MRI sales see slow growth But new features will help

November 21, 2010
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A recent report from Kalorama Information, a leading diagnostic market research provider, said sales of magnetic resonance imaging machines have grown a bit — even during the nation’s recession — and should continue to grow slightly in the coming years.

But that growth will not occur in the same manner as other technological devices, as functionality will drive future sales, and health insurance companies will have a strong say in how much MRI sales will grow.

The report issued last year, Medical Imaging: MRI & Ultrasound Markets, said about 28 million MRI scans were performed in the U.S. in 2008. That volume had slowed somewhat, mostly due to insurers requiring pre-certification. The more often an MRI machine is used, the more revenue it generates and the more it reduces the per-use cost for its owner.

Kalorama Information Publisher Bruce Carlson said the pre-certification requirement doesn’t directly affect the manufacturing market. But he did point out that it impacts sales on an indirect basis because hospitals won’t have driving needs to buy new systems if they have fewer insurance-approved MRI procedures to perform.

“We are only estimating a small growth in MRI — 1 to 2 percent in most health care device markets and the imaging market is anemic. When price increases are considered, it can almost be zero. But it still is growth in a recession,” wrote Carlson from his New York office in an e-mail.

“Emerging markets are a small part of the engine here. It’s still mostly a 50 percent North American market, but they provide some growth opportunities. And a counter to the slowing in standard procedures is that it’s increasingly being ordered for surgical procedures. High-level MRI is sensitive enough to replace arthroscopy,” he added.

An MRI system can cost from $500,000 to $2 million, depending on the magnetic power of a unit, and the report noted that hospitals have had to streamline and simplify how these machines are used to justify a purchase. Kalorama Information cited one way of doing that is to use advanced operational software that can, for instance, perform several exams on a single patient at the same time.

“The price resistance is for current systems at current functionality. It sounds odd but they may actually overcome the price impediment by increasing the price on some systems but also increasing function,” said Carlson, who added that his firm expects 4 percent growth in the MRI market over the next four to five years.

Carlson pointed out that in other technology fields such as communications, the development pattern is toward smaller units — for example, handheld devices — that reduce cost and increase sales. But MRI designers and manufacturers are taking a different approach.

“With the high-cost system such as MRI and a few players, there tends to be less development in the cheaper, higher-volume direction — the way of making an MRI cheaper to conduct — but in actually increasing the functionality so that it’s more likely insurers will OK the procedure over other technologies.

“Making systems faster, requiring less imaging time from the patient and more readable will tend to have this effect,” he said.

“For instance, a 3T system can give a surgeon the confidence that a cardiac surgical intervention may not be required, while a lesser system could not. So there is upward price pressure for health systems contemplating a purchase. Our analysts suspect that better software over the next four or five years may help to make images more precise.”

Carlson said the market leaders in MRI production are Siemens, GE and Phillips. He said one Siemens product, Syngo Expert-I, adds a remote consultation so other physicians can see the MRI result.

“Those types of things will help sell more systems and thus drive revenue,” he said.

Kalorama Information has been a publisher of market research in medical markets for more than 30 years. MarketResearch.com acquired the company in 1998. The report indicated that worldwide revenue for MRI systems topped $4 billion in 2008, and should reach $4.16 billion by the end of this year and $4.45 billion in 2012.

According to a study last summer by The Lewin Group Inc. for the Advanced Medical Technology Association, the medical technology industry employed 422,778 workers, paid $24.6 billion in wages, and shipped products worth $135.9 billion in 2008. Those numbers were up by roughly 12 percent from 2005.

“The medical technology industry is a strong and vibrant part of the U.S. economy and plays a critical role in our health economy,” read the report, called State Impacts of the Medical Technology Industry.

California, Minnesota, Massachusetts, Pennsylvania and Florida had the industry’s highest employment numbers. Surgical appliance and supplies manufacturing was the sector that employed the most workers, followed by surgical and medical instrument manufacturing.

The study found Michigan to be the median state — the one in the middle of the 50 — and reported that medical technology industry workers in the state were earning an average of 22 percent more than the average employee in Michigan.

The report said Michigan had 9,355 employed in the medical technology industry in 2007 and those workers earned $467 million that year for an annual average wage of $50,022. That same year the average worker in Michigan earned $40,935. Medical technology industry sales in Michigan topped $2.4 billion in 2007.

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