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As the world emerges from the clutches of the coronavirus pandemic, the turbulence that has characterised the last few years has lingered. From supply chain headaches and shortages of critical components to the inevitable economic repercussions caused by Russia’s barbaric assault on Ukraine, stability is in short supply. While less dramatic, the medical imaging markets are also in a period of flux. Some vendors have enjoyed unexpected windfalls from Covid-related products, while others have seen sales, at times, decimated due to restrictions at providers. Furthermore, medical imaging sits on the cusp of the widespread adoption of several hugely impactful technologies, including machine learning, cloud computing and data-driven healthcare.
How vendors respond to these circumstances could define their fortunes for years to come; below is our assessment of where each of the five largest medical imaging vendors (GE Healthcare, Siemens Healthineers, Philips, Fujifilm and Canon) stand, and where their opportunities lie.
Portfolio & Portfolio Integration
From an imaging modality perspective, GE has among the broadest product portfolio of any of the top five vendors, with strength across a broad range and the ability to sell into both the wards of large academics and integrated networks, and at lower tiers and into emerging economies. Unlike some of its peers, GE has no single clinical or product sectors where it dominates, or offers products of unique quality, but as an accomplished generalist can meet the needs of a wide range of customers.
The vendor’s digital strategy, meanwhile, is less robust. While there is still the breadth of capability offered, and good coverage of the core imaging IT products, GE’s success in the integration of these separate products has been less successful. The vendor has increasingly recognised this issue, as evidenced by the release of products such as the enterprise imaging-focused Edison True PACS software, but this response has been relatively sluggish. The vendor has held a large share of the market for a long time, but that share is slowly being eroded. Whether GE can stem this customer leakage is dependent on how well it can deliver on the newer, better connected, data-driven facets of imaging IT. If it is unsuccessful, these weaknesses, which will become increasingly more important, will cause customers to look elsewhere, a concern for the division given it plans to be spun-out in 2023.
New Digital Technologies
AI is set to be among the most transformative technologies in medical imaging in the coming years, and GE is treating it as such. The vendor has taken a centralised approach to AI development, using a common team and platform (Edison AI) to efficiently deliver useful AI tools to the different modality departments. This has meant it has focused less on creating stand-alone AI products per se, but instead has been able to efficiently and effectively offer AI functionality to all of GE’s imaging modality teams, while also leveraging its strong position and channel in Advanced Visualisation software. The company was also early to market with a radiology AI platform, Edison Open AI Orchestrator, to support the deployment of native and third-party AI applications.
Another of the rising trends in medical imaging and the broader healthcare sector is the adoption of cloud capability. In this regard, GE is performing very similarly to its peers in that it is offering cloud-enabled products, but does not offer comprehensive cloud-native solutions. At present this has not hindered GE Healthcare. While technological capability is one driver for cloud adoption, business model flexibility is at present a more significant driver. As such, GE, like its peers, has, for the most part been able to meet customer needs without reverting to cloud technologies. That said, recent cloud-native releases such as Edison True PACS highlight the vendor’s cloud-focused approach, which potentially gives it the edge over some of its direct competitors.
As highlighted in recent Insights assessing vendors’ financial performances, GE Healthcare has arguably been adversely affected by industry-wide challenges to a greater degree than its peers. Operationally, factors such as the supply chain disruption has been more challenging for GE compared to the likes of Siemens and Philips. GE Healthcare is also more exposed to emerging markets than several of its peers. Markets which could become more challenging as the repercussions of the Covid pandemic continue to bite.
GE Healthcare is, all things considered, in good shape. It has competency across the board and scale to ride out the current headwinds. The vendor does have its weaknesses, it has gaps in its therapy range compared to Philips, and cannot match Siemens’ Varian-based oncology offering, for example. It must acknowledge these weaknesses and act accordingly. That could manifest as acquisitions to improve its digital integration or therapy offerings, greater focus on the central AI platforms that connect the predominantly distinct tools or recalculate supply routes and logistics strategy to minimise the impact of disruption – an area where the vendor has lost ground to its peers.
