Diagnostics & Imaging Week

Frost & Sullivan (F&S; Palo Alto, California) outlined research from its report on growth prospects for digital X-ray modalities in Asia on Tuesday, when it suggested that the market for the two types of digital X-ray – digital radiography (DR) and computed radiography (CR) – would reach about $700 million by 2012, compared to $313.6 million in 2005.

Digital X-ray, the conversion of X-ray to digital images without the use of film, "produces digital images directly after X-ray exposure," said F&S Research Analyst Subha Basu, who made the presentation over via both conference call and webcast. CR captures X-rays onto cassettes, "which are then read by a laser," he said.

"Some of the hot topics for the Asian markets include reimbursement rates, where medical facilities in China, especially, are encouraged to incorporate digital X-rays instead of film," Basu said, noting that a population of more than 1 billion people and 15,000 hospitals requires "workflow efficiencies and throughput."

In light of the large population, he noted that the Chinese government reimburses radiologists at higher rates for digital images, because it allows more people to be examined per day.

In the Asian markets, Basu said it is common that local distributors use foreign-made digital detectors in order to leverage their distribution networks.

"This provides ample sales avenues for extensive local sales distribution networks while also bypassing international trade costs associated with foreign commerce," he said. "Healthcare facilities also benefit by having high-end and low-end ranges of digital X-ray solutions that can cater to each hospital's individual needs."

Part of the need for the transition to digital X-ray is being driven by dense populations in Asian countries. These "booming markets," according to Basu, have been "constantly increasing in the last five years."

That naturally leads to high utilization of healthcare services, and it is typical for some facilities to have as many as 100 patients a day for "simple X-ray procedures such as chest and extremities."

Another factor he pointed to is the fact that wealthy clients in many Asian countries have the expectation of more advanced systems, and they are willing to pay higher prices to get the advanced care.

Countries that are part of the population boom, including China, South Korea, Japan, Hong Kong and Taiwan, "all have the capital and the digital X-ray infrastructure to readily adopt DR or CR," Basu said.

"These technologically advanced countries already have electronic information management systems . . . installed in medical clinics and hospitals," he noted. "Additionally, [the] respective governments are willing to invest in the cost of DR or CR systems for long-term ROI and cost savings."

Among the major challenges to Asian countries' adoption of digital CR is the fact that governments are the largest buyers of technology, which "makes the transition to digital environments more challenging," Basu said. Depending on a government's particular healthcare policies, that will affect how technology is acquired.

However, he noted later than China's particular healthcare policies have "fueled large sales across Asia," as that country seeks to move toward international standards.

A second challenge to adoption is the fact that "in-creased [information technology] infrastructure is required in most Asian countires to fully implement" DR or CR technology. That requirement for improved infrastructure will also impact the adoption of other digital imaging modalities, including computed tomography, MRI or positron emission tomography, Basu said.

Another challenge is the reality that most patients and administrative activities are "still managed in paper form," he said, so they will require "lengthier lead times" for adoption in order to incorporate electronic data storage.

Finally, the "high initial prices" of DR and CR are a barrier to widespread market penetration. "As you can imagine, the currency trade ratios made the economic impact of digital solutions nearly five to 10 times more expensive in Asia than in Western countries," Basu said.

But like China's favorable healthcare policies, there are other drivers toward wider adoption of digital X-ray. For example, he noted that local manufacturers that assemble DR systems "have lower production costs and greater distribution networks." This results in some average selling prices that can be two to three times cheaper for local vs. foreign systems, he said.

Another driver is Japan's influence over the region through its own practice of "constantly buying or upgrading CR medical systems each year."

Other drivers include the high prevalence of PACS [picture archiving and communication systems] and the fact that "tech-savvy" countries like Japan, China, South Korea, Taiwan and Hong Kong have "high IT infrastructure to support digital systems."

Among the leaders in DR cited by Basu are GE Healthcare (Waukesha, Wisconsin), Siemens Medical Solutions (Malvern, Pennsylvania) and Philips Medical Systems (Andover, Massachusetts). Leaders in CR include Fujifilm Medical Systems USA (Stamford, Connecticut) and Eastman Kodak (Rochester, New York).

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