Tag Archives: Canon

Signify Premium Insight: Tribun’s Tightrope on Canon Double Date

The march of digital pathology into enterprise imaging has continued with the news that Canon Medical has partnered with Tribun Health.

The agreement will see Canon add Tribun’s digital pathology capabilities to the Japanese vendor’s enterprise imaging roadmap, enabling it to offer providers solutions across a growing number of departments, including radiology, cardiology, endoscopy and pathology. It also illustrates the growing importance of digital pathology to informatics vendors. With Canon becoming just the latest example of a large international imaging vendor to announce a deal with a digital pathology specialist, eagerly following in the footsteps of Siemens Healthineers, Fujifilm and GE HealthCare. While Fujifilm decided to acquire Inspirata and Siemens chose the partnership route with Proscia. GE HealthCare also chose the partnership route, also with Tribun, adding an interesting dynamic to Canon’s announcement.

Signify Premium Insight: Q4 Vendor Financials Round-Up – A Firm Footing and the Stability it Demands

As medical imaging vendors headed into 2023, there was considerable change afoot. Aside from the broader healthcare challenges that beset providers such as a shortage of physicians, staff burnout and the backlog of elective procedures resulting from the Covid pandemic, vendors also had their own specific strategic goals.

For some, this meant difficult times ahead, with sizable staff lay-offs; for others the focus was on new opportunities, with GE HealthCare spinning out of the broader GE conglomerate; others still had to address challenges beyond their control, with supply chain and logistics issues all playing their part. Despite these differing priorities, vendors’ financial performances were, overall, positive in Q4 2022, albeit with some very dark clouds on the horizon.

Signify Premium Insight: Fujifilm’s Roadmap to Reality

It will soon be the second anniversary of the completion of Fujifilm’s acquisition of Hitachi’s medical imaging business.

The deal, which was first announced in 2019 for a value of $1.55bn, saw Fujifilm bolster its medical imaging portfolio, adding CT and MRI capability and expanding its ultrasound capability to complement Fujifilm’s strong X-ray, endoscopy and IT offerings. By acquiring such capability, Fujifilm aimed to be able to compete more closely with medical imaging’s leading vendors, GE HealthCare, Siemens Healthineers and Philips, allowing the Japanese vendor to tender for large, multi-modality deals.

Integrating one business into another is a long-term process, but, as the second anniversary rolls around, what progress has been made so far?

Signify Premium Insight: Re-born in the USA

This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. The content is only available to companies that have subscribed to this paid-for service. To view other recent Premium Insights that are part of the service please click here.

Canon has recently announced its intention to redouble its efforts on the medical imaging market in the US, with the launch of Canon Healthcare USA.

With the new subsidiary, Canon aims to accelerate the growth of its medical business in the US, as part of its ongoing ‘Excellent Global Corporation Plan’. The vendor hopes to improve its competitiveness across medical imaging, noting that its CT, MRI and Ultrasound businesses, as well its X-ray component businesses were particular areas of focus.

Under the plans, Canon will establish Canon Healthcare USA at a new location in the Cleveland area and will see the new venture take over a portion of product sales and service from Canon Medical Systems, which until takeover by Canon in 2016, traded as Toshiba Medical. The move will put it in tighter competition with the likes of GE HealthCare, Philips and Siemens Healthineers, but, will the Japanese vendor be able to hold its own?

The Signify View

The United States has long been the world’s most lucrative medical imaging market. As such for any medical imaging vendor harbouring any grand ambitions, it is inevitable that the region must, sooner or later, be targeted. Canon already has a sizable presence in the US, carving out a reasonable market share in several key modalities. In ultrasound, for example, Canon can lay claim to the fourth highest share of the North American market in 2021, with a market share of seven percent. Similarly, in the North American MRI market, Canon can boast of market share of around five percent, while the vendor lays claim to around nine percent market share in CT, once taking the number four spot in both.

