Picker plans reentry into Japan; searches for ultrasound opportunity

Resuscitated Japanese sales, blooming international market shareand a possible play in ultrasound should help Picker Internationalavoid sluggish sales in a maturing U.S. medical imaging market,according to Cary J. Nolan, president and CEO.

With no new modality on the horizon comparable to MRI, the U.S.medical imaging market is expected to grow during the next decadeat about half the 9% compounded annual rate experienced duringthe roaring 1980s, he said.

International sales will advance more quickly in the 1990sbecause the density of advanced imaging equipment is lower outsidethe U.S. Cleveland-based Picker stands to grow internationallyboth by expanding with the market and capturing market share fromother vendors, Nolan told SCAN.

Picker once focused almost exclusively on the U.S., but internationalsales now make up a third of its total business. The vendor isaiming at a 50/50 split of U.S. and international sales. Pickerset up a Paris-based organization in September to build WesternEuropean business outside its existing base in Germany. At thesame time, Picker chose Shimadzu as its exclusive distributorof Prism nuclear medicine cameras in Japan (SCAN 10/9/91).

Shimadzu has a strong track record in nuclear medicine sales,Nolan said. The Japanese medical imaging vendor had a long distributionrelationship with Siemens in the nuclear field, which has beenterminated.

Although Japan has a high density of CT and other advancedimaging systems, Picker has not actively sold CT or MRI theresince breaking off from its Toray Fuji Picker (TFP) joint venturelast December. Picker Japan, a small direct organization, providesservice and customer support for the vendor's installed base.Picker is considering ways to revive CT and MRI sales in thisimportant national market.

"While we are not actively marketing CT and MR in Japan,we have discussions under way with companies that might providean opportunity to do something analogous to the Shimadzu (nuclearagreement)," Nolan said.

Picker did not sell single-photon emission computed tomographycameras in Japan prior to its agreement with Shimadzu. The vendorexpanded its nuclear product line last year with the introductionof single- and dual-detector units combining new gantries withacquisition and processing technology from its sophisticated triple-headPrism SPECT system.

TFP had been given responsibility to develop a new ultrasoundsystem for Picker, but the vendor was never able to arrange areentry into that rapidly expanding imaging modality. Picker atone time was a leading supplier of B-scan ultrasound units, butlost its position with the advent of real-time scanners.

With prospects bright for ultrasound both internationally andin the U.S., Picker would like to return to the fray. Chancesare the vendor will acquire rather than develop an ultrasoundoffering, Nolan said.

"We continue to examine opportunities to reenter and bea player in the ultrasound business," he said. Picker isalready a strong force in the German ultrasound market througha distribution relationship with Hitachi, he noted.

Ultrasound, nuclear and standard x-ray sales will offer thebest growth opportunity in the U.S. during the 1990s, Nolan said.Ultrasound is the most rapidly expanding imaging modality, withsales expected to grow at a 10% to 15% annual rate over the nextseveral years. Nuclear medicine may grow at close to that rate,but from a smaller base level. Standard x-ray sales are growing,but more slowly, at 4% to 5% a year. Certain areas of x-ray, suchas vascular and cardiac imaging, are healthy, he said.

Picker has invested considerable funds in x-ray R&D anddistribution during the past year. The vendor brought x-ray inline with other modalities by assigning about 20 technical employeesas x-ray specialists. These specialists will assist Picker salesrepresentatives in its 15 U.S. sales districts much the same waytechnical support is provided for MRI, he said.

The installed base of CT scanners in the U.S. has reached about6000 and will not grow much beyond this level. Picker has 1200of those installed CT systems and is well positioned for replacementsales.

MRI has more room to grow in the U.S. There are about 2500MRI systems installed in this market. That number is expectedto peak at about 4000, Nolan said. Picker will introduce a newMRI magnet at the Radiological Society of North America meetingnext month in Chicago. The new magnet does not require nitrogen,he said.

Orders for U.S. medical imaging systems were surprisingly robustover the first six months of this year, despite regulatory joltshitting the market, Nolan said. The hottest game in town thesedays is to guess how badly physician payment reform, changes incapital reimbursement and restrictions on referring-physicianinvestment in medical joint venture will depress sales.

Picker had a strong six months ending September, Nolan said.Revenues rose 14%, from $350 million to $400 million. The vendoranticipates revenues of $900 million for its current fiscal year,up 10.5% from $814 million last year. Much--although not all--ofthat growth was due to Picker's growth in non-U.S. markets, hesaid.