Tag Archives: Sectra

Signify Premium Insight: Sectra Believes Future Success Lies in its Genes

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Last month, Sectra revealed that it is launching a new business unit to drive innovation and develop new products within the area of genomics. The Swedish enterprise imaging vendor will, in the future, extend the capability of its diagnostic platform to integrate genetic information. This multidisciplinary approach, the vendor hopes, will enable improvements in cancer care and increasingly allow providers to deliver on the promise of precision medicine.

Sectra also announced a collaboration with the University of Pennsylvania Health System, a partnership initiated to facilitate the vendor’s development of an effective clinical IT solution for the new unit.

The Signify View

Healthcare technology vendors have, for several years, discussed the benefits that precision medicine will be able to offer. Those in the industry have promised more personalised care, enabling doctors to make better decisions about treatments, ensuring they are optimised for individuals and ultimately promising better outcomes for patients.

All too frequently, however, such ambition has resulted in precious little material benefit, with precision medicine, for the most part, remaining an ambition rather than a reality. Sectra’s new initiative in genomics aims to address this shortcoming, and improve the discipline’s utility in clinical care. By adding another layer of clinical information into a provider’s enterprise imaging platform, and enabling genomic data to be used alongside radiology and pathology, Sectra hopes to improve diagnosis and treatment of complex diseases, including, as one of the first focuses of the advancement, cancer.

This has been an expected direction of the market for some time, and was highlighted as one of the upcoming areas set to be integrated into enterprise imaging in Signify’s Imaging IT Core Report – 2021:

Sectra is among the earliest vendors to commit to such integration, although others do also note their longer-term interest in the space, harbour isolated sequencing platforms or have made moves on the research, rather than clinical use cases. For Sectra, this grants a potential early advantage in the clinical market, which it hopes to capitalise on as it has done in digital pathology; an area which it has already successfully integrated into its EI platform.

Experiential Experimentation

To make this integration useful, however, will not be easy. Unlike many other adjacent areas which have been integrated into EI solutions, many providers have no legacy of utilising genomic data alongside medical images. As such it would be easy for Sectra to focus on less important genomic information, or attempt to integrate too much  genomic data, resulting in an abundance of erroneous information and a subsequent slowing of diagnosis. For this reason, the Swedish vendor’s partnership with Pennsylvania State Hospital is sensible. It offers the opportunity for Sectra to take guidance from a top academic hospital and refine its solution accordingly.

This is in addition to the considerable technical barriers that any enterprise-wide genomics implementation will present. Chief among these is the sheer volume of data created by genome sequencing, with each human genome sequenced approximately 120GB, orders of magnitudes higher than other types of medical image. As highlighted in several past Insights, imaging IT systems will, over time, shift to the cloud, so it makes sense that a new business unit established by Sectra is cloud-native from the outset, but this also offers considerable challenges. Aside from the cost of storing such a potentially enormous volume of data, the vendor will have to develop an effective strategy for managing this data.

In typical cloud deployments, Sectra works in partnership with public cloud vendors which host the data, while the Linköping-based company manages the service element of the deployment. For genomics, Sectra will need to work with both the providers and public cloud vendors to ensure the cost-effective management of storage, discovering which parts of genomic sequences need to be accessed regularly and therefore benefit from the more-costly “hot storage”, and which sections can be relegated to cheaper “cold” or “glacial storage”.

The work Sectra is doing with Penn State University will help inform this process, but the inexperience of both Sectra, and providers themselves, will make effective implementation of genomics data into EI workflows challenging, not to mention the overall burden such an implementation can place in terms of network infrastructure and load on the broader performance of the network.

Time to Grow

Fortunately for Sectra, these challenges do not need to be dealt with immediately. The integration of genomics into enterprise imaging platforms is, most likely, several years away from a commercial launch, so the vendor has time to work with Penn State University and any other partners it may make to refine the service.

