MRI sets new U.S. record in revenue and unit sales

No end appears in sight to sales boom

A powerful fourth quarter turned 2001 into a record year for MRI sales in the U.S., as the industry topped previous heights in both revenues and units sold. Rising procedure volumes for traditional applications and the promise of new ones coming on the heels of high-performance equipment installations have created euphoria among industry executives. Many believe sales will continue to grow.

Last year, vendors sold 949 new MRI systems for $1.2 billion, according to the National Electrical Manufacturers Association (NEMA), topping the previous high of 928 units and $1.074 billion set in 1999. It was the fourth consecutive year the industry sold close to or beyond the billion dollar mark. Increasing revenue by nearly 20%, as the industry did in 2001 ($1.202 billion versus $1.041 the previous year), may indicate that MR vendors will be treated to steady growth.

"Demand doesn't show any signs of slowing down," said Nancy Gillen, vice president of Siemens' MR division. "There are a lot of people out there looking to buy."

A major driver is the sale of high-performance systems. Last year, 62% of the units sold in the U.S. were cylindrical 1.5T systems. Demand for these systems is coming primarily because of the rising volume of MR procedures. This rise, which industry observers believe is growing annually at about 15%, favors the purchase of scanners with high throughput.

"The U.S. is fast exchanging its installed base of 1.5T systems for newer (1.5T) systems," said Jacques Coumans, Ph.D., Philips' global marketing director for MR. "Meanwhile the increase in procedure volume is leading to more interest by sites, hospitals and imaging centers, that do not have this modality."

The first quarter of 2002 could be stellar. Vendors entered the new year with a staggering backlog of 349 orders valued at $457.2 million, according to NEMA statistics. Not all-but certainly many-of these units will ship before the end of March, setting the stage for another record year. This is the way 2001 began, as the industry achieved nearly $327 million in revenue in Q1 on the sale of 275 units.

"We expect 2002 to be another record-breaking year," Coumans said. "We do not see anything that would predict a downturn."

Industries typically consolidate during tough economic times. The imaging industry has consolidated during one of the best. The effects of merger mania will be seen in the coming months as Philips takes full advantage of the engineering gains from its completed acquisition in October of Marconi Medical Systems. DI SCAN has learned that Philips is launching the Panorama 0.6T (formerly known as the Marconi Infinion HFO) at the European Congress of Radiology, which opened March 1 in Vienna.

"The system was designed to meet the tough homogeneity criteria in Germany, so this is a good time to launch in Europe," Coumans said. He noted that lower field open scanners cannot meet the German requirement. Philips' North American effort will pick up steam following a push by the company for its 0.6T system at the annual meeting of the American Society of Neruoradiology May 13 to 17, Coumans said. The scanner, which will be priced around $1.4 million in the U.S. to compete with GE's 0.7T OpenSpeed and Hitachi's 0.7T Altaire, cleared the FDA Jan. 22.

Philips has organized its commercial offerings into two major families, open and closed. The ultrashort-bore Infinion 1.5T (formerly Marconi's) is featured as a high-field open product. Philips' own Panorama 1.0T will fall in behind it, followed by the Panorama 0.6T and Panorama 0.23T (a modified Marconi Proview, that had been sourced from Marconi for the past two years).

Industry executives have long been predicting that higher field open MRs would reignite interest in the open MR segment. The slow appearance of these products may have dampened customer interest in the traditional open market, however, as prospective customers have waited for the newer systems to appear. Last year, mid- and low-field open systems accounted for only 23% of the units sold.

With the arrival of more higher field opens, customers are beginning to get comfortable again with the idea of low- and mid-field open scanners, said Anita L. Bowler, product manager for Toshiba's 0.35T Opart, the industry's first superconducting open scanner. They can compare the image quality, applications, and speed of operation of these two classes of scanners.

"Customers are coming back," she said. "There is more information and physicians are more educated, and I think you will see a continuing increase in the open market as customers compare the relative benefits and costs."

Interest in open systems may be spurred further by the commercial launch later this year of Rhapsody, Siemens' 1T open system and Philips' Panorama 1.0T. These two additions will join offerings already available from GE (0.7T OpenSpeed) and Hitachi (0.7T Altaire), as well as Philips (Panorama 0.6T), possibly creating a critical mass of higher field open systems and putting to rest any remaining hesitation among prospective buyers.

The very high field 3T systems will also add to future growth. GE is already in the market with one such system, its Signa VH/i. Philips and Siemens are expected to join in soon with whole-body systems of their own.

"We are very bullish in the 3T area," said Dennis Cooke, general manager of the global MR business for GE Medical Systems. "We are seeing a lot of interest. Orders are starting to come in."

Two sales opportunities promise to drive the future of very high field imaging: neurology and cardiology. Advanced brain applications at 3T, which center on functional imaging, are still largely confined to research centers, but they could easily enter the clinical mainstream in the next several years. Siemens Medical Solutions already offers a 3T head scanner to satisfy demand for high-powered brain scans. Whole-body systems will let clinical facilities choose brain or heart studies. Cardiologists and radiologists are also being attracted to 1.5T scanners optimized for scanning the heart.

"We love dealing with customers who have great relationships between cardiology and radiology, because they seem to be the ones pushing the envelope in cardiac MR," Cooke said. "The radiologist is really knowledgeable about MR, and the cardiologist obviously knows the heart."

Orthopedists are also getting interested in MR. Demand from this group historically has been for scanners dedicated to joint imaging. But that is beginning to change, according to Mona Theobald, GE general manger for MR, Americas sales and marketing.

"There is much more interest among this group, which is now beginning to look at whole-body scanners," she said. "They want to capture spinal exams, as well as those for shoulders and knees."

The installed base may expand even more as smaller hospitals cut ties with mobile MR operators and buy fixed systems of their own. This change is already beginning to happen, according to Gillen, in response to the overall rising demand for MR studies, as well as a continuing moderation in equipment prices. Still to be realized is the potential of MR-guided interventions.

"We are seeing a lot of new avenues for MR and some of them are just in their infancy," Gillen said.