Medical Device Daily

DÜSSELDORF, Germany – The economic downturn that has stalled decisions on capital outlay for the big ticket machines of radiology is benefitting a rapidly shifting market for ultrasound that is expected to grow by 15% each year from almost $3 billion in 2008 to over $5 billion by 2012.

The low cost and increasing power of processors over the past four years has transformed the famously snow-bound images of ultrasound into vivid, high resolution and natural-looking pictures depicting with increasing precision the morphology and even the function of internal anatomy.

Miniaturization of electronics has also made these scanners portable, bringing immediate and non-invasive diagnostic capabilities to every practice area within a hospital, and more recently beyond the walls of a medical center into private practices, outpatient centers and even emergency vehicles.

The lower barriers of ultrasound technology, which is driven by signal processing and software, and the high potential rewards for innovation, have set off a robust competition that is currently pushing the market out of the quality stage, where new features win customers, to the commodity phase where every company offers similar features and price drives purchasing decisions.

There was an eerie silence here last week at Medica 2009 among the market leaders in Europe for ultrasound, in order of market dominance: GE Healthcare (Waukesha, Wisconsin), Philips (Eindhoven, the Netherlands), Toshiba (Tokyo) and Siemens (Erlangen, Germany).

Traditionally major companies hold their announcements for the upcoming competition set for Chicago at the congress of the Radiological Society of North America (Oak Brook, Illinois), putting the accent at Medica on relationship building and reinforcing brand.

Yet moving away from the bright lights and the massive stands of the market leaders visiting the second-tier companies in European ultrasound elsewhere in the exhibition halls provided snapshots of a shifting market adapting products to the coming competitive pressures.

Aloka lowers pricing for high-end features

The pioneer in ultrasound, Aloka (Tokyo) may have peaked in 2007 when it rolled out the high-performance ProSound Alpha 10.

The developer of the first commercially available ultrasound system in 1960, Aloka secured a reputation for innovation with the first electronic linear array scanning system in 1971.

Aloka continues to break new ground today as a partner with Olympus (Tokyo) in developing ultrasound capabilities for endoscopy.

Yet in the broader market for clinical ultrasound scanners, at the same moment Aloka launched its top line Alpha 10 the company simultaneously introduced the Alpha 7, a scanner loaded with similar features, including cardiovascular capabilities, but priced for mid-level and office-based applications.

At Medica 2009, Aloka presented the Alpha 6, an even more compact cart-based system that lowers the price further for key capabilities also found on its high-end Alpha 10.

"You could say the Alpha 6 is our war-horse built to compete on price," said Fredrick Henke, a sales manager with Aloka GmbH (Willich, Germany) who said Aloka began deliveries of the Alpha 6 in Europe in October.

"Alpha 6 has the same features as the Alpha 10, but at an affordable price," he told Medical Device Daily, adding that it includes eFlow, a broadband color Doppler technology that visualizes blood flow dynamics and is highly sensitive for blood perfusion

With high power processing and a reduced footprint, the Alpha 6 is meant to help Aloka break out of highly specialized applications, such as fetal cardiology where its precision is highly valued, to compete across the broader diagnostic market for general imaging, cardiovascular and internal medicine.

Buy once, upgrade on the internet with Zonare

Where Aloka's strategic path can be traced with the count down from Alpha 10 to Alpha 6, Zonare (Mountain View, California) continues to defy definitions by scaling up the name of its products even as the price comes down.

At Medica 2009 Zonare presented the Z.ONE Ultra SP, which despite the super-sounding "SP" is actually a step down from the flagship Z.ONE Ultra, and one would guess, a step up from the Z.ONE Mini.

Except that is not how Zonare prices its very pricey machines.

Zonare actually offers a single product, a "scan engine," lightweight and portable at 2.5 pounds, that holds all the image acquisition technology, the processing power, a small display and a laptop style keyboard interface.

A customer specifies clinical diagnostic capabilities and then selects a cart, either Ultra, Ultra SP or Mini.