Sectra would also be wise to take a sensible approach with regards to not over committing itself. When integrating other areas such as digital pathology into its enterprise imaging platform, Sectra was careful to focus on areas in which it harboured expertise, focusing on the viewer and the ability to visualise pathology slides alongside radiology imagery for effective collaboration. They, in essence, focused on developing the architecture which allowed the vendor to bring in pathology data and enable doctors to usefully interact with it, rather than focusing on the minutiae that other, niche best of breed vendors are likely better equipped to manage.

A similar approach is likely to be taken in genomics. Sectra will allow specialists to provide the research foundation that underlies the value in utilising genomic sequences in patient care, while itself providing the architecture for that foundation to be leveraged in a clinical setting alongside medical images and other sources of diagnostic information.

In such a way, Sectra will be able to expedite the commercialisation of its genomics products. This could help the vendor win mindshare and, ultimately, custom at leading academic and research hospitals. For these sites, genomic integration will not, at present be a deal breaker. But, given the length of medical imaging IT contracts, and the lengthy development processes effective integrations can take, Sectra’s early move and public road mapping could appeal to leading providers as they begin to consider their approach to the inevitable adoption of genomics.

When Delivery is Due

Over time, depending how efficiently other enterprise imaging vendors can develop and commercialise their solutions, a similar impact could be felt at more mainstream hospitals and provider networks, as they themselves begin to consider their options. Now Sectra has launched an opening salvo, other vendors who don’t want to fall behind must react. They do not need to develop solutions immediately, but they should at least begin to convey their plans to their customers, giving providers the confidence that when genomic integration is more mature, their chosen vendor will be ready to deliver.

In the meantime, Sectra must be careful to avoid spreading itself too thinly. Targeting cutting-edge segments and working with prestigious academics gains mindshare and helps reinforce claims of technical prowess, but the vendor must not take its eye off more lucrative deals. Opportunities to displace rivals are few and far between in imaging IT, so the vendor would be loathe to miss a lucrative contract with a large provider for the sake of a development project. Moreover, on the tail of some big marquee wins for EI that are going through implementation and additional phases of go-live, Sectra does not want to risk damaging its reputation for strong client service and support.

That aside, the move represents a sensible strategy for Sectra. The vendor is, and will become increasingly, disadvantaged compared to some of its larger peers due to the limitations of only offering software, as managed service deals including modality hardware proliferate. By innovating in adjacent areas, Sectra is somewhat able to offset this, claiming for itself more significant mindshare, and market share than it might otherwise warrant. There are challenges, as an early mover. Sectra doesn’t have the benefit of learning from another’s mistakes as will help other vendors in the future, and the returns on its move will not be enjoyed for several years to come, but, by helping to bring the abstract into the concrete, the Swedish company has now laid for itself a clear path to follow.

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Signify Premium Insight: Making Plans for Pathology

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.

One of the motivations providers have for increasingly looking to adopt enterprise imaging solutions is to bring disparate departments together. For some vendors, this requirement means venturing into departments that they previously had no exposure to. Sometimes these transitions are relatively straightforward, with departments already meeting the criteria necessary for a shift to enterprise imaging. In other cases, however, the challenge is far more substantive. In pathology, for example, the general lack of digitisation, the poorly defined return on investment, and the nascency of the technology means the integration challenges facing vendors are very significant. However, some vendors are finding ways to rise to the occasion, with the potential rewards providing significant motivation.

The Signify View

Interest in digital pathology has been steadily increasing over the last decade. Some countries, such as the Netherlands, have wholeheartedly embraced the technology, while others, such as the US have been far more hesitant in their rollout. What many of these countries needed was a catalyst to hasten adoption.

Such a prompt came in the form of the Covid-19 pandemic in 2020, which highlighted the disparity in digitalisation between digital pathology and other departments. Many radiologists in mature markets, for instance, were able to work at home almost immediately thanks to the near complete digitisation of their field. Pathologists, meanwhile, had to continue to travel to hospitals, despite restrictions and the spread of Covid. This gave impetus to plans to digitise pathology labs and finally tackle the challenges that had been holding back the market’s progress.

