Bloomberg News

Philips Gets U.S. Consent for Combo-Scanner to Rival Siemens

December 01, 2011

(Updates with analyst in fifth paragraph, shares in sixth.)

Nov. 28 (Bloomberg) -- Royal Philips Electronics NV won U.S. approval to sell a combination scanner that performs both PET and magnetic resonance imaging, in a competition to capture a share of the world’s biggest health-care market from incumbent General Electric Co.

Permission to sell the PET/MR scanner from the Food and Drug Administration culminates a multi-million-euro development phase spanning seven years, Steve Rusckowski, chief executive officer of Philips Health care, said in a phone interview. The Dutch company has 13 orders for the machine outside the U.S.

“The jury is still out” on whether the system can replace traditional scanners, Rusckowski said in the interview. GE leads the U.S. health-care scanner market, followed by Siemens AG of Germany.

Philips, based in Amsterdam, is hoping U.S. hospitals will opt for the benefits of having a combined scanner that can accelerate imaging time for patients, Rusckowski said. For Chief Executive Officer Frans van Houten, it’s an opportunity to expand in a growth market as he steers Philips away from struggling consumer electronics and lighting.

“This should give them some incremental sales in the U.S. and help the growth outlook in the business,” said Martin Prozesky, an analyst at Sanford C Bernstein Ltd. The U.S. is still the most important imaging equipment market, he said.

Philips rose 3 percent to 13.79 euros at 10:08 a.m. in Amsterdam trading, giving the company a market value of 13.9 billion euros ($18.6 billion).

Growth Market

The scanner uses a chemical tracer to image organs and tissues, while magnetic fields and radiowaves also scan bone, and combining systems helps improve the diagnosis of cancers and cardiovascular diseases at lower radiation levels than x-rays, he said.

The 16 billion-euro market for diagnostic imaging is projected to grow with 3 percent to 5 percent a year, according to Philips, which has installed five of the scanners worldwide and has orders totaling more than 30 million euros. The new scanners are complementary to existing ones.

Philips developed the PET/MR scanner at its nuclear medicine headquarters in Cleveland, and more orders are in the pipeline, Rusckowski said. Siemens won regulatory approval to sell its rival system in the U.S. in June.

“There is a lot of pressure on the health care systems, but despite the pressure there is still interest in investing in the future,” Rusckowski said.

--With assistance from Rachel Layne in Boston. Editors: Andrew Noel, Benedikt Kammel

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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