More pertinently, GE must continue to push forward with its longer-term aims, despite the day-to-day challenges that are impacting the medical imaging market. As well as needing to continue to integrate its digital offering to keep customers from bleeding away and invest in its AI and cloud products to ensure it remains a leader rather than a follower. The vendor also will need to navigate the complications of a spin off from the wider GE conglomerate and successfully integrate BK Medical, the fruit of a recent acquisition, into its fold. Managing these priorities will prove difficult, opening itself to bold gambits from competitors who see a distracted rival. But, over the long term, the fruits of this effort will render it a nimbler outfit, with capability among the broadest out there and the might to seal deals of any size whenever the opportunity presents itself.
Portfolio & Portfolio Integration
Compared to some of its competitors, Siemens Healthineers has some areas within its imaging portfolio which are not performing as strongly as the wider business. Its ultrasound business, for example, has a reasonably broad range of products, and reasonable market share, but has been losing ground for some years. Signify Research’s latest Ultrasound Equipment – World Market report highlights that the vendor had, in 2020, actually lost market share in its key radiology/general imaging and cardiology markets.
Despite this, however, Siemens has both a wide-ranging portfolio and is amongst the pinnacle of the market when it comes to the advanced imaging modalities. As well as driving forward with new technologies, having been the first to commercially offer a photo-counting CT system, the vendor is also adept at innovating further down product line ups to create and capture market share, with its recently MAGNETOM Free.Star designed to bring MRI capability to new locations.
This modality focus has, however, meant that its core imaging IT software has been slow to meet the clear trend of enterprise imaging consolidation . This has been apparent in several regions, with North America a particularly challenging market for the German vendor. More recently, however, Siemens seems to have identified and acknowledged this weakness, and has delivered several products which not only bolster the vendor’s capability (it holds strong global share in Advanced Visualisation) but brings it together into a more integrated offering. This has been effective in multiple areas, but progress in workflow and operational efficiency, have been particularly well-received.
New Digital Technologies
Siemens Healthineers sits alongside GE as one of the vendors with the most advanced native AI offering. Unlike GE however, Siemens has taken a different approach, focusing first on the common frameworks, such as AI Rad Companion, into which further capability will be able to grow. This more integrated approach contrasts with other vendors which, for the most part, have adopted a platform plus marketplace strategy. Siemens has more closely integrated its algorithms into its broader platforms, which, for the large imaging vendors such as Siemens, appears at present to be the strategy which is delivering the most promising results.
Despite Siemens’ strategic differentiation when it comes to AI, the market is not yet mature enough for this approach to have a significant impact on sales. However, as AI use becomes more integral to medical imaging workflows, Siemens’ strategy could pay dividends.
Siemens Healthineers has arguably been the strongest performer over the past year. While it has, like other vendors been affected by supply chain issues and chip shortages leading to the sacrifice of some margin in its latest quarter, it has also managed to maintain revenues and growth.
Additionally, Siemens Healthineers has also been among the vendors that have been keenest to create and nurture managed partnerships. Such partnerships have allowed Siemens to both protect market share and increase the portion of revenues which are taken on a recurring basis. In doing so, Siemens is favourably positioned to weather difficult conditions.
Further, while not directly related to imaging, Siemens Healthineers has also benefitted from what is effectively a Covid windfall, with its antigen testing bringing a one-off cash boost to the vendor and lining its coffers in readiness for offensive or defensive action.
Siemens Healthineers is going into 2022 in the best shape of any of the leading medical imaging vendors, with a slight reduction in margin the only real indicator of difficult times. Siemens also has some aces up its sleeve for the future. As time passes the vendor’s acquisition of Varian is increasingly proving its worth. With ever-increasing requirement for cancer care and Siemens’ ability to join up the diagnostic and therapeutic sides of oncology this advance is set to continue ever more effectively. This clinical integration also puts Siemens in a unique position, with no other vendor yet managing to join diagnostic imaging and therapy in quite the same way.