These challenges are not insignificant. Digital pathology’s lack of standardisation makes it difficult for providers to invest heavily in both hardware and software, for fear that their investments will become obsolete as standards change or that they would not be able to take advantage of improved products from other vendors. Another hurdle is the size of the images produced, with files of 2 GB – 15 GB depending on the magnification, far higher than radiology images, which range between 0.02 GB and 0.05 GB for an X-ray, to 0.5 GB – 3 GB for a CT scan, for example. Whether stored in on-site servers, or in private or public clouds, this represents a significant cost that must be shouldered.

Return to Basics

A more fundamental challenge, however, lies in demonstrating the return on investment. When a hospital shifted X-ray imaging to digital radiology, it was able to demonstrate a clear cost saving given the X-ray film processing consumables were no longer needed. This is not the case in pathology, where providers will continue to face the costs of producing a slide as before, but, in addition, will also face the cost of expensive hardware, expensive software and image storage and transfer.

Digital pathology does offer opportunities for cost savings, but these are often poorly defined. For example, downstream care pathways benefit from ready access to images for clinical review (tumour board setting), while secondary consult and peer review is more flexible and efficient with digitalisation. Furthermore, the need for transport of glass slides is reduced and with flexible digital storage models, long-term archiving of glass slides can be reduced or made redundant. However, many of these benefits are hard to measure within conventional working practices, leading to tentative adoption.

Perhaps the greatest saving with digitalisation relates to many healthcare providers’ most prized and increasingly rare assets – its pathologists. Pathologists are in short supply, and digital workflow software and new AI tools which can automate time-consuming tasks, allowing these doctors to attend to cases more efficiently, offer a clear return on investment. However, in the case of AI, digital nascency has hindered development, such is the limited availability of training data. It will therefore be a long time before these AI-driven resources returns can be seen.

There are some positive advancements being made with regards to digital adoption however. Among the most significant is the recent provision of Class III CPT codes from the American Medical Association, which go into effect from January 2023. While these codes do not grant reimbursement for the use of digital pathology, they do allow additional work and service requirements associated with digitising glass slides to be tracked, representing a likely precursor to reimbursement.

Enterprise Opportunity

As such advancements facilitate and accelerate the uptake of digital pathology solutions, the opportunity for enterprise imaging vendors to capitalise also increases. For several significant lab equipment and consumables vendors offering digital pathology solutions, software, and even in some cases scanner hardware, was not a priority. Instead, it was merely a complementary business to their strong consumable products. Unlike the companies which are encumbered by this legacy, enterprise imaging vendors are free to be more disruptive within digital pathology. As healthcare providers are looking for more holistic imaging solutions, and decisions are increasingly being made at a higher level within a hospital, at a c-suite rather than departmental level, enterprise imaging vendors have the opportunity sell cross-department solutions. Offering a solution which includes significant digital pathology capability will appeal to a provider’s c-suite, helping them realise their ambitions of digitalising their pathology departments and enabling pathology to be used more closely alongside other types of medical imaging.

Different vendors are ensuring they can offer this capability in different ways – some such as Philips and Sectra offer digital pathology solutions in-house. This is a strategy which can offer advantages in the long-term, as these vendors can keep all revenues from digital pathology deals, while also having meticulous control over strategic direction and product development. This, however, comes at a cost. Significant time and investment is required to develop competitive solutions, which may still appear too late to trouble more established competition. What’s more, developing a solution in-house can also lack flexibility. Given adoption of digital pathology remains very nascent, particularly in some key markets such as the US, a vendor risks expending significant resource on developing a system, only to discover that it doesn’t meet the needs of potential customers.

An alternative strategy which, in the near term at least seems preferable, is the partnership route. Siemens Healthineers’ partnership with Proscia and Fujifilm’s partnership with Inspirata are the most high-profile examples of this strategy. In both instances an established medical imaging vendor is bolstering its enterprise imaging offering with tried and tested expertise from digital pathology specialists. While such partnerships lack some of the advantages of a solution developed internally, increased flexibility makes it a smart choice, certainly in the near to mid-term.

