN 9/16/93).

The companies' work in 3-tesla MRI would mark a notable expansionof their relationship. Indeed, a GE executive recently took aposition with Advanced NMR. Robert Kwolyk, who formerly oversawthe 3-tesla program for GE, became Advanced NMR's vice presidentof sales and marketing last month.

Advanced NMR and GE are close to reaching an agreement underwhich GE would supply most of the components of the scanner andAdvanced NMR would integrate them with its fast MRI technology.The first 3-tesla system will be installed at the University ofPittsburgh Medical Center, according to Saldarini.

"All future GE 3-tesla systems will be built in Milwaukeeand the magnet and system will be integrated at Advanced NMR headquartersin Wilmington, MA," Saldarini said.

The first 3-tesla systems, which have not yet received a productname, will be made to order for individual clinicians. The companiesmay decide to begin building 3-tesla systems in production quantitiesif there is enough demand for them, Saldarini said.

Innovation on the cheap. The GE/Advanced NMR relationship isjust one in a growing number of strategic partnerships that includeagreements between Varian and Picker International; Fischer Imagingand ADAC Laboratories; Picker and 3M Medical Imaging Systems;and Lorad and Philips Medical Systems. Such partnerships supportinnovation by allowing companies to combine their strengths andreduce costs.

Varian and Picker are negotiating whether Picker's Voxel Qworkstation, used as part of a radiation therapy simulator marketedto Varian customers through an alliance between the companies,might be adapted for use with Varian's evolving PAC system, calledVaris.

"Today, this is an information system, but in the futureit will grow into an image and information system," saidLee Smith, general manager of oncology systems for Cleveland-basedPicker. "We are looking at how we can apply our joint technologyto that end."

ADAC is using its alliance with Fischer to edge back into vascularimaging, a market in which it was once active. Each of the twocompanies contributes technologies that are integrated into anangiography system called Cygnus. Fischer sells one version ofthe system for applications involving electrophysiology, whileADAC sells another for angiography.

3M is supplying laser imagers and specialized software foruse with Picker systems, including Voxel Q, a stand-alone workstationfor postprocessing image data.

And at the last Radiological Society of North America meeting,Philips unveiled MD 3000, a new mammography unit, and PMS 2000,a portable x-ray system, built by Lorad for Philips (SCAN 12/17/94).

The deal points out one of the potential conflicts inherentin joint-venturing with a real or potential competitor: The productmarketed by your OEM partner could cut into sales of your ownunits. For example, the agreement that binds Lorad and Philipsdoes not preclude Lorad from selling its own mammography systemsor portable x-ray units, which raises the possibility that Philipsand Lorad, in essence, will be competing with themselves.

One possible solution is to restrict joint-ventures to companiesthat are not strong in the potential partner's primary marketsegments. John Brenna, director of marketing at Philips, acknowledgedthat there is conflict in Philips' agreement with Lorad, but thatit is not expected to be a stumbling block because the companiesmarket their products in different niches.

"It is a good match in terms of product technology anddistribution and market segmentation," Brenna said. "Weare more in the high-end hospital market, whereas the Lorad dealernetwork is in the smaller hospital, group practice and privatepractice segments."

One of the trademarks of a successful alliance is the continuedindependence of the two companies. The relationship between AdvancedNMR and GE is a case in point.

That agreement provided funds that kept Advanced NMR afloatin the highly competitive waters of the mid- and late 1980s. Itdid not stop the company from developing its own MRI productsin a spin-off company, however. Called Advanced Mammography Systems,this company has begun building stand-alone MRI scanners for breastexaminations (SCAN 2/10/93).

"A system will be imaging by the end of 1994 and, withany luck, we will have two or three placements in alpha test sitesby the end of this year," Saldarini said.

Meanwhile, the company is nearing the end of its agreementto provide the Instascan upgrade exclusively to GE. After June1994, the company can adapt its technology to work on machinesbuilt by other MR vendors. Saldarini declined to comment on whetherthe company would adapt the technology to work on non-GE products.

Elscint motion denied in ADAC suitScore one for ADAC Laboratoriesin its litigation with Elscint over nuclear medicine patent claims.The Milpitas, CA, company announced last month that the federalcourt judge hearing the case denied one of Elscint's motions fora preliminary injunction to bar ADAC from manufacturing gammacameras covered by the patents.

Elscint filed suit against ADAC in U.S. District Court in Marylandlast year, charging its competitor with violating Elscint's patentsrelating to gamma camera technology (SCAN 9/8/93). Elscint askedfor the preliminary injunction pending the outcome of a trialon its claims. The trial is scheduled to begin in October.

Elscint lost the first round in the case, however. U.S. DistrictCourt Judge Marvin J. Garbis denied Elscint's motion for a preliminaryinjunction on one of the nuclear medicine patents in question.Garbis has yet to rule on Elscint's motion relating to a secondnuclear medicine patent involved in the claim.

A countersuit filed by ADAC in response to the Elscint litigationis in discovery, according to an ADAC spokesperson. That suitcharges Elscint with violating patents ADAC acquired from PhilipsMedical Systems earlier this year (SCAN 3/2/94).kl/sc