With its windfall from antigen tests, Siemens Healthineers is also in a strong position to make additional acquisitions. As has been achieved with Varian and to a lesser extent Medicalis, Siemens could look to bolster its offering with another sizable acquisition, further broadening the capability it can offer customers.
There are challenges; development of its digital offering and the march towards a more complete enterprise imaging solution needs to be a priority, but otherwise, Siemens Healthineers is looking strong.
Portfolio & Portfolio Integration
Philips has a full portfolio across the modalities, with everything from handheld ultrasound to MRI available from the vendor. The only significant concession it does make to any of its peers is in photon-counting CT. Philips does offer spectral CT, a tool of a similarly premium status, but at present it doesn’t yet offer commercially an alternative to Siemens’ latest innovation. The photon-counting CT market is still very small, so Philips is unlikely to miss out in the immediate future, but it will become more significant, highlighting the importance of Philips successfully commercialising its own photon-counting CT technology. For some categories, such as mammography, Philips has essentially relied on partnerships to fill its range, but for any gaps in an MRI or CT line-up, such a strategy would not fly with customers.
Unlike some of its peers such as GE Healthcare and Fujifilm, which are more generalist in their approach, Philips has worked to offer excellence in several key areas including cardiology and interventional imaging, while still offering a broad portfolio in other areas. These are set to be growth drivers over coming years, so the vendor is well placed in that regard.
Things are less rosy on the software side. While it has all the important pieces, and strength in some key areas such as operational workflow, the integration of disparate parts is proving difficult. This appears to be particularly true with regards to its Carestream acquisition. While the acquisition brought improved technology to Philips, the integration has taken longer than originally anticipated, suggesting that some expectations for the technology have been either been unmet or were more complex to architect than expected. While it seems Philips is emerging out of the other side of this process based on recent product announcements, whether customers have kept the faith will only become apparent in the next few years.
New Digital Technologies
Unlike Siemens Healthineers and GE Healthcare, which have primarily focused on developing AI tools in-house, Philips has instead chosen to partner with medical imaging AI vendors. Even on this front, however, they are somewhat behind their chief competitors, with their AI Orchestrator platform only being released at RSNA 2021. This measured schedule has at least resulted in well-executed products, somewhat making up for the slower schedule.
One of the reasons for this sluggishness is that Philips has chosen to rebuild its entire software offering. Longer-term this will arguably pay dividends, as the vendor’s entire software catalogue can be architected from the ground-up, as a broad, cloud-native enterprise imaging solution with solid AI integration. However, this is still some years off, leaving Philips in a sort of holding pattern until then, doing enough to avoid losing market share to hungry specialists, but not yet unleashing its solution’s final form. Ultimately, Philips has started to lay a lot of groundwork, but the fruits of that labour are yet to be realised.
As detailed in Signify’s recent analysis of vendor’s latest financial results, Philips seems to be prioritising margin over the conversion of orders to sales. The vendor says it hasn’t yet lost a customer through such an approach, but this could become more difficult over time if supply chains cannot be restored, and providers are forced into long waits for their equipment. For the time being, however, Philips’ medical imaging business is performing strongly.
There are distractions elsewhere in the business. The recall of certain Philips’ ventilators (DreamStation and specific Trilogy solutions) may not immediately impact the company’s imaging business, but ventilator revenues were another of those unexpected Covid windfalls which could have left Philips ready for a large opportunistic acquisition. The recall of the ventilators could therefore limit the vendor’s ability to capitalise on potential opportunities near-term.
