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In January, Clarius Mobile Health launched the latest version of its wireless handheld ultrasound scanners. The third-generation scanners are available in 10 different varieties, including a multipurpose scanner, as well as a range of nine speciality scanners, targeting a diverse selection of use cases, including abdominal, lung, cardiac, vascular, MSK, dermatology, and several veterinary applications.
Clarius says that the new models are around 30% smaller and lighter than the outgoing models and have been developed to be as easy as possible to use, with many settings and parameters being automatically set by AI. Also supporting new users are new pricing structures, including a subscription service, and an app with improved functionality.
The Signify View
The handheld ultrasound market is becoming and will for the foreseeable future continue to become more crowded. After a long period, in which the young market was dominated by just a handful of players, there has been a veritable explosion of vendors utilising new ultrasound technology to develop their own products. The results of this explosion are evident, with a whole host of vendors having released or planning to release their own handheld ultrasound systems. This list includes: GE, Philips, Fujifilm, Butterfly Network, Exo, Vave, EchoNous, Pulsenmore, Healcerion, eScopics, Biim, Somax Systems, Sigmax and many others. According to Signify Research’s Ultrasound Equipment – World Market 2021 report, all these vendors will be chasing a market forecast to be worth less than $270m in 2022. With that being the case, it will become increasingly difficult for vendors, and their products to stand proud of the milieu in order to secure sales.
Clarius has found one way to address this issue. Instead of targeting the hospital market and traditional POCUS applications, which is relatively crowded, being cornered by the likes of Philips, GE and Butterfly Network for handhelds, as well as vendors of compacts and carts such as Fujiflim SonoSite and Mindray, Clarius has focused its attention on clinical speciality markets in outpatient settings. This is the rationale behind the development of multiple speciality scanners in addition to a general-purpose scanner, instead of the more common approach of developing a single, multi-purpose system. Ultimately, to sell to specialists, Clarius thinks specialist products are required.
Trying to Stand Out
One of the changes the vendor has made, which better aligns it with its peers in the handheld ultrasound market is in offering a subscription-based purchase option. While standalone purchases of the devices can still be made, from $4,995, Clarius is now also offering the devices for a lower price of $2,995, if purchased with a membership costing $595 annually, which grants users access to advanced software features, including measurement packages and advanced workflow tools, and unlimited cloud exam management. This more flexible pricing puts the vendor on an equal footing with other leading vendors in the handheld ultrasound market. Clarius will hope it allows them to sell more scanners, and retain customers’ business on sticky, recurring deals. However, even if this is not the case, it’s competitive pricing will at least ensure that it is not spurned based on cost.
Where it does differ, however, is with regards to its useability focus. Other handheld vendors have tended to adopt AI in such a way as to enable novice ultrasound users to, with minimal training, perform advanced clinical examinations. Butterfly Network’s partnerships with Caption Health and Ultromics are a prime example of this, with the collaboration enabling users to both perform, interpret and quantify cardiac examinations. Clarius, in contrast, is instead focused on streamlining and automating the acquisition of images and incorporating use of the scanner into a physician’s workflow. Many specialists will use their Clarius scanners for a single task or handful of tasks. For the vendor it makes sense to use AI to make the completion of these specific tasks easier, rather than using AI to add additional capability, that is unlikely to have any meaningful sales impact in Clarius’ target markets. What’s more this focus on useability avoids some of the challenges that other vendors developing AI capability will have to face, such as attaining regulatory approval, and undertaking clinical validation. These are expensive and time consuming, so focusing on using AI for workflow means that Clarius can invest in other areas, or offer devices at a lower cost, depending on which it deems will net the most sales.
Segment Sophistication
The new devices from Clarius represent the vendor’s third generation of handheld ultrasound scanners, as such, unlike their peers which are still selling first and second generation hardware they have had two opportunities to refresh and improve the product. This is important as it will increasingly entice customers who are not at the forefront of technological adoption. Innovators and early adopters will be more willing to accept compromises in order to benefit from a novel device’s advantages. As handheld vendors target larger and larger potential markets, however, they will need to reach more mainstream customers, which will be less forgiving. This change is evident in Clarius’ new scanners. While the vendor highlights the scanners’ improved image quality, with the L20HD the only wireless 20 MHz scanner available, and resolution that Clarius says has only previously been seen in cart systems, the scanners also feature several ‘quality of life’ improvements. Factors like improved battery life, improved wireless connectivity, and liquid cooling to enable the scanners to be used for longer periods mean that specialists will be able to adopt the scanners without having to make significant compromises or endure significant periods of down time. Furthermore, the latest version of the Clarius app (Clarius Ultrasound App 9) offers a more streamlined, intuitive and personalised user experience. For example, the user can enable and disable advanced settings to only show what is needed for routine exams, the full screen mode setting while scanning automatically hides menu options and tools, and customised pre-sets.
These sorts of iterative improvements will become commonplace, with a number of vendors expected to announce new versions of their own systems in the coming year, including a new version of Lumify from Philips. However, this approach is not without its challenges. Vendors will have to continually innovate to ensure their devices are competitive with those of other handheld vendors. However, such development can prove costly, which could be particularly onerous given the low selling price of handheld ultrasound devices. This will prove to be a delicate balance for vendors, which will need to continue to make improvements to their products, particularly as the market is growing and they are trying to secure first time and less experienced users, without overextending themselves, and being unable to spend on other critical activities, such as market education and the development of sales and support networks.
Large Players and Small Markets
Despite the costs, this rapid development and iteration of features and devices could still be advantageous to the young specialist vendors. For vendors such as Clarius, handheld ultrasound is the top, if not only, priority. Some vendors do have other interests; Butterfly Network’s roadmap in its investor presentation points to the vendor releasing a wearable in 2023, but, with the firm anticipating 2021 revenue of $61.5-$62.5m against an original forecast of $78.1m, it, like other specialist vendors, can’t afford to take its eyes off its core business. This is in contrast to the larger international vendors. Despite its rapid growth, at $270m, the handheld ultrasound market is still a small niche for multimodality vendors, which, aside from their activities in other modalities, imaging IT, AI and services, will be primarily concerned with the larger cart and compact categories, forecast to be worth $5.4bn and $1.2bn in 2022 respectively. These vendors will look to secure revenue and capture share in the growing handheld segment where possible, but not at the expense of categories with potential revenues magnitudes higher.
This, ultimately, leaves one of the quickest growing ultrasound markets being mostly driven by a cohort of young, hungry vendors, innovating and iterating at a frantic rate. Some of those that are more developed and releasing refined second or third generations of their products, as is the case for Clarius, may have a head start, but increasing competition from an increasing number of entrants could still make life difficult. Clarius has been shrewd in its targeting of specialist clinicians, giving it some breathing room, but as it and other handheld vendors continue to develop and release systems the market is at risk of becoming a bloodbath, with a number of vendors embroiled in a bitter battle for market share, amidst ever decreasing margins. Regrettably, there are likely to be failures as the younger handheld ultrasound vendors attempt the transition from start-up to scale-up and eventually become established and trusted vendors.
With this fate on the horizon, Clarius, and its peers, need to plant their flags in the market. Grasp market share now, and tie customers into their subscription plans and ecosystems. The vendors that are able to achieve this are those that will be able to maintain the pace of iteration and feature expansion, and that, in the long run, will help them flourish.
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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