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Carestream scours landscape, finds new opportunity

Article

Thirty years ago radiology was on the cusp of an explosion, triggered by the introduction of CT and MR and propelled by the widening adoption of these technologies. Expansion of the imaging universe continued with PET/CT, digital x-ray, and healthcare IT. But now this big bang has begun to cool. New and different opportunities for future growth are swirling into shape. Carestream Health has identified analog x-ray, characterized by clinics, private practices, and small hospitals, as a universe it can explore.

Thirty years ago radiology was on the cusp of an explosion, triggered by the introduction of CT and MR and propelled by the widening adoption of these technologies. Expansion of the imaging universe continued with PET/CT, digital x-ray, and healthcare IT. But now this big bang has begun to cool. New and different opportunities for future growth are swirling into shape. Carestream Health has identified analog x-ray, characterized by clinics, private practices, and small hospitals, as a universe it can explore.

Last month the Rochester, NY, company announced its acquisition of Quantum Medical Imaging, a privately held Ronkonkoma, NY, manufacturer of digital and conventional x-ray. Quantum's portfolio and distribution network complement those of Carestream's high-end, largely internationally distributed products.

"Quantum has built up channel relationships into the segment of the market with smaller hospitals and smaller clinics, which is really beginning to go digital with the entire healthcare IT and reform efforts," said Diana Nole, president of Carestream's digital medical solutions division. "We think this is a strategic segment of the market that it is important for us to serve."

We'd seen enthusiasm surrounding digital x-ray in the mid 1990s. Noting the enormity of this modality-at least 70% of all imaging exams were radiographic-Trex Medical acquired and rolled several of the larger independent x-ray makers, including Bennett X-Ray and Lorad, together. T-Rex, as it became affectionately known in the industry, was formed to dominate this market. It failed miserably. In 2000, its assets were sold to Hologic for pennies on the original investment dollar.

Why? Early digital radiography equipment was too expensive for this traditionally low-cost area of medical imaging. The revolution became an evolution. Early adopters bought DR products when they made sense from an efficiency point of view, a process executed at an excruciatingly slow pace for those who had hoped digital x-ray would follow the explosive diffusion path of MR and CT.

Now the opportunity for growth in digital radiography has resurfaced, a variation of market dynamics that paved the way for the growth of computed radiography. The price of the technology underlying DR has fallen as demand has risen among private practices, small clinics, and community hospitals looking for ways to enter mainstream digital x-ray. Execs at Carestream Health believe this could be the perfect pairing for them.

Before its acquisition by Carestream, Quantum focused heavily on selling lower cost digital radiography products to private practice, imaging centers, orthopedic facilities, clinics, and small hospitals in the U.S. Its portfolio now rounds out Carestream's own CR systems and its family of DRX-1 wireless digital upgrades, entry-level RIS/PACS and archive solutions, and medical film printers.

"Since we are doing 70% of our business outside the U.S. and they do 90% of their business in the U.S., we will bring their products into our global distribution network where we have a very well-established presence," said Markus Lusser, Carestream's senior vice president of global medical sales and services. "With their presence in the U.S. and in the smaller hospital space and the practice or clinic space, we will get broader access for our products here."

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