A third option is acquisition. While such a move requires greater commitment, the longer-term opportunity of digital pathology, in addition to the relative affordability of many digital pathology vendors means this could also be an attractive route. If a vendor can ensure it makes the right acquisition, in doing so it could pay dividends in the long term.

The Need for an Answer

Regardless of which strategy is selected, what is increasingly important is that a strategy is selected. One of the reasons Siemens Healthineers made a deal with Proscia when it did is that deals in Western Europe increasingly include digital pathology as key component. These providers, and for provider in the US also adopting the requirement, are stipulating pathology provision in deals, but may not wish to include digital pathology as part of a broader enterprise imaging strategy immediately. They may not even have the infrastructure and equipment to do so. However, these providers know the opportunities digital pathology offers in the future and need to ensure that the imaging IT vendor they select, an agreement which could last 7-10 years, must have a strategy in place for facilitating their transition to digital pathology when they need it.

Imaging IT vendors looking to secure such holistic deals need to show providers they are knowledgeable about the needs of digital pathology and options for implementation. This includes accommodating hardware preferences and the input from pathologists (e.g. scanner fleet, best-of-breed research, and clinical analysis software applications), while also helping providers to capitalise on external possibilities including transitions to cloud deployments etc. More importantly, however, IT vendors must be able to highlight the economic benefits that become possible with a connected digital path lab.

Ultimately this is what will help informatics vendors win deals that include pathology. The scanner hardware used, and the specifics of digital pathology set ups will vary from provider to provider, but, if potential value can be realised and measured at the point of diagnosis and across the wider enterprise, adoption will grow.

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Signify Premium Insight: Vendor Financials Roundup – The Health of the Imaging Sector Q4 2021

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.

Although 2021 may seem a distant memory, vendors’ performances in its final quarter, along with the circumstances which shaped them, offer mixed fortunes for medical imaging’s biggest companies in 2022.

The quarter’s results showed some continuing reticence as a result of the coronavirus pandemic’s ongoing disruption, with new variants causing further headaches for vendors and providers alike. More broadly however, vendors’ results were mixed. Many fell into the ‘unremarkable’ category, such as Philip’s Diagnosis and Treatment business, and Nuance’s Healthcare business. These vendors were able to deliver low single digit revenue growth over the quarter, enough to appease, but not delight, investors.

Other vendors had more dramatic quarters. Fujifilm presents the highest quarterly growth compared to the same quarter in 2020, with a huge 47% increase, including a 56.7% increase in its Medical Systems business. The vendor did have a good quarter, noting in particular the demand for its ultraportable digital X-ray imaging systems and ultrasound systems, however much of this growth was only on paper as a result of turning Fujifilm Healthcare, which includes Hitachi’s diagnostic imaging business, into a consolidated subsidiary. Other standouts were Siemens Healthineers’ Imaging segment, which posted revenues 12% higher at EUR2.53bn, and Change Healthcare which posted revenues 10% higher than a year ago at $866m. Sitting at the other end of the spectrum was GE Healthcare and Shimadzu Medical Systems, which saw revenues fall by four and six percent respectively.

The Signify View

One of the central factors determining how vendors performed in the quarter, stemmed from their response to one of the quarter’s most significant challenges; the immense disruption to supply chains. This disruption and its impact was highlighted by many vendors, and, as explained in Signify Research’s Q321 analysis, its management would be among factors that defined their performance.

These differing approaches were apparent in the vendors’ financial figures. Siemens Healthineers revenue growth of 12% looks good on paper, but this came at the cost of the vendor’s margins. Siemens’ Imaging EBIT margin was still strong at 20%, but this was 340 basis points below those of the prior year quarter. Looking ahead the vendor said that margins would continue to be affected throughout 2022, with the most significant impact to be felt in the first half of the fiscal year.

