Imaging diagnostics market: Filling the gaps

With the increasing pace of technology, there is an intense competition resulting in price erosion in the diagnostics imaging segment. Besides competition has also resulted in widening the demand-supply gap. Chandreyee Bhaumik details the factors that can plug in the gap.  

The diagnostics sector has made tremendous progress in the last few years, contributing significantly to the growth of the healthcare industry. Globally, the US is considered to be the largest diagnostics market, valued at $ 5.4 billion in 2009, which is further expected to grow by 5.4 per cent annually over the next seven years to reach $ 7.8 billion in 2016, according to GlobalData report. This report further highlights that such healthcare average expansion to include 32 million people by 2014 will render a positive effect.

Coming to terms with the theory of emerging markets, the diagnostic imaging market in China and India put together was valued at$ 2 billion in 2009, accounting for more than 12 per cent of the global market, states the same report. This will be driven by an ever-expanding patient pool, continuously improving healthcare infrastructure, rise in health spending, enhanced health awareness and affordability. These factors will push the market to reach $ 3 billion in 2016. Commenting on the development in this segment, Suhas Pokale, Country General Manager-Medical Division, Fujifilm India opines, “Over the last decade, innovative imaging technology was being used for basic X-ray imaging that started from Computed Radiography (CR) to Digital Radiography (DR), which is a very direct technique.”

Business models and growth drivers

To hold a larger share in the market, companies have adopted different business models, depending upon the reach, product portfolio and targets to be achieved. Highlighting the business model at Trivitron, Paul Stephen, GM Imaging, Trivitron HealthCare remarks, “We have a joint venture with Aloka to manufacture ultrasound systems in India. We also have a partnership with Vision Mediaid for manufacturing and marketing the X-ray range of systems including the C-arms.” Elaborating further, Stephen says, “We are also distributors for Hologic brand of digital & analog Mammo systems and bone densitometers. Whereas, Uma Shankar, General Manager, Imaging Systems Business, Philips Electronics India Ltd, notes, “ In 2008, we acquired two Indian companies in imaging systems – Alpha and Meditronics. With these acquisitions, we are very strongly poised to provide affordable solutions in the field of cardiovascular labs and general X-ray systems.”  These models clearly indicate that consolidation will be the growth driver for this segment too.

Shankar feels that the government’s focus on growth of the healthcare sector through Pradhan Mantri Swastya Suraksha Yojana (PMSSY), accompanied with expansion plans of corporate players in this industry will be the key contributors to this segment.

Besides, the advent of technology has also metamorphosed the face of the imaging diagnostics segment. Highlighting the role of technology as one of the factors responsible for propelling growth and development in this industry, Jayant Singh, Industry Analyst-Healthcare Practice, Frost & Sullivan, South Asia and Middle East opines, “One of the most important growth factors has been the introduction of new technology like the digital X-ray system which makes it possible for doctors to perform various functions that were not possible earlier.”

Advancements in technology and R&D

Introduction of novel aspects is fundamental to any sector, and behind such innovation goes in efficient R&D. Elaborates Shankar, “We have undertaken healthcare research at the Philips Innovation Campus in Bangalore since 1996, and this research enables us in developing solutions for Philip’s global products offerings.”

Also, R&D is a continuous and ongoing process, as Dr Vivek Yadkikar, Founder Director, Hi Tech Institute of Imaging & Research, informs, “We always receive feedback from imaging specialists & consultants, and efforts are made to solve problems.” However, while shedding insights on the research ground, Singh candidly remarks, “Since almost nothing happens in India, therefore, it is a wishful thing to talk about what R&D goes behind this. Barring low end X-rays, nothing is manufactured in India, and most of the things are imported from abroad.”

