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Last week GE Healthcare and Elekta announced that the two companies were collaborating in the field of radiation oncology, enabling them to offer providers a more joined-up offering across imaging and treatment for cancer patients in need of radiation therapy.
According to the vendors, the non-exclusive deal is set to combine GE Healthcare’s imaging solutions with Elekta’s radiation therapy solutions. This aligning of diagnosis and treatment is set to improve care the vendors say, enabling providers to more accurately determine the size, shape and characteristics of tumours, and subsequently target them with the most appropriate dose through advanced patient position, motion management and other technologies.
The Signify View
Bridging the gap between diagnostic imaging and therapeutics has the potential to be hugely beneficial to a vendor such as GE Healthcare. Just ask Siemens Healthineers CEO Bernd Montag, who in his company’s Q421 results highlighted that Siemens’ 2020 acquisition of Elekta rival Varian was already opening new sites, giving both the imaging and oncology teams “opportunities they wouldn’t have had before.” Siemens Healthineers’ partnership and later acquisition of Varian also shows such synergising is nothing new. Even for Elekta the partnership isn’t revolutionary, with the vendor already having an arguably closer relationship with Philips.
This path makes a lot of sense for GE Healthcare. Providers are increasingly looking to simplify their supply chains and, to an ever-greater degree, purchase medical imaging equipment on ever broader managed service contracts. By forging a partnership with Elekta, GE can better compete with the likes of Siemens, offering multi-year deals which cover both imaging and radiotherapy systems. In this regard, GE’s closer ties represent a defensive move, with the vendor’s bolstering of ties to Elekta particularly important given that Siemens’ acquisition of Varian increases its reliance on the company.
Beyond offering more holistic packages to meet providers’ changing procurement requirements, the collaboration between Elekta and GE Healthcare, or the collaboration between Philips and Elekta for that matter, also opens up possibilities for greater software integration. One of the obvious areas that collaboration could help is for tumour board software, allowing radiologists, pathologists and oncologists to work together more efficiently in order to better plan a patient’s treatment. Selling such tools as standalone packages is challenging, with vendors having to justify additional investment when basic functionality to support collaboration can be found in existing solutions, whether that is within the EMR or imaging IT platforms. Further, the value of such collaborative tools will only grow as imaging IT vendors increasingly develop and deploy fully featured multi-ology enterprise imaging platforms, with greater integration of digital pathology data, for example, further increasing their usefulness. Such tools can be made without a close link to an oncology vendor, but GE’s new partnership will streamline such processes.
Even with this ability, however, GE Healthcare’s partnership with Elekta is still more constrained than the Siemens Varian proposition because of the opportunities for synergising that the acquisition offers. Varian’s products can be further tailored to Siemens Healthineers’ medical imaging and imaging IT systems as these are the only systems that Varian’s tools work alongside. Conversely, Elekta must ensure that its offering is compatible with the products of GE Healthcare, Philips and any other vendor’s imaging equipment that a provider may choose.
Better to Buy?
With this being the case, it is fair to ask whether GE would have been better making a bid for Elekta, or whether it is in fact considering doing so in future, with the partnership one of the early stages in building a relationship. Such a deal would represent a major strategic play, and an expensive one at that; Siemens’ acquisition of Varian, for comparison, cost $16.4bn. It does, however, represent an intriguing prospect. Aside from the additional flexibility a combination of GE and Elekta or a combination of Philips and Elekta could offer, such a deal would also prevent a competitor from taking advantage on such synergies. A vendor looking to capitalise by focusing on the broader oncology pathway could find itself hamstrung if the two major radiotherapy players were committed to their respective owners.
Even without an acquisition from GE, Philips, which has a long and well-established relationship with Elekta, may stand to lose some of its influence. Elekta’s decision to bolster its relationship with GE suggests it may feel that it is not getting as much out of its partnership with Philips as possible. This could mean Elekta is ready to innovate and is increasingly planning to do so with GE. This will lead to closer ties to the American firm, which over time could leave Philips at a disadvantage in trying to secure large comprehensive deals with providers, at least from an oncology perspective. One of Philips’ strengths is in cardiology and cardiology interventional equipment. As such, the vendor could be more focused on realising growth from joining diagnostics and cardiology treatment than diagnostics and oncology, choosing another global health burden to specialise in. This could be especially true given that Siemens has effectively “doubled-down” on Oncology and Diagnostics. Philips does product software capability via its Intellispace Oncology offering in partnership with leading Oncology provider Dana-Farber, but the initiative has yet to drive substantial new demand.
Ultimately, GE’s partnership with Elekta will not bring about any immediate dramatic change. However, as vendors increasingly shift towards supporting condition-based care, providing complete solutions for the diagnosis and care of major global health issues, the move will put GE in a stronger position to compete going forwards, especially as it spins-off its corporate conglomerate parent in 2023. As highlighted in our recent Premium Insight The Fate of the Five, its acquisition and exploitation of Varian is one of the factors that has left Siemens Healthineers in the strongest position going into 2022. GE’s closing ties to Elekta, while potentially bad for Philips, will help the Boston-based firm fight on an equal footing.
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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