Essentially, Siemens has shouldered much of the increased costs caused by supply chain disruption and component shortages. Philips also saw margins decline, falling from 14% to 13% on an adjusted EBITDA basis, however, comparable sales growth was flat, suggesting that the vendor was less willing to absorb the additional expense in a bid to protect margin. The vendor claims that this hasn’t cost it any business. It has, however, reported double-digit growth in the order book for its Diagnosis & Treatment business, implying that the vendor is enjoying similar demand to its German competitor, but could be less willing or able to spend more on fulfilling those orders immediately, instead choosing to wait to convert them into sales, but, hopefully, without sacrificing margin.

GE Healthcare also appears to fit this mould. At $5.3bn, the segment enjoyed a 7% increase in orders, however these future sales are contrasted by a 4% fall in revenue to $4.6bn, an 18% drop in profit to $800m and a 290 base point decline in margin to 16.5%. Another vendor fitting a similar pattern is Canon, which, in its Medical segment, saw net sales increase by 4.6%, but profit fall by 20% from 10.3bn Yen to 8.2bn.

Of course, these headwinds didn’t impact all vendors equally. Supply chains and logistics are obviously of less importance to vendors focused on software and imaging IT, a fact borne out by Change Healthcare and Sectra’s Imaging IT Solutions group, showing strong results, with revenues 10% and 7% higher respectively.

Expanding Inflationary Pressures

These supply chain difficulties also come amid global inflationary pressures. Many of the tracked vendors have increasingly been moving clients onto longer and ever more comprehensive managed service contracts. While this brings stability, with providers tied into deals for extended periods, vendors may lack the flexibility to raise their prices, despite facing higher costs themselves. While these eventualities will have been somewhat priced into deals, it could hurt vendors’ margins over an extended period. Such effects would hit those vendors who have most readily adopted these sorts of deals hardest, but, it could also have knock-on effects further in the future, as providers coming to the end of a managed service contract could find themselves suddenly hit with a dramatic increase in costs. Effectively being forced to stomach several years of inflation all at once.

Some vendors will also benefit from more positive currents over the coming years. Fujifilm and Canon, which are strongest in their home nation of Japan, were well supported throughout the pandemic by the Japanese government, which invested strongly in order to bolster the nation’s ability to fight the pandemic. Canon and Fujifilm benefited from this spend both in the near term, with hospitals acquiring additional systems for use in Covid care but are also likely to reap rewards for years to come, with the possibility of additional service revenues and upsell opportunities stemming from those additional hardware sales and expansion of their installed bases.

More broadly, vendors offered limited commentary about less developed markets. Philips noted that its Diagnosis and Treatment business enjoyed double-digit growth in Latin America and India, as well as mid-single-digit growth in China, but otherwise information was limited. This absence suggests that for most vendors, performances in emerging markets, excluding China, were neither remarkable, nor an area of particular focus. This makes sense. Although there is potential in these markets in the future, at present, the lower vaccination rates among their populations, the proportionately higher costs of tackling the pandemic compared to more developed regions, and wider pandemic-induced economic instability means that these are poor areas on which to focus, particularly when so much attention is required to deal with the challenges in their core markets. Vendors need to ensure resources are delivered to their highest-margin products, particularly in instances where they have had to absorb additional costs.

Fighting Fires

Headwinds facing the tracked vendors are, in many cases, more severe than they have been over the preceding few quarters, but, for the most part vendors are doing a fair job of managing them. Judging solely by the fourth quarter results (for those that have published at time of writing), vendors have, to a greater or lesser extent, been able to mitigate the impact of the headwinds by shouldering costs themselves, pushing out installations and sales, and relying on their service sales and add-ons to drive revenues.