The scan engine is docked into the selected cart and it powers a new set of peripherals that include a large screen, a large control center and an array of transducers and probes.

"We are not selling a product, we are selling a concept," said Ludwig Steffgen, sales manager in Germany who helped to translate the Zonare model.

"Any of our competitors will offer physicians 10 different models for ultrasound, and whenever the physician or radiology group wants to add a new feature for diagnosis they find they have to buy a new machine," he told MDD.

Zonare offers the scan engine priced according to the diagnostic features required, and to later add capabilities only requires an internet hook up.

Rather than shipping a new machine with new processing capabilities, Zonare charges customers for upgrades to the scan engine that are downloaded, Steffgen explained.

"We made ultrasound smaller and yet more powerful, that is the concept," said Steffgen. "We threw away the beam former with line-by-line scanning because it is too slow."

Zonare's scan engine instead sequentially covers zones of the targeted organ, he said, acquiring images 10 times faster than line scanning.

"We can use the extra time to process the image on a proprietary video diagnostics board," he said, admitting that the processor is identical to a video game board, "but we don't call it a game board because ultrasound imaging is not a game."

The scan engine uses the same frequency as conventional ultrasound "yet capture a higher resolution, a sub-millimeter resolution, with greater penetration," he said.

"Look at this image of a stent in the liver and you can count every link and trace the struts of the stent," he said.

"With a single sound pulse a bat in flight can visualize in detail a three-dimensional space," said Steffgen. "We are not quite that good as we still require several pulses, but we are on our way to matching this skill."

"Considering that we began deliveries in April 2007 and we have 3,000 units installed worldwide, that is an incredible track record in such a highly competitive market," he said, adding that Zonare also bucks the trend in ultrasound by keeping its pricing toward the highest end of the market, despite the concessions with the recently introduced Ultra SP.

Sonoscape challenging ultrasound space

Sonoscape (Shenzhen, China) came to Medica for the first time in 2003 and quickly moved out of what is perhaps not affectionately called "China Alley" and into the main exhibition hall for radiology products.

The world's first portable color Doppler, the SSI 1000, proved to be the company's ticket into the main business of European ultrasound with a strong appeal at the right moment for emergency departments and specialized practices, especially OB-GYN.

"It was a little difficult for people in Europe to accept a new name in the business, and then to understand that this powerful and high performing portable was coming from China," said Randy Hwan, vice president with Sonoscape.

"Today, of course, everyone has matched this capability and it has been interesting to watch these big companies building down from their high-end machines to the portable scale," he told MDD.

At the same time, he said, Sonoscape has been moving in the opposite direction continually building up from the portable.

At Medica 2009 Sonoscape introduced the flagship SSI 8000, a full featured cart-based clinical scanner that supports a staggering array of 512 probes and transducers from cardiac exams to transvaginal to transesophageal.

Sonoscape is able to sell as low as one-third below established market prices, adding to the market pressure for leading companies.

Sonoscape has also expanded its portable line to 10 different models, including the S8 that was introduced to Europe at Medica and matches the performance of high-end cart-based ultrasound systems.

All systems are Linux-based and can be serviced through internet connection.

"In general terms, portable ultrasound has an immediate appeal for emergency departments, but we have also found opportunities in markets where specialists simply prefer to bring ultrasound with them between different locations for their practice," said Hwan.

Italy immediately took to the portable offer and Sonoscape has a strong presence in that country, setting up its European service center in Rome.

"Some markets tend more heavily toward the portable models, such as Russia or Italy, where France and Germany tend to prefer the trolley based units," he said adding that Eastern Europe has proven to be more evenly balanced in their requirements with a nearly 50-50 blend between mobility and clinical scale units.

Sonoscape ,in four years since winning its first CE mark, has established distributors in 100 countries and is now targeting a new opportunity, mainland China.

Hwan enjoys the irony of admitting the company does not yet sell in its native country.

"Our first market, and this may surprise you, was the toughest market we faced, the United States," he said.

"We knew we had a unique offer to customers with the color portable, and this became our strategy, to take on the challenging opportunities first," said Hwan.