Gamma cameras slump, PET/CT booms in 2005

Demand dropped for gamma cameras in 2005, while it boomed for PET/CT. Trends driving this teeter-totter market, which links these two related but very different modalities, are continuing but moderating, according to industry sources.

Pundits ascribe the declining interest in gamma cameras to the lack of technological development in both hardware and radiotracers. Conversely, the growth in PET/CT is being driven by the need for sites with just PET scanners to upgrade and sites without positron imaging to provide this capability.

The obvious exception to the argument that gamma cameras are mired in a dearth of innovation is the appearance of multislice SPECT/CT. These systems are having a negligible effect on the overall market, however.

The introduction of SPECT/CT two years ago sparked hope that hybrids could kindle new interest in SPECT imaging. Some in the industry compared SPECT/CT to PET/CT, which five years earlier helped fuel positron imaging in the U.S., amid expanding PET reimbursement. But anyone looking for a similar effect on SPECT imaging has been, and will continue to be, disappointed.

"We need to do more clinical research to prove the value of SPECT/CT and to increase its acceptance in the mainstream," said Deepak Malhotra, senior director of marketing and business development for Philips nuclear medicine.

Despite the poor showing by gamma cameras, the overall market for nuclear medicine in 2005 grew compared with the year before, according to estimates by the big three players in this industry. Consolidated industry estimates peg the 2005 market for new gamma cameras and PET/CTs shipped in 2005 at about $740 million, up about 7% over 2004.

Details reveal a faltering market, however, for gamma cameras, which last year accounted for about $350 million in new unit shipments compared with $365 million in 2003 and $370 million in 2004. Last year's 6% shortfall compared with 2004 resulted mostly from a dismal fourth quarter.

"There was a 25% drop in terms of volume," said Markus B. Lusser, vice president of global marketing and sales for Siemens molecular imaging. "This was more dramatic than we had anticipated. We now see some indications that the market will pick up a little this year but not to the level we had in previous years."

PET/CT brought the nuc med industry into the light with a 23% jump in new unit shipments in the U.S., generating revenues of $390 million last year compared with $310 million in 2003 and $315 million in 2004. The surge in demand for PET/CT came even though the installed base of PET/CT is not being fully utilized.

Overcapacity characterizes many of the PET/CT sites now operating. But that has not dissuaded new buyers who want to open their own stream of positron imaging revenues. Demand for PET/CT is continuing in 2005 but not at the level of the previous year.

"We predict a growth rate in terms of volume probably in the 10% to 12% range rather than the 20% range last year," Lusser said.

PET/CT rose last year partly at the expense of gamma cameras, according to Malhotra, who characterizes the two market segments as financially intertwined. Forced to make a choice between PET/CT and SPECT, customers in 2005 might have shifted dollars in a consolidated budget for nuclear medicine toward the high end of hybrid imaging.

Another factor may have been the issue of capacity. SPECT has saturated the U.S. marketplace, as most U.S. hospitals have at least one of the estimated 12,000 gamma cameras operating in the country, he said. PET/CT is far from such a saturation point with less than a fifth as many installations.

The market for gamma cameras historically has been among the most stable of any capital equipment market in medical imaging. The drop in shipments last year sounded a sobering note to vendors, who characterize the long-term trend as flat or declining. Of particular concern to Malhotra was the sharp decline in demand from the cardiology office segment. Here the rise in PET/CT demand was not a factor, as oncology rather than cardiology drives the purchase of these hybrid units.

Two factors may have triggered this decline, he said. The first relates to market saturation, as sales into this segment have boomed for the past five years. The second involves reimbursement concerns, specifically fears that Medicare payments will decline and that regulators may apply provisions of the Stark law to cardiology offices, thereby limiting utilization of gamma cameras.

Of the three major vendors, only GE reported optimism about its gamma camera sales in the near term. Hadi Moufarrej, general manager of global functional imaging at GE Healthcare, attributed his upbeat attitude to GE's involvement in the development of both hardware and radiotracers. Radiotracers on the horizon at GE's biosciences division, formerly Amersham, portend demand for new procedures, he said, a message the company is conveying to its prospective customers.

"GE is best positioned to figure out which (radiotracers) are coming first and which are coming after," Moufarrej said.

The company expects a boost in PET/CT on the heels of the commercial launch later this year of its FASTlab synthesizer of PET radiotracers. The cassette-driven product increases yields and speeds synthesis times of FDG tracers, while affording the flexibility needed to handle future radiotracers.

"FASTlab allows you to be [FDA-compliant] for manufacturing radiotracers without issues, because everything is based on the cassette," Moufarrej said.

Another driver of PET/CT sales this year and beyond is the need to replace the aging installed base of positron imaging equipment. A substantial number of dual- and quadslice PET/CTs are nearing the end of their useful lives. The need for replacement is greatest at sites that jumped on PET imaging. These institutions are now fighting the widespread perception among referring physicians that PET/CT is the only way to go. To remain competitive, they have to make the leap to PET/CT. The problem is that the equipment they now operate, stand-alone PET scanners, has virtually no resale value.

"You can more or less scrap them," Lusser said.

Siemens is working with these customers to absorb the cost of stepping up to PET/CT. The company is offering attractive trade-ins on dedicated PET systems, he said. Siemens then will refurbish some of the units for resale, depending on their performance capability, adding a CT scanner, when possible.

Philips is counting on the release of its Gemini TF (True Flight) PET/CT to keep its prospects bright. The new scanner, released March 3 at the European Congress of Radiology in Vienna, completes whole-body PET scans in less than 10 minutes, compared with 15 minutes or longer using conventional systems. This will hold true even for obese patients, who generally require additional scan time on conventional systems. Alternatively, users of the Gemini TF have the option to acquire data over the usual time period and generate images with increased sensitivity or specificity.

This year, several factors may affect PET/CT and gamma camera sales by GE and its competitors. Outpatient facilities targeted for reduced Medicare reimbursement starting next year due to the Deficit Reduction Act of 2005 might think twice about buying imaging equipment, Moufarrej said. He predicts that the impact on gamma cameras, however, will be minimal, as the cardiologists who buy many of these systems have some latitude in how they make up for payment cuts.

"If I am a nuclear cardiologist who must absorb a 6% or 7% reduction a day, I will try to do two more patients a week and recover my losses," he said.

The effect on PET/CT could be more difficult to make up.

"Not every site has a line-up of waiting patients," he said. "GE will help them. We will help our customers promote PET."