These are primarily defensive moves, which see the tracked vendors protecting their revenues, and protecting their customer bases. Expending effort on such defence will naturally mean that these companies will have less capacity with which to address their longer-term objectives, meaning that advances in broader industry directions such as precision medicine, AI and digital twinning, for example, could be delayed. There are tailwinds that are set to offset some of these headwinds. If vendors can service demand, then the enormous backlog of elective procedures will provide a boon to those vendors who offer interventional imaging and therapy technologies, these will be strong growth drivers. Other vendors will see changes in some product categories offset changes in others. CT, for example was used heavily in Covid care, so the improving coronavirus situation will see demand for new systems diminish, however, this will be somewhat offset by increases in MR system sales, which were dampened during the pandemic.

The culmination of these various factors means that 2022 will be a challenging, albeit manageable year. Instead of being able to focus on long-term ambitions, vendors must be reactive and dynamic, shifting their resources to deal with the issues of the moment. Several vendors have suggested that supply chain conditions will improve in the second half of 2022, at which point increasingly normal service will resume. Until then, however, the vendors that perform the most strongly, are likely to be those that can most effectively juggle this breadth of challenges, without dropping any important balls.

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Signify Premium Insight: Vendor Financials Roundup – The Health of the Imaging Sector Q3 2021

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.

The third quarter of 2021 has been impacted less by the coronavirus pandemic than any of the previous six. This is evidenced in the financial results of the major medical imaging companies which shows that vendors are, by and large, progressing steadily along the recovery curve and in many instances showing growth for the trailing 12 months in the upper single digits and beyond.

One of the vendors that did, at first glance, appear to struggle, was GE Healthcare, which posted year on year growth for the quarter of -5%. However, this negative growth figure was, in part at least, a result of a tough comparable quarter, with last year’s $300m ventilator order for its Life Care Solutions business proving hard to match. This fall, however, was at least partially offset by increased volume in Imaging and Ultrasound. Despite this, the figure still stands in sharp contrast to those of its closest competitors, Siemens Healthineers and Philips, which posted growth figures of 12.7% and 10% in their respective Imaging and Diagnosis and Treatment businesses.

Of more concern than a tough comparable quarter in 2020 are the supply chain issues that GE pinned most of the blame for the negative growth on. GE was not alone in suffering from such problems, with players in industries as diverse as carmaking and meat production all being affected. The vendor did highlight that it was working to minimise the disruption, citing the example of its CT team in Japan that has worked to reduce production lead time by 40% from when parts are received compared to a year ago, but these initiatives have so far been unable to offset the challenges being faced. Canon was another vendor that highlighted this problem. Although the Japanese firm posted a year-on-year improvement just shy of ten percent, the vendor noted that the figure was still below its expectations.

Medical imaging vendors have, for the most part, performed strongly over Q3 2021. N.b. While Fujifilm Healthcare did enjoy organic growth and saw a ‘surge’ in revenue, the acquisition of Hitachi Ltd.’s diagnostic imaging-related business also contributed to its dramatic quarter-on-quarter growth.

Order from Chaos

GE Healthcare’s decline does look set to be short-lived, however, with it, and several other vendors highlighting remarkably robust order books. GE reported year-on-year order growth of 21% globally. Philips boasted comparable order growth of 15% in its Diagnosis & Treatment business in the third quarter, Siemens Healthineers highlighted that it had booked more than Eur20bn of order intake in its FY2021, Canon’s medical segment mentioned that it was building up its order book for the coming year, while Agfa described its order book as ‘healthy’.

The strength of these vendors’ order books is a result of several factors. The aforementioned supply chain issues are among them, with providers being forced to place orders for purchases that cannot be made right away. There are also other more pervasive trends having an impact.

One of the key reasons is the continuing Covid support packages from many governments. In countries with publicly-funded healthcare systems, providers are still benefitting from additional funding that has been allocated over the last 18 months. These providers have already spent heavily on equipment such as ventilators and patient monitors that was urgently needed during the worst of the pandemic, now their focus has turned to the enormous backlog of patients waiting for postponed elective procedures. To address this backlog many providers are investing heavily in imaging equipment, seeking to take advantage of both additional systems, as well as the efficiency improvements that newer equipment can offer.

