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The role that flat panel detectors (FPDs) play in the medical imaging market can be easy to overlook. Unlike the medical imaging systems that are directly promoted to providers through specialist sales channels and trade shows like RSNA, developments in the FPD market are not always as visible. They are an essential component within X-ray imaging systems, and dynamics in this market are facilitating digitalisation globally. However, despite this lack of mainstream coverage, several pervasive trends continue to impact the market away from the spotlight, as highlighted by senior market analyst Graham Cooke and senior market analyst Bhvita Jani in their upcoming report Medical Flat Panel Detector Supply – World – 2022.

“What is important to remember is that a lot of the trends in the FPD market echo the trends for X-ray systems,” highlights Cooke. “Covid has obviously been a big part of that story, so, as in the wider market, 2020 saw a huge increase in sales of mobile systems, which was reflected in a similar increase in sales of static panels. At the same time, with lots of elective surgeries canceled globally, sales of dynamic panels, most frequently used for interventional procedures, fell drastically.

“Now, as the battle against Covid has started to subside, the market has started to rebalance itself somewhat, and sales of dynamic panels for interventional equipment are starting to increase once again, and sales of static panels are coming down to where they were before the pandemic.”

The Chinese Contingent

As with the broader medical imaging market, however, the market disruption caused by the Covid pandemic has taken place against the backdrop of wider, more sustained trends. One of the most notable in the flat panel detector market is the continuing rise of Chinese vendors, and the impact that they are having on the wider global market. The most noticeable effect of the rise of iRay and other such vendors is on pricing. The report forecasts that globally, unit sales will increase by almost 20% between 2020 and 2025. However, over the same period, the revenues taken from these sales will decrease around 12%, from $2.06bn to little over $1.81bn. While a readjustment from the pandemic will impact revenues to some degree, with mobile X-ray being a key diagnostic tool in Covid care, the decline is predominantly a result of Chinese vendors being increasingly aggressive and depressing the average FPD selling price. Resultantly the average selling price of a detector is set to fall more than 25% between 2019 and 2025.

“This trend has been so significant, and there has been such a level of competition that margins have been jeopardised,” explains Jani. “So large, market leading multinational vendors, such as Varex, for example, have been forced to re-evaluate their supply chains, source components from less expensive suppliers, and even open manufacturing facilities in China to keep their costs down.

“This all reflects how hard it is to compete with some of the Chinese vendors. In the past there have been concerns about the reliability of the Chinese brand detectors, and the quality of the detectors from some vendors has been very poor. However, more recently the leading Chinese vendors are making good progress, they have improved the quality and reliability of their panels, allowing them to make much more of a global footprint, and they are taking market share.”

Budget Bloodbath

This encroachment will have the greatest impact at the lower pricing tiers. “One of the real opportunities for flat panel detectors over the next few years is in developing countries, where analogue and computed radiography technology still has a sizable installed base,” Cooke emphasises.

“Over time, these analogue X-ray systems in emerging countries will continue to be replaced by digital technology, giving X-ray vendors a chance to sell either new digital systems, or retrofit kits, as providers make the switch.”

These markets, which have not yet fully transitioned to digital radiography are markets where affordability is often providers’ primary concern, and so represent prime opportunities for lower priced Chinese FPD vendors. One way in which the established market leaders can defend their position is at the higher price tiers and in the more advanced markets.

“One way the FPD market will evolve in the next few years is we will see increasing consolidation. The most innovative smaller FPD vendors could become acquisition targets for some of the largest players in the market. Those that lack unique capability, on the other hand, could be forced to retreat” opines Jani. “We have already seen this to a degree, as one of the bigger acquisitions in recent years was Varex’s acquisition of Direct Conversion, which specialises in photon counting.

“Larger imaging modality vendors are set to develop photon counting technology in house, and there have already been acquisitions to this end, with GE and Canon, which have bought Prismatic Sensors and Redlen Technologies respectively. However, the smaller players are likely to forge partnerships in order to target the PCCT market.”

Decision Maker’s Moves

Another of the major changes impacting the flat panel detector market, as well as the broader medical imaging market is the fact that purchasing decisions are being made by personnel higher up in a provider’s management structure. Instead of purchases being made by the head of an imaging department, for example, they are more frequently being made at an executive level, often as part of a much broader and much more holistic deal.