However, as a vendor with grand ambitions, Canon is seeking to significantly improve these figures. According to one press release from the vendor, for example, Canon hopes to ultimately capture “the number one share of the global CT market at an early stage”.  With such focus in place, Canon was bound to make a bolder move, and there were several reasons why it chose to make it now.

One of the factors providing impetus for Canon to focus on the US market at present is simply, that it’s where its best growth prospects lie. The vendor has, in the past focused much of its effort at its home market, targeting sales in Japan. This has been rewarded with the vendor capturing a significant market share across modalities in its domestic market. However, government spending in Japan has declined, leading to tougher market conditions in its home market, and a resultant decline in demand. This has been exacerbated by global market conditions and supply chain and logistics challenges. These factors combined mean that Japan does not represent the opportunity it may have done in the past.

Location Selection

There are, of course, other markets where Canon could have focused in order to grow. The US is, after all, perhaps the most fiercely fought market in world. However, there are a many reasons that make other markets less appealing. Europe, for example, is difficult to navigate, with the continent’s fragmentation into numerous individual markets making it complex for a vendor to efficiently tackle. Emerging markets offer considerable growth opportunities but are volatile, and, particularly at a time when the world is facing significant macroeconomic challenges, are a far riskier proposition than may be palatable.

Further to this, and despite the establishment of a new subsidiary, Canon also has some presence in the US. Between Canon Medical’s sites and sales networks that were made available through the Toshiba acquisition, as well as the Ohio base of recent Canon acquisition Quality Electrodynamic Devices, the foothold the Japanese vendor already has in the market, offers an attractive base from which it can grow.

What’s more, having this network, even if slight compared to its chief competitors of GE HealthCare, Philips and Siemens Healthineers, makes Canon a more viable option in the US. While there are some differences in the image quality and capabilities between systems from different vendors, in many cases these are slight, with advantages in technology being, for the most part, temporary. With this being the case, providers must look to other factors, including total cost of ownership, when making their purchasing decisions. As such the after-sales service and support that Canon can offer with its already established network, bolstered by its new subsidiary, will allow it to compete on a more even footing with the other players in the market.

A Tailored Fit

In addition to better serving customers, having this greater presence will also enable it to tailor products, and their marketing to better target American customers. Canon has indicated plans on this front, highlighting that as part of the launch of its new American subsidiary, it will partner with medical institutions to research the utilisation and implementation of its more advanced medical imaging systems. This will not only help introduce Canon’s products to new customers in the in US, and, the vendor will no doubt hope, foster some positive sentiment among the radiology community, but it will also allow Canon to ensure its products can fit seamlessly into American hospital’s imaging workflow.

This could be particularly important for photon-counting CT. At present only Siemens Healthineers and Samsung Neurologica have solutions approved by regulators and commercially available. Canon has been making efforts in photon counting CT, having purchased Redlen Technologies in 2021, in part to secure supply of semiconductor technology necessary in producing photon counting CT detectors, and having prototype installations active in Japan. Canon’s strides in this nascent market, along with a greater focus on the US, could enable it to become one of early market leaders in the young technology. Maintaining its presence over the long term would still be a challenge as the likes of GE and Philips release their own systems but getting to market quicker and establishing an installed base earlier, would at least give it the advantages of incumbency. While Siemens Healthineers and GE’s positions in the broader CT market are far higher than any other vendors, such, a move by Canon could help displace Philips for third, with the Dutch vendor harbouring a market share only slightly higher than that of Canon.

The Scale of the Problem

Ultimately, however, these facets of Canon’s strategy fall into a much greater trend which is particularly pertinent for all Asian vendors. Above all else these vendors need scale. In its latest financial results, Canon forecasts full-year revenues of $3.9bn for FY 2022 in its medical segment. A significant figure but still only around a third of what Siemens made in 2022 in its Imaging segment alone. Canon is a significant global player, but it still lacks scale compared to its market-leading competitors. This lack of scale in healthcare, which is affecting other Asian vendors, including compatriots Fujifilm, Shimadzu and Konica Minolta, as well as other Asian vendors including Samsung, United Imaging and Mindray, makes competing at the top that much harder. With smaller revenues, Canon has less to invest in the research and development that it needs to fight at the top, it has less resource to pour into portfolio expansion and software solutions which will allow it to compete for broader enterprise-wide tenders; it also is less able to maintain the same density of service and maintenance teams, perhaps offering larger vendors an edge as equipment downtime and managed service elements become increasingly important to providers.