This glut of orders is also present in privately-funded markets, although here providers are spending to take advantage of the backlog, which represents a significant revenue opportunity, much needed for many following the difficulties of the past 18 months.

Maintain the Chain

This increase in demand was noted by many different vendors. Fujifilm mentioned the demand of its ultra-lightweight mobile digital x-ray systems and ultrasound devices, both Philips and Siemens called out the popularity of their CT systems, Agfa mentioned the demand for its healthcare IT solutions and Konica Minolta highlighted the success of digital radiography and diagnostic ultrasound, among others. This, almost universal demand for medical imaging devices is obviously good news for medical imaging vendors, although there are also some risks.

Supply chain issues could continue to blight performances, and if one vendor is particularly struggling to supply equipment, then orders could leak away to competitors, similar to providers’ prioritisation of availability above all else in the digital radiography market during the height of the pandemic (a trend discussed in more detail here). Essentially, supply chain management and logistics is, in many ways, set to be the most crucial factor over the coming 12 months.

There are other clouds on the horizon too. While many governments have prioritised investment in new medical imaging systems, few seem able to address the shortage of radiologists. Longer-term this shortage could increasingly bite, with the purchasing of additional systems coming to an end when there is a lack of radiologists, technicians and other imaging professionals to use them. This shortage means that over time vendors will have to focus on other factors peripheral to the imaging systems themselves in order to boost their revenues. Improving efficiency and workflow, offering AI capability that will assist in some of the less complex and time-consuming tasks, and increasingly offering services as part of deals, are factors that could make a significant difference in coming years, given that the rapid rise in equipment demand can only last so long.

The worst of the pandemic’s volatility appears to be over, with vendors squarely into recovery.

Major Market Focus

One feature of this quarter’s results was that much of the commentary and discussion was centred around developed markets, with little attention directed elsewhere. Emerging markets often provide palpable growth when there is a lack of opportunity in more established markets. At present, however, many healthcare providers in emerging markets are particularly stretched financially. This combined with the more volatile nature of these markets, and the simple fact that vendors’ largest markets are enjoying unrivalled demand, means that the focus is elsewhere.

One market that is growing is China, but this has been more beneficial for some vendors than others. The two Chinese vendors tracked for this Premium Insight, Beijing Wandong and Shenzen Mindray both enjoyed year-on-year growth in the quarter above 20%. According to the latter this was a result of predominantly domestic growth, stemming from China’s ‘unprecedented’ medical investment in the wake of the coronavirus pandemic and a large expansion of public hospitals. Given China’s strategy of favouring local vendors, domestic companies have been the main beneficiaries of this investment. However other international vendors also performed strongly in the country, with Philips, for example acknowledging revenue delays, but touting mid-single digit order growth for the quarter. The vendor also said it expected prospects to improve further as regulatory guidelines in the country ‘become clearer’.

Time to Eat

Despite this nuance, when all is said and done, it has been a lucrative quarter to be a medical imaging vendor. While there have been weaker spots, AGFA noted a ‘softer’ quarter, for example, and Sectra saw revenues dip compared to the previous quarter as it experienced its usual quarter-to quarter variability, but these are minor hiccoughs in what is currently a booming market. The challenge for vendors will be how they can continue to capitalise on this very strong demand and ensure that nothing prevents them turning this demand into revenue. This will mean ruthless supply chain management and ensuring that there are no hurdles in producing and delivering medical imaging systems.

Vendors will be keen to make the most of this demand, which appears robust enough to support strong performances for the coming quarters. However, in servicing this demand they should maintain an eye on the future. The time will come when government spending boosts end, hospitals are left with more restricted budgets, providers have purchased all the medical imaging equipment their staff is able to utilise, and vendors will have to find more creative ways to grow.

Until then, the famine of the pandemic’s peak is past. Now is the time to feast.


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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 ResearchTo view other recent Premium Insights that are part of the service please click here