Health imaging a rosy picture for Kodak
By Lu Haoting (China Business Weekly)
Updated: 2004-08-17 14:13

US-based Eastman Kodak Co believes the health-imaging business is, and will remain, one of its most important growth points, and that China will make a significant contribution to its growth, senior company officials said last week.

China is the world's third-largest, single-country medical market, after the United States and Japan.

And China's medical market is growing about 10 per cent annually.

"We plan to shift our existing production base from Shantou, in Guangdong Province, to Xiamen, in Fujian Province," said Joshua K. Sun, general manager in charge of Kodak's health imaging business in greater China and South Korea.

Experts believe that the move is to further streamline its business growth in China market.

Kodak's US$20-million investment, in March, has helped transform Xiamen into Asia's largest production base for sensitizing materials.

Kodak currently manufactures X-ray film systems in Shantou.

Kodak's health-imaging research and development (R&D) centre in Shanghai, with about 100 employees, has begun operations.

The company will recruit more people to its R&D centre in the near future, said Sun.

"This centre serves not only China, but other markets as well. It works along with our R&D centres in North America and Europe."

Sun said China's reform to allow private entrepreneurs to invest in hospitals will result in the wider use of advanced medical equipment in China.

"Foreign investors' capital and modern management styles will help Chinese hospitals upgrade their services," Sun said.

State capital will gradually be reduced from public hospitals, said Song Ruilin, director of the Ministry of Health's science, education, culture and hygiene law department.

Under the new policy, widely expected to be issued in the next few months, the State plans to maintain, at minimum, a 51-per-cent stake in public hospitals.

"Presently, medical services cost about 5 per cent of China's GDP (gross domestic product), which is much smaller than the 13-15 per cent in developed countries, such as the United States," Sun said.

"But that is going to change, given the increasing health-care coverage in the country, the government's investment and Chinese people's rising average disposable income."

Kodak, due to international consumption trends, is coping with a tough transition from its declining traditional film business towards digital cameras and products.

Health imaging, which generated US$2.43 billion in sales revenues last year, was Kodak's second-largest revenue source, after the digital and film-imaging segment.

"Kodak last year spent US$700 million to acquire the latest digital medical-imaging technologies. Kodak will maintain its commitment to the health-imaging business," Sun said.

Kodak purchased the computer-aided detection (CAD) technology for mammography screening from California-based MiraMedica last September.

"We will start to sell Kodak Mammography CAD systems in China by the end of this year," said Owen Wang, market representative of Kodak (China) Co Ltd.

A CAD system automatically highlights suspicious areas on patients' digital-medical images or digitized film images. That warns radiologists to closely examine those areas for possible diseases, notably cancer.

"Mammography CAD systems will see rising demand in China, as more Chinese women are aware of the danger of breast cancer," Sun said.

Kodak last November acquired Algotec Systems Ltd, an Israel-based PACS (picture archiving and communications systems) developer. The KODAK DIRECTVIEW PACS System 5, currently entering the market, is the result of the collaboration.

The US company last July acquired Georgia-based PracticeWorks, which provides dental-imaging services.

FUJIFILM Medical Systems USA Inc and Konica Minolta are also major players in China's medical-imaging market.

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