These challenges will have to be faced, but, in the near term, increasingly focusing on capitalising on the lucrative US market, and using a new subsidiary to realise the opportunities it offers, provide a sensible first salvo in what is sure to be a lengthy campaign.

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Signify Premium Insight: Vendor Financials Roundup – The Health of the Imaging Sector Q2 2022

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here.

Medical imaging vendors, like their counterparts in other industries, are having to tackle challenges that haven’t had to be faced in years or even decades. Some of these are universal. Inflation, for example. In some countries inflation is at levels not seen in forty years, energy costs have hit new highs impacting manufacturing and shipping, and logistics headaches continue to disrupt supply chains. Some problems are more specific to healthcare such as staff shortages and staff burnout after the toll of the Covid-19 pandemic and enormous backlog of elective procedures that are yet to be undertaken.

Given this gloomy outlook, it would be natural to expect that these challenges are being reflected in medical imaging vendors’ bottom lines, however, for the most part, their Q2 financial results appear remarkably robust.


The Signify View

Almost across the board, vendors have reported revenues higher than they did so in the equivalent quarter a year ago. In most cases these gains are modest, with GE HealthCare, for example, seeing growth of 1.4% while Philips saw growth in its diagnosis and treatment business of 1.9%. However, even given the size of the increases they are still notable, particularly given that for the same quarter a year earlier the market was performing strongly and had largely recovered from the lows seen in 2020 at the pandemic’s peak. Other vendors are seeing even more pronounced gains, with Shimadzu’s Medical Systems group and Konica Minolta’s Healthcare group seeing rises of 11.9% and 12.2% respectively.

There are several reasons for this outwardly surprising robustness. Chief among them is the natural delay inherent in healthcare procurement. Medical imaging, as with healthcare in general, tends to react slowly to changes in the market. Contracts are increasingly lengthy, procurement plans are in place well before they are acted upon and, barring unusual spikes such as that caused by the Covid-19 pandemic, demand is consistent and predictable. As such, wider trends that will, in time, come to have an impact are not yet severely damaging medical imaging vendors’ bottom lines. This could well change over time as economic challenges at hospitals start to filter through to their purchasing plans and therefore medical imaging vendors, while these vendors will at the same time be hit by supply-side costs, with energy, raw materials and logistics all becoming more expensive.

In response to these rising costs, vendors will raise prices. Several vendors referenced this in their financial presentations, with some even producing schematics to illustrate the price increases in the short-to-mid-term, as pricing measures chase cost increases to restore margins. The results of these price increases will not be felt right away. This is both a reflection of the implementation of the increases, but also stemming from vendors’ willingness to accommodate the budgetary challenges of providers.

Results to Order

Another factor supporting the financial results of medical imaging vendors is that a glut of orders seen in Q3 2021, which vendors’ boasted about in their financial presentations for that quarter, are presently being turned into revenues. This wealth of orders was the result of both the supply chain issues that plagued vendors for much of last year and the fruits of emergency Covid-spending that providers began to wield against the backlog in procedures rather than Covid-care itself. The rapid inflation seen over the last year will have compromised the margin vendors could have expected from these orders, but they have at least helped sustain revenue growth.

As these orders are fulfilled, vendors will need to carefully watch their order books. In doing so they will be best placed to react quickly and balance their need to raise prices and sustain margin with customers’ ability to pay. At present, for most vendors, order books continue to look healthy. In its presentation, Philips boasted of an ‘all-time high orderbook’, Canon noted record order levels for its Medical business, Siemens Healthineers mentioned ‘very good growth in equipment orders’ and GE referred to 1% order growth, albeit comprised of 5% service order growth and a 1% decline in equipment order growth.

