E-Z-Em, ISG agree to cooperate in imaging

E-Z-Em, the dominant supplier of barium sulfate contrast mediafor gastrointestinal imaging, agreed last week to invest a minimumof $1.1 million in the three-dimensional image processing effortsof ISG Technologies of Mississauga, Ontario.

The two firms also plan to cooperate in the development ofnew technology. There will not be a direct marketing relationshipbetween the companies at first, although ISG hopes to benefitfrom E-Z-Em's established position and contacts in the medicaldiagnostic imaging field, said Michael M. Greenberg, ISG president.

ISG will continue to sell its 3-D workstations through SummitMedical Technologies of Hudson, OH, Greenberg said. The firm willalso continue to supply image processing equipment to Philipson an OEM basis. Combined Summit and Philips sales of ISG technologyin the 1990 calender year amounted to about $10 million, he said.

This marketing strategy has proved successful for the 3-D company.ISG announced its first profitable quarter since entering themedical field. The firm doubled revenues in the second quarter(end-December) of fiscal 1991 from $1.5 million to $3.2 millionand had a slight profit of $70,000 (see graph). Profits are almostunheard of among dedicated 3-D medical workstation companies,Greenberg noted.

E-Z-Em has been exploring ways to diversify out of its basebarium business into areas of more exciting growth, and has alreadyentered the field of computer systems. The firm makes and sellsa radiology information system called AIM. Eventually, E-Z-Emexpects to integrate images with the RIS, said Howard S. Stern,chairman, president and CEO.

E-Z-Em had been exploring investment in HipGraphics, a 3-Dventure initiated at Johns Hopkins University, along with otherimage processing alternatives (SCAN 12/13/89). The company optedfor cooperation with ISG because of its advanced technology andmarket experience, Stern said. "There is no sense reinventingthe wheel," he told SCAN.

While E-Z-Em's barium business might appear low-tech comparedwith ISG's workstations, the two companies have complementaryvisions of the future, Greenberg said.

"Our expertise is in an area E-Z-Em has identified asstrategic to them, and their expertise is clearly in an area ofvital interest to us, namely the diagnostic imaging industry,"he said.

Both companies have developed technology oriented to the surgicalarena. E-Z-Em's Surgical Dynamics subsidiary makes the Nucleotomedevice for treatment of herniated disks. ISG has developed a 3-Dwand that surgeons can use intraoperatively. There is a possibilityfor cooperation in this area in the future along with imagingproduct development, the executives said.

E-Z-Em's $1.1 million will be used to purchase ISG debenturesthat may be converted to about 6% of ISG stock. The barium supplierwill have an option to increase this equity position to 20% ofISG common shares.