Focused for Growth 4158

COVER STORY

As a division of a division of one of the largest integrated manufacturers of electric and electronic equipment in the world, it would be easy to get lost in the shuffle—particularly when a company's competitors are also multinational giants that compete successfully in multiple industries. Yet Toshiba America Medical Systems Inc. (Tustin, CA) hasn't had any trouble making a name for itself in the field of imaging.

One of only four international manufacturers to produce a full range of imaging products, Toshiba America Medical Systems has boasted 25% year-over-year growth for the past three years—an impressive figure in a sector estimated to be growing at an overall annual rate somewhere in the high single digits. And while its competitors have turned their attention to high-profile acquisitions in molecular imaging and healthcare information technologies as a means of spurring greater growth, Toshiba America Medical Systems remains focused on investing in its core competencies in the diagnostic imaging market and building stronger relationships with its customers and strategic partners.

In recent months, Toshiba America Medical Systems has made significant strides in furthering its commitment to both its customers and its technology. In November 2006, the company announced the grand opening of the Toshiba Education Center, a $6 million, 4840-sq-ft expansion of the Toshiba Training Academy. Later that month, at the annual meeting of the Radiological Society of North America (RSNA), the company offered a sneak peek at images acquired from its 256-slice computed tomography (CT) scanner, a works-in-progress technology with the potential to significantly alter the field of imaging.

In this interview with MX editor-in-chief Steve Halasey, Lawrence Dentice, senior vice president and general manager of Toshiba America Medical Systems, elaborates on these and other developments that are paving the way for Toshiba America Medical Systems' continued growth. He discusses the company's strategy for differentiating itself through customer-centric initiatives, world-class partnerships, and focused technology development.

MX: Imaging technologies are powerful, but they are also arguably not as well understood as products from other medical technology sectors. How informed is the general public about the advanced imaging technologies now being used by physicians?

Lawrence Dentice: There has been a good deal of public discussion regarding imaging technologies, but as with many technologies, such discussion in the general marketplace is being driven by direct-to-consumer advertising. So although the general public knows a great deal about imaging advances, there is also a great deal of confusion in the marketplace.

Toshiba prefers to partner with physicians, healthcare administrators, and technologists. Instead of launching a direct-to-consumer advertising campaign, our company spends its time educating these parties so they can in turn educate their patients and the public at large. If manufacturers educate and train their customers, they have the expertise and the knowledge to advise their patients. Toshiba works with not only physicians but also with their direct marketing personnel and their technologists. Our company spends its time educating them so they can educate their patients and their customers.

Imaging technologies are contributing to better healthcare in many ways. What clinical applications do you find most impressive?

A couple of technologies are getting a lot of buzz. Overall, there is more awareness of cardiovascular disease than ever before, thanks to magazine articles and television shows such as Oprah. And multislice CT systems are enabling quicker, more-accurate diagnoses. In addition, in women's health, breast magnetic resonance imaging (MRI) offers an accurate and much less invasive means of diagnosis because there is no radiation.

What clinical opportunities are still on the horizon—under discussion, perhaps, but not yet in everyday clinical use?

When discussing which technology offers the most tremendous potential to improve the quality of healthcare, I must mention the 256-slice CT scanner, which is a works-in-progress technology at Toshiba. And it's going to do something very different in the marketplace.

From a cardiac perspective, the key thing the 256-slice technology will do is cover the entire heart in one rotation. That means the technology will be able to scan the entire heart in less than a second—it will scan it in one heartbeat. Therefore, the patient is scanned at a much lower x-ray dose—probably 10–20% of what a patient would be exposed to on the current 64-slice technology.

The 256-slice technology will also provide new applications. One of the key applications is functional imaging of the heart, meaning perfusion studies to take a look at the myocardium as well as infarct imaging. The technology will also go beyond the heart. It will likely scan most organs in one rotation—in less than 1 second. It will also have significant implications for oncology patients by enabling physicians to look at perfusion of antiangiogenesis therapy for follow-up of oncology patients. These will be game-changing clinical applications.

You mentioned that 256-slice CT is a works-in-progress technology. How many years of research have already gone into the product and what is the projected date for commercialization?

From a research and development (R&D) perspective, most of these products take up to 10 years to get them to a works-in-progress stage. That's about where this product is now. Toshiba's 256-slice system is probably about two years away from a commercial launch.

So comparatively speaking, this product is close to commercialization.

Yes. At the RSNA meeting last year, Toshiba held a conference on the future of CT, during which we discussed what 256-slice technology will do.

The Imaging Life Cycle

RSNA holds the world's largest international medical meeting—and the one that imaging companies prepare for most intensely. At what point in the development of a product do you begin to consider timing its launch for a particular RSNA meeting?

It really depends on the product. We have products across all imaging modalities: CT, MR, x-ray, vascular, and ultrasound. For the most part, based on my interactions with our R&D department, I'd say we start planning for a launch around the seven-year mark. That can vary according to the clinical applications being targeted.

At a meeting like RSNA, press coverage is critical. At that meeting, people want to see new products. Members of the press want to see advanced applications and how they are affecting healthcare. In addition, RSNA is attended by customers such as independent delivery networks, group purchasing organizations, the Department of Veterans Affairs, and other government agencies. They want to see what's new and what's going on with works-in-progress technologies so they can appropriately budget for what's on the horizon.

Is there a false expectation that every imaging company is going to have something new at every RSNA meeting?

The larger providers have a breadth of products, so it's not an issue. At RSNA, there's generally something new in every modality. And most of the 60,000 people that attend RSNA each year don't attend every year. Most of them will show up every two or three years, so they're always seeing something new and exciting.

Aside from marketing as part of RSNA's trade show, the scientific sessions at RSNA also offer opportunities for companies and their investigators to discuss the results of new clinical research