Demanding Clientele

Medical imaging vendors do, at least, have the luxury of continued demand. The disruption caused by the Covid pandemic means that providers are servicing a backlog of both elective procedures and other delayed imaging exams, with for example, screening programmes paused amidst the pandemic. To meet this elevated demand, providers are, for the time being, willing to invest in equipment that is proven to deliver improved operational efficiency, both on the hardware and software side. This willingness is, in many countries, and for the time being, supported by post-pandemic economic stimulus packages. As economic pressures mount, governments could reduce or remove this extra spending, impacting hospitals’ ability to purchase new equipment and therefore presenting a challenge to vendors. This is likely to be further exacerbated by the servicing of the procedural backlog. As the size of the backlog diminishes, so too does the necessity for new equipment.

As these effects take hold, vendors will have to react. That could mean simply becoming more aggressive on pricing, focusing on value product ranges or becoming increasingly flexible with regards to payment schedules and purchasing options. Regardless, it is unlikely that this demand will be sustained indefinitely.

So the World Turns

Another factor that held significant sway over the fortunes of medical imaging vendors over the quarter was the regional differences. In some cases this proved a boon, with, for example, Japanese vendors Fujifilm, Canon, Konica Minolta, and Shimadzu all benefiting from the depreciation of the yen, making their products more affordable in export markets.

In other cases, the trends were less favourable. Unlike many major markets, China continued to enforce Covid restrictions in some regions throughout the quarter. Such restrictions severely impacted vendors’ fortunes in the market. This not only manifest in the form of weaker sales, with declines in revenue for a number of vendors, but also added to the logistical problems vendors faced. Philips, for instance, noted that production at several of its Chinese factories, as well as those of its suppliers was suspended for two months during the quarter. This exacerbated supply chain challenges and increased costs, as well as impacting the vendor’s ability to pursue sales activities in the region. One of the only vendors to have enjoyed growth in China was Mindray, which saw overall revenues improve by more than 16% in the quarter. While still affected by lockdowns, the domestic market offered the vendor an advantage compared to some of its international peers. This is likely to continue in the future given the economic conditions which benefit domestic companies, as well as Chinese initiatives such as the Thousand Counties policy and Sunshine procurement plans which can, either directly, or incidentally support Chinese healthcare vendors.

Chinese firms such as Mindray are also looking to target emerging markets such as India. Now could be an opportune time for the likes of Mindray to capitalise, particularly if large international vendors look to limit their exposure to some markets amidst increasing economic volatility. Conversely, in the case of India, Chinese vendors may also find they have increased competition from Indian companies, while themselves facing increasingly protectionist procurement policies.

Accepting the Flow

Such details are, however, eddies in the broader currents of medical imaging. More generally, despite the economic headwinds, vendors are in a relatively strong position. Margins may have to temporarily be sacrificed in the near term to secure and store raw materials and components to ride out disruption to supply chains, and to absorb price shocks and offer flexibility to customers. Vendors may also choose to sacrifice some opportunities for rapid growth in emerging markets in a bid to reduce their exposure to the subsequent volatility and to be able to devote themselves to their core, established markets. Such moves, however, are priced into vendors’ outlooks, a fact reflected in their financial forecasts which remain steady or show only a slight decline.

Ultimately, these vendors exude stability amid broader economic volatility, and will do so for at least 12-18 months. Beyond this, the levels of inflation, energy prices, stability in emerging markets, geopolitical challenges, government spending priorities, staff shortages and recruitment challenges, additional waves of Covid-19 and backlogs for diseases like cancer make forecasting difficult. In these times, the onus is on the leadership teams at individual vendors to be able to capitalise on their strengths. Vendors will, in essence, be forced to chart their own courses.

About Signify Premium Insights

This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here