Market Overview

The Picture Archiving and Communications Systems (PACS) market has yet to make as significant an inroad into Europe revenue-wise, as compared to the development of the market in North America, where the increased prevalence of film-less hospitals demonstrates the success of PACS solutions. As in most of the IT healthcare markets there is a lack of funding available for PACS, even in North America where hospitals operate on a private basis and more like a business in comparison with their European counterparts. North America is certainly leading the way and therefore some of the trends experienced here will be reciprocated in Europe. Despite the fact that PACS will operate in the same way wherever it is deployed we will discuss the North America and European regions as two separate markets. The market participants, domestic issues and econometrics of healthcare provision are very different for each continent and this will become apparent throughout the report.

Market Dynamics

HBS TekPlus market intelligence forecasts estimate that the North American and Western European PACS market has a market value of $0.71 billion in 2001 and significant growth rates for the remaining forecast period are reflected in the 2005 estimate for PACS market of $1.58 billion at a compound annual growth rate of 22 percent.

Introduction to the North American and European PACS Market

Report Coverage

Methodology The forecast period is from 1999 to 2005, with the base year starting at 2001. Definitions for the report are contained within the section below. The report covers the North American and Western European market for picture archiving and communication systems. The countries included in the report are as follows: Benelux (Belgium, Luxembourg and the Netherlands), Canada, France, Germany, Spain, Italy, UK, Scandinavia (Denmark, Finland, Norway, Sweden), the Rest-of-Western Europe (Austria, Greece, Ireland, Portugal and Switzerland) and the United States. HBS TekPlus have conducted in-depth face-to-face and phone based interviews with executives across the industry. Interviews included quantitative and qualitative information and covered vendors and hospitals across Europe and North America.

Report Contents The sections that cover the picture archiving and communication systems market in this report are: Market Overview ? The overview of the market provides a very brief summary of the main findings of the picture archiving and communications systems market in terms of market numbers. Introduction to the North American and Western European Picture Archiving and Communication Systems Market ? Definitions for the report are contained within this section along with the primary issues pertinent to the PACS market. Total PACS Market ? The forecast period is from 1998 to 2005, with the base year starting at 2001. The main challenges and market opportunities are also provided in this section together with a breakdown of revenues by region/country and by segment. A historical perspective of the PACS market is discussed and what role it will play and its impact on the provision of healthcare in the future. Competitive Positioning ? We discuss the shape of the PACS industry structure and how this is likely to change in the future. We also provide detailed profiles of a number of significant or interesting market participants and provide our view of their strengths and weaknesses. An indication of where new competition and threats to present day vendors in the PACS market is also discussed. Strategies and Recommendations ? HBS TekPlus provides discussion on our recommendations and strategies for different types of market participants, indicating the strength of the impact depending on whether it is applied in North America or Western Europe.

Definitions

Picture archiving and communication systems (PACS) comprise: ? Department-wide PACS ? Department-wide PACS are deployed specifically for deployment into one department and consist of the archiving and communication of images on a local basis, normally on a LAN. Department-wide PACS stretch to the transferral of imaging information between up to two departments. In general department-wide PACS are small and deployed to small hospitals or to ones that only have an X-ray facility or one other type of imaging lab. ? Enterprise-wide PACS - Enterprise-wide PACS systems are larger in scale than Department-wide PACS and also operate on LANs, and WANs depending on the scale of the healthcare facility. Enterprise PACS integrate all the different types of imaging departments within a hospital, namely CT, MRI, nuclear medicine, X-ray, and ultrasound. Such systems allow different systems to link and communicate with each other and indeed sometimes extend outside hospital walls to connect to other hospitals, clinics and possibly GPs. Teleradiology is included in the two segments above and is not included as a separate segment in its own right. This technology has become increasingly incorporated into PACS and refers to the transmission of medical images between departments, hospitals or any other originating and terminating locations. This solution differs from the other two components of PACS since images in teleradiology are not archived after use. Images are transferred from one site to another to allow other physicians to pass diagnosis. Teleradiology allows the transfer of images across sites using telephone lines or other transmission equipment and may digitise images if they originate in analogue form. Practitioners primarily use teleradiology to view images off-site at their home office utilising their analogue telephone line. The introduction of broadband connections has impacted upon the independent growth of the teleradiology sector. We define the PACS market to include equipment and software that enables images to be archived, retrieved, manipulated and transferred. The equipment includes those systems that convert X-rays into digital images such as laser or CCD (charge-coupled device) digitisers and workstations necessary to view and manipulate images on. This includes the software necessary for image manipulation. The archiving solution comprises cutting edge optical and hard disk storage.

North America and Western Europe - Total PACS Market

The most dramatic changes in the PACS market are to be found in the distribution of revenues spent on the different systems that form patient archiving communication systems. There is a definite move towards the deployment of enterprise wide solutions, this is shown in figure 3.1 and 3.2.

Figure 3.1 Forecast of PACS Market by Segment, 1998-2005 North America and Western Europe.

A gradual move towards the deployment of enterprise PACS solutions has occurred in recent years and this is expected to result in its share of revenues to total 53.6 percent in 2001. In 2005, enterprise-wide systems are expected to see its share of the market rise to 56.0 percent. The benefit of deploying enterprise-wide solutions as opposed to departmental ones will spur growth in this area.

Figure 3.2 Percentage Breakdown of PACS Market by Segment, 1998-2005

PACS Market Breakdown by Region

The figures below show the forecasts and revenue breakdowns of the North American and Western European PACS markets.

Figure 3.3 Forecast of PACS Market by Region, 1998-2005

Figure 3.4 Percentage Breakdown of PACS Market by Region, 1998-2005