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DeepSight Technology recently announced that it has secured $25m in Series A funding, in a round led by healthcare investment firm Deerfield Management Company. The investors saw promise in DeepSight’s novel ultrasound technology, which according to the company, will utilise a bespoke mixture of hardware, software and AI to offer 100 times higher sensitivity than other ultrasound systems on the market. DeepSight says that this dramatic increase in sensitivity will help overcome some of the limitations of existing ultrasound technology such as sensitivity, depth penetration and clarity.

Details about the new technology, which is expected to augment current diagnostic imaging methods, are scarce, with the vendor is holding its cards close to its chest. However, if DeepSight’s claims are accurate, the technology could have a significant impact on the ultrasound market.

The Signify View

The ending of several years of stability in the ultrasound market arrived with the dawning of a new age of innovation in the handheld segment. Butterfly Network was among the highest profile of these innovators, as it sought to use a combination of proprietary sensor technology, novel payment models, and integrated software to offer a new approach to handheld ultrasound. As well as increasingly encouraging the use of ultrasound as a supplementary diagnostic device in new clinical settings, Butterfly Network was among the vendors at the forefront of a wave of innovation. This disruption not only placed Butterfly Network among the market leaders, it also trod a path for other, similar vendors to follow. Now the handheld segment has blossomed, and there is an abundance of different products, from both established, broadline ultrasound companies and challenger vendors specialising in the handheld market, using innovative new technologies and targeting different niches.

DeepSight could be looking to do similar. However, some of the use cases the vendor has mentioned in its marketing – general radiology, cardiology, women’s health, speciality and point of care – are not typically linked to handheld applications, suggesting that DeepSight’s ambition lies elsewhere. The vendor could be ready to shake up another ultrasound segment using some of the developments seen in the handheld space, such as the close integration of innovative proprietary hardware and custom software, and the inclusion of AI tools.

 Picture This

As DeepSight’s headline claim illustrates, this disruption will be centred around image quality. Significant enough improvements in this regard will allow ultrasound to replace MRI and CT examinations in some instances. This is not only better for the patients, who will not have to face the potential discomfort of being in a loud, confined space, and will not be exposed to radiation as is the case for CT. Providers will also benefit from the cost differential, with premium ultrasound systems being considerably cheaper than even the most basic MRI and CT systems. These benefits mean that if DeepSight can deliver on its promise, then sales of the technology could prove lucrative.

Despite this potential, however, DeepSight could find the route to its realisation hard to navigate. The backgrounds of the start-up’s leadership team points to its key technology being based on a novel on-chip transducer technology, akin to Butterfly Network’s Ultrasound-on-Chip transducer or Exo’s Cello pMUT transducer in the handheld market, rather than a piezo-based approach as taken by other innovators in that space such as Clarius. With DeepSight’s capability stemming from this transducer technology and its interplay with the vendor’s software it has a range of options available to it.

It could develop its own ultrasound system. This would give it complete control over the entire solution, however, taking this route could prove particularly difficult with the vendor likely having to compete directly with the large international modality vendors. The premium segment of the ultrasound market is entrenched by the incumbent multinationals, with GE Healthcare and Philips taking a combined 70% share of the market in 2020.These vendors, with their established sales channels, loyal customer bases and mature ecosystems would prove difficult to displace. DeepSight could produce a handful of software tools, but systems from the likes of GE, Philips and Canon already come with a wealth of tools and applications that assist in the workflow, automate parts of the process and provide measurements for example.

The Knowledge Gap

Perhaps more significantly still, DeepSight’s expertise appears to be technical, rather than clinical. The established players have decades of domain knowledge. This clinical knowledge is critical to a vendor’s success given that even the most advanced technology will bring limited benefit if it doesn’t bring material improvements to real-world clinical settings.

These hurdles make other routes to market look more likely. DeepSight could ultimately end up leveraging the advantages one or more of these vendors have by either licensing its technology, or aiming for acquisition. Either of these routes would mean that DeepSight’s technology could be sold through the established sales channels and to existent sales networks. It would also mean the technology could be better integrated into other vendor’s platforms. However, this approach is also not without its obstacles. Any multi-modality vendor selling systems bolstered by DeepSight’s technology would need to carefully position those devices. It would have to both promote the improvements in image quality to encourage providers to purchase the systems, but do so carefully as it would not want to jeopardise the sale of a more expensive MRI or CT system.

Another difficulty in some markets could be in convincing providers to purchase the systems. In predominantly private markets such as the United States, for example, providers might well be interested in the lower price of a DeepSight-equipped ultrasound system, but the fact that they receive greater reimbursement for MRI and CT exams means that they will be reluctant for patients to undergo an ultrasound exam in place one of these more lucrative exam types. There are routes that could avoid some of these hurdles, DeepSight’s technology could be positioned as an adjunct device for instance, which would ensure that vendors and providers alike wouldn’t cannibalise their own sales. However, the creation of an entirely new ultrasound category, especially at the premium end of the market, would require significant time and resource for market education and development if vendors were to be able to convince providers to allocate budget on a new device in any meaningful way.

The Spoils of Disruption

Where, and indeed whether, DeepSight will be successful with its new ultrasound technology remains to be seen. However, the fact that, it, a young and unproven company, has secured a reasonable investment, for a commercially and clinically untested device, highlights that there is an appetite for disruption in the ultrasound markets. Whether DeepSight is the company to manifest that disruption is not yet clear, but after years of stability in some core ultrasound markets, the type of innovative technical strides being made by the vendor are indicative of the kind of developments which could be set to alter the market’s competitive complexion.

Challenger vendors must be ready to pounce on opportunity, while the established market leaders must be ready to fight tooth and nail to protect their positions. For those vendors, Butterfly Network’s rapid rise from obscurity to market leadership in the handheld segment should serve as a warning of how quickly a new competitor can upset the established order. Positions may be more entrenched outside of the handheld segment, and the barriers may be greater, but so too are the rewards. These spoils of disruption are those that DeepSight, one way or another will hope to claim for itself.

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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