Philips has strength in its admirably broad portfolio. What’s more, several areas in which it is strongest such as interventional and cardiac imaging are set for above industry average growth. Further, while it may not have made any headline grabbing acquisitions in the therapeutic space on the scale of Siemens’ Varian move, it has made several smaller “tuck in” acquisitions of therapy device companies over recent years, as well as some very solid partnerships such as that with Varian rival Elekta, which have left it in a strong position moving forward.
However, it must, as efficiently as possible, fully complete the integration of Carestream. Upon which it can not only increasingly leverage the capability it gained from the acquisition, but, as significantly for the longer term, then begin to focus on its next targets. Rounding out its AI offering and re-building its core products to capitalise on the new trends of cloud capability and enterprise imaging.
Portfolio and Portfolio Integration
Canon’s combination with Toshiba Medical Systems, a deal which was completed in early 2018, has bolstered the Japanese vendor’s modality offering, with the deal bringing together two largely complementary product portfolios. With regards to the advanced modalities, the vendor arguably lags behind Siemens and Philips, lacking the very top draw innovative products that those vendors lead in. Similarly to Philips, Canon does have its strengths, with cardiac imaging capability, acquired from Toshiba, an area where the vendor stands out.
One modality in which Canon does see growth is in ultrasound. While the vendor is well represented in its domestic market, the company has recently become more aggressive on price in order to further penetrate the North American and European markets. Many vendors have comparable products in ultrasound, so price is one of the few levers Canon has at its disposal. Success will be hard to come by in this market, with there being limited differentiation between it and its immediate competitors, but if it is to enjoy the longer-term service revenues that increased footprint brings, it is a critical objective.
Canon’s digital offering is also relatively strong in places. The vendor has been trying to build on its prowess in advanced visualisation and broaden its offering into a fully-fledged enterprise imaging product. However, these efforts have not yet gained significant traction in the market, leaving the vendor with a competent core package, but without a sizable market share. Of bigger concern is the lack of operational tools, a component which is becoming increasingly important to securing larger, higher-value deals.
New Digital Technologies
While Canon offers a competent core platform, it is starting to fall behind when it comes to newer digital technologies. It hasn’t made the same progress with AI development as the standouts GE and Siemens, and lacks many of the tools those vendors offer, although is making headway with workflow tools. Across imaging IT however, the firm holds the smallest global share for imaging informatics of the “five” reviewed here. Canon has started to further address these gaps, however, responding with a new brand and AI strategy in November 2021. The Japanese firm hopes its new Altivity brand will improve efficiency and outcomes, with tools based on both clinical decision making and workflow, although the fruits of this labour are yet to be seen.
When it comes to cloud, Canon, like its peers has made progress. It is not at the same leading edge as the nimbler imaging IT specialists but will facilitate its customers’ transition to cloud should they request it.
Over recent quarters Canon has performed strongly. As illustrated in Signify Research’s recent financials analysis both the vendors’ latest quarter and in particular its trailing 12 months showed solid growth. Canon is strongest in its home market of Japan, and as such will have been among the key beneficiaries of Japan’s Covid recovery spending, given its strength in modalities used in Covid care, and more internally focused procurement policies.
While this boost will end as extra funding to fight the pandemic runs out, and providers have all the systems they need, the growth in Canon’s installed base will grant the vendor opportunities for service revenue and upselling opportunities for years to come.
Canon is performing strongly in its domestic market, it has a broad, reasonably-well integrated portfolio, with competence across most modalities and core software components, and a few areas of excellence. The vendor has also performed strongly setting it up for reasonable domestic revenue growth in the coming years.
However, despite this strength the vendor finds itself in a sort of stasis. There is limited opportunity for growth at home, which means the vendor needs to look further afield, but without a unique selling point it could struggle to gain traction. Without an area in which it is the hands down leader or can quickly grow its enterprise imaging platform share, it is hard to see what is going to entice North American and European providers to go with the Japanese vendor instead of one of the better-established alternatives.