Technological innovation and renovations are implemented for a faster and reliable diagnosis with reduced doses, procedure time and newer application. Shankar elaborates with the help of an example, “The third generation Time Of Flight (TOF) technology in PET-CT scanners renders benefits in terms of time, dose and image quality. Another feature like TX: MR imaging at 3T has always been subjected to challenges such as dielectric shading. TX scanner has fundamentally addressed those challenges by using multiple RF sources.”

Whereas Singh notes a different trend, “Another technological advancement in the X-ray market that is picking up pace is the digital mammography though it will not replace the biopsy.  Overall, if one considers X-ray, then ‘digital’ is the buzz word. This trend is going to continue for next few years. However, on the other hand, in the ultrasound section, one has almost reached the saturation point where not much is happening on the technology front. But again the companies are trying to make it more affordable rather than concentrating on the technological aspect in the strict sense of the term.”

Key trends

One of the most visible trends is the increased intensity in the competition and thus, the subsequent price erosion. This is expected to continue for the next few years. Singh avers with the help of an example, “Leading players are almost forced to reduce their prices in order to cope up with the competition of launching innovative products at a much lesser price.” When digital X-ray system was launched in the country, it was conceived to be ` 2 crore, of late it is almost reduced to ` 70 lakh and expected to be about ` 40-50 lakh, according to Singh.

He further adds, “Companies like GE Healthcare and Siemens Healthcare are also forced to reduce the prices and respond to what the companies like Fuji and Kodak are doing. Fuji has launched a digital X-ray at ` 30 lakh. It might not incorporate all the benefits of the system worth ` 2 lakh, but the task of handling the workload is accomplished by Fuji also. Thus, these companies sometimes run a chance of explaining the extra ` 1 lakh or ` 1 lakh 50 thousand. In these situations, the customers become proactive, and thus the companies will have to reduce the costs.” 

The need

Be competition, or the subsequent price erosion, healthcare for people is imperative. Taking this sentiment further, Dr Indranil Biswas, Orthopaedic Registrar, Department of Orthopaedics, Columbia Asia Hospital, Salt Lake, Kolkata highlights the importance of these technologies with a day-to-day example, “It is only yesterday that I had noticed such a case. A 44 yr old gentleman came to ER with an h/o RTA following that he had sustained a fracture pelvis and injury to the cervical spine. He had also developed sudden abdominal distension and that was when he was brought to us. In this situation, a conventional X ray reflected a rib fracture with right sided lung haziness and abdominal haziness in the film. Urgently a contrast scan for the lungs and abdomen was done along with abdominal ultrasound that showed blood collection in the abdomen with constant intra abdominal bleed, and surgical emphysema was noted down in the HRCT lungs. Immediately chest drain was done followed by emergency laprotomy. Later CT scan of pelvis was done to better mark the fracture pelvis for further management.” Here, the point he tries to make is how digitalisation and quick time response have made things and critical situations to be handled faster today.

The way ahead

Like any arena that is developing, imaging segment also has its own set of roadblocks. Stephen says, “The challenge is the rising yen that drives import costs at this point of time.” However, talking about the roadblocks, Dr Yadkikar avers, “One of the hindrances is the availability of trained personnel. Further, there is a world wide scarcity of radiologists and that is true in India. Again, the number of experts is less, especially when the smaller cities and rural areas are considered.” He continues, “Second, there is a lot of investment required in order to start the imaging facility.  It is not one time but a recurring investment. The technology is changing so fast that one has to keep on upgrading the equipment. Moreover, the Indian market is price sensitive. Thus, to provide ultramodern facilities at affordable rates to a common person is a big challenge in itself.”

Seconding this thought, Singh affirms, “Despite high technologies, no company has been able to bring out a blockbuster like a blockbuster drug in pharmaceutical industry. We feel that there is disconnect between what the customers want, and what the companies give them.”

Shankar explains, “Hospitals are in need of solutions to combat the uncertainty that surrounds their expansion and investment plans. Philips offers solutions in the form of ‘Financing Solutions’ and ‘Philips healthcare solutions’. Therefore business models like these are important for the growth of this segment.”