Pricing strategy and human resource training top priorities for European 3D imaging equipment vendors

London 08 May 2002Three-dimensional (3D) imaging continues to gain in popularity as the technology's advantages over two-dimensional (2D) and the broadening scope of clinical applicability become increasingly apparent. The European 3D imaging market, accruing revenues worth $386 million in 2001, is more hotly-contested than ever, attracting a host of new entrants and demonstrating significant technological advancements.


With varying degrees of impact across national and product markets, uncontrollable extrinsic factors such as reimbursements, budget allocation, and lack of skilled staff, are contributing to a rapidly changing market landscape. Exacerbated by the scarcity of radiologists and radiographers, inadequate reimbursement rates could hamper widespread hospital uptake of 3D imaging technology, despite the ongoing structural reforms in health care management sweeping Europe.

Frost & Sullivan, the international marketing consulting company, believes that these issues need to be addressed by the marketing function and corporate management in terms of handling the pricing strategy and human resource training. The company's new study titled European 3D Imaging Market cheers the market with an upbeat statement as it predicts sales of 3D imaging, comprising CT, MRI, angiography as well as ultrasound and nuclear medicine, to reach $733 million in 2008.

While uncertainties surrounding the clinical promise of the concept still exist amongst end-users, Frost & Sullivan is confident that 3D imaging will evolve to become a common technique for most imaging modalities. The study emphasises that the introduction of 3D imaging offerings as an integral part of the product mix will create a sustainable competitive edge for manufacturers.

Sumit Sharma, Research Analyst at Frost & Sullivan, explained: "Technological factors such as the application of NT-based operating systems and its associated cost benefits have helped expand interest in 3D imaging. The surge in 3D imaging system installations in new hospitals, as well as in hospitals where installations could not be fulfilled in 2001 and are being earmarked for implementation over the next two years, will further galvanise sales."

Greater acceptance and rising awareness of the technology have unleashed heightened demand for 3D imaging. Frost & Sullivan stresses that the 3D imaging market's fortunes hinge on end-user knowledge of the technology and the ability to cater for customers' increasingly complex needs and changing requirements. A clear understanding of customer demands is fundamental to competitive survival, strategic planning, and the development of a winning marketing plan.

The strength of the 3D imaging industry rests heavily on the sheer size of the predominantly untapped market and the large number of health care institutions that will be set up over the next few years. Additionally, a substantial proportion of existing hospitals and imaging centres will be undergoing upgrades to 3D imaging.

The growing realisation amongst end-users of the cost-efficiency and precision which 3D imaging boasts will provide further impetus for growth. Citing the example of the new three-tesla MRI imaging technology, Mr. Sharma underlined the improved work flow 3D offers through faster imaging, indirectly reducing the cost per unit as a greater number of diagnoses can be carried out with enhanced accuracy and detail.

Curtailed health care spending and limited hospital budgets, affected by the redefined reimbursement systems are crystallising the necessity for health care institutions to optimise their resources in order to manage costs. These factors are leading to a constant need for efficient functioning, cultivating strong demand for 3D imaging.

Accounting for 72,3 percent of total sales in 2002, the 3D CT/MRI/angiography segment grabs the limelight in Frost & Sullivan's review of product markets. This is mainly attributed to the market's steadiest source of growth, 3D CT, which enjoys rising popularity due to its multiple applicability and proven increased clinical benefits. MRI and angiography are also poised for growth, albeit not as dramatically as the CT segment, which is projected to represent approximately 40 percent of the total 3D imaging market consistently over the forecast period.

The segment composed of 3D ultrasound and nuclear medicine will advance at a more sluggish pace, with growth being inhibited by lower awareness levels, insufficient clinical benefits and premium prices. Nuclear medicine is forecast to increase its penetration of the market at a rate of 5 to 10 percent. 3D in the ultrasound market will be perceived as an upgrade or added feature. However, niche markets in ultrasound, such as 3D endoscopy and others, will almost certainly experience demand, however, not enough to help this segment flourish.

Followed by Italy and Scandinavia, Germany is expected to retain its stranglehold on the 3D imaging, accounting for just under 15 percent of total European revenues in 2001. Increasing market saturation will see Scandinavia lose its position to France and the United Kingdom. Siemens, GE Medical Systems (GEMS), and Philips take a commanding position in the European 3D imaging market, jointly snapping up the lion's share of the market with 73 percent in 2001. Other heavyweights in the market include Toshiba, Voxar, Medison, Cedara, Aloka, and Shimadzu.

Mr. Sharma points to Research and Development as a crucial tool for the main Original Equipment Manufacturers (OEMs) to not only fulfil customer needs in terms of product features, but to also reduce costs and hence prices. "This is particularly important because customers in this market demand high price-performance ratios from these products. Companies capable of satisfying these needs will grab a larger share of the 3D imaging pie and grow further to achieve leadership." Moreover, the study highlights the successful implementation of customer relationship management tools as a further step to competitive advantage.

"Price erosion is taking place constantly during this growth stage of the market, reducing profitability. Thus, managing internal costs is a key issue in order to maintain steady profits. For this purpose, it is suggested that these companies reduce their costs in unprofitable markets such as Spain, Belgium, and other such regions within large markets and reallocate these resources to markets which have higher potential. Overall, an approach to acquire cost leadership should be focused on by these companies", Mr. Sharma concluded.

More information about the Frost & Sullivan European 3D Imaging Market report is available from Katja Feick.

Leslie Versweyveld

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