“As such, though there is often great innovation when it comes to the clinical benefits, even in the developed markets the decision is often based on cost, durability and reliability,” notes Jani. “So, where the high-end players may be putting themselves in a difficult position, is if they are becoming too specialised and too fixated on the high-end solutions.

“The decision makers at financing departments, procurement departments and group purchasing organisations that are driving the decisions are unlikely to appreciate some of the clinical features of specialised, high-end systems. Or, more simply, their hands may be tied in terms of how much budget is available.

“This means that advanced capabilities and features may not have as much benefit on sales, even in developed markets, because a lot of decisions are still being made based on cost. So, ultimately, I think the FPD manufacturers which will most successfully increase their market share over the upcoming three to five years, will be the low-end panel manufacturers, particularly the Asian manufacturers, because they are going to have the most success in the highest growth markets.”

Targeting a Niche

This cost competitiveness is, more than any other single factor, likely to cause FPD vendors headaches over the coming years. But there are ways in which these vendors can give themselves an advantage. “These vendors need to find themselves a niche,” suggests Cooke.

“Further, they need to find a niche that works for them. That does offer considerable benefits and offers high quality at the right price point.”

One niche which could be successful is AI. Larger modality vendors are increasingly adding AI tools to enhance their imaging systems, with tools available for diagnosis and decision support, as well as workflow tools and image enhancement solutions. Smaller vendors may not have the resource to develop comparative systems, so AI tools included with the FPD could make a material difference.

“This link between hardware and software is already happening,” Jani explains. “While there are significant developments being made in R&D departments, at present, commercially available hardware is very comparable in terms of its image quality and other physical specifications.

“So Vieworks, for instance, must showcase the latest imaging software, which includes AI solutions for chest X-ray diagnosis support. I think the vendors will be more focused on software rather than hardware, because they can compete on hardware, but the added value will come from software.”

There is, however a caveat to this trend, continues Jani.

“Due to flat panel detector vendors’ margins being severely jeopardised in previous years through hardware sales alone, software may play a fundamental role in providing an alternate and more profitable revenue stream. Uptake of such software is restricted however to high-end facilities in developed markets, such as the United States and Western Europe, where clinical precision still holds some precedence.”

Ultimately, for many vendors the flat panel detector market could be a challenging place to be for the coming years. Although unit shipments are set to increase significantly, revenue growth is for the most part, expected to be low single digits at best as vendors engage in pricing wars. The decline in average selling prices of systems may have lessened from its peak, but with annual falls of mid-single-digit percentages, that news will be limited salve for vendors.

Innovation to the Rescue

More positively, it is a market rich in opportunity and innovation, as Cooke points out. “There will be more feature developments from detector manufacturers, using software to enhance the image processing capabilities, dose tracking, the storage of images on the detectors, for example. Other developments are also in the works; long length imaging to enable spinal images without stitching, not to mention upcoming hardware optimisations such as flexible TFT substrates and IGZO panels.”

Flexible FPD panels consist of a structured layer of amorphous selenium on a flexible thin film transistor and offer high image quality, while offering better damage resistance than the ubiquitous glass panels. IGZO panels, meanwhile, combine the strengths of both of the most common types of FPDs on the market today. These include the strong switching performance of TFT panels, as well as the high-resolution capabilities of CMOS panels.

However, as Jani highlights “market potential of hardware innovation, such as IGZO and flexible detectors, has been slower than anticipated by FPD vendors.”

“Despite FPD vendor marketing being evident, unless imaging OEMs are openly requesting or endorsing such technology uptake is restricted, Siemens’ endorsement of photon counting CT, for example.

“As a result, FPD vendors are increasingly trying to push awareness of such hardware features direct to end users and clinicians, which reap the most benefit. As with photon counting, despite the clinical and diagnostic benefits of hardware innovation, the initial higher price premium will hinder market penetration.”

Whether any of these developments will gain traction over the longer term remains to be seen, but their imminent approach means that, for larger Western vendors, there are at least new tools on the horizon to address the pricing competition. Chinese vendors continue to be a big threat, but with these new tools emerging, higher-end vendors will have a bigger arsenal in the fight to keep their place at the top of the pack.

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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 Research. To view other recent Premium Insights that are part of the service please click here