Portfolio and Portfolio Integration
Like Canon, Fujifilm has recently closed a major portfolio acquisition of Hitachi’s diagnostic imaging group. This has bolstered its portfolio bringing Hitachi’s capabilities in MRI, CT and diagnostic ultrasound alongside Fujifilm’s range of X-ray and point of care ultrasound systems. The combination leaves a large vendor with a breadth of portfolio that will enable it to compete for the larger network-wide imaging deals that are increasingly defining the market. However, this joined-up approach is yet to be fully leveraged, leaving Fujifilm with what is effectively several disparate product sets.
As with GE, Fujifilm leans toward being a more generalist, and although there are some smaller niches in which it excels, such as mobile X-ray, it doesn’t stand out in any single category, offering a safe, rather than revolutionary option for providers. Fujifilm is however aggressive on price, allowing providers to amass capability for a competitive outlay. Other vendors, such as Siemens Healthineers, are also releasing lower-cost MRI systems. While this will increase competition for Fujifilm and threaten the legacy Hitachi MRI portfolio, it will also increase the interest in MRI in non-traditional settings, a dynamic which Fujifilm could arguably use to its advantage.
This hardware portfolio is also backed up by a solid core imaging IT package, while the vendor has made good headway in its transition to enterprise imaging. As with its competitors, it has lost out to the likes of Sectra, Mach7 and Visage for large academics and IDNs in the US market of late, but this has not yet been a significant issue to seriously erode market share. Moreover, the firm has a dominant position in the Japanese domestic market for imaging informatics.
New Digital Technology
Fujifilm has invested in its AI offering, and it shows. Its ReiLI brand is competent and represents the vendor’s effort to enhance its diagnostic imaging products, with a particular focus on supporting the diagnostic imaging workflow, leveraging the combination of its deep learning innovations and utilising its expertise in image processing. Like Siemens, Fujifilm has also adopted a more integrated approach to AI, choosing to develop algorithms in-house on an integrated framework, rather than overly relying on external partners and AI marketplaces as has been the choice of some of its competitors. Over the longer term, this will likely prove a smart choice. Where Fujifilm falls down, however, is in execution. These foundations have been laid for some time, but there has, so far, been a lack of progress to highlight that Fujifilm is realising its vision.
Fujifilm’s recent performance is difficult to accurately ascertain, with the acquisition of Hitachi’s imaging business and the restructuring of its business units making it hard to contextualise its filings. That said, the vendors’ strength in mobile X-ray systems and ultrasound systems will have stood it in good stead over the course of the Covid pandemic. This performance, will, like Canon, also have been bolstered by the substantial government support given in the vendor’s largest market, its home market of Japan. Further aiding Fujifilm over the pandemic is the vendors’ aggressive pricing, making it an attractive proposition for providers who have reined in budgets because of the coronavirus pandemic.
Whether Fujifilm can continue to capitalise on these recent advantages remains to be seen. As with its peers, any additional sales during the pandemic leave Fujifilm with solid up-selling and servicing opportunities which could help to bolster growth.
More broadly, if Fujifilm is set to achieve the ambitious growth targets it laid out in its VISION2023 plan, released in April 2021, it must look to utilise its newly found breadth of offering to secure the larger, longer-term deals that its most successful competitor’s relish. It does, on the face of it, appear to be making substantial progress. In its strategy announcement it targeted revenues of 750bn Yen ($6.5bn) for its healthcare segment in FY2021. After three quarters the vendor is now offering guidance of 790bn Yen ($6.9bn) for the year, well on its way to the 860bn Yen target it has set itself for FY2023.
As with Canon, for continued growth Fujifilm must look for opportunities outside of its home market. Unlike Canon, however, which has made plain its designs on the US market, Fujifilm may look to carve out its own territory in emerging markets. With a strong network of distributors and subsidiaries, Fujifilm’s competence and price competitiveness could see it replicate the large managed service deals that Siemens Healthineers, GE Healthcare and Philips have prioritised in other markets, including India, parts of the Middle East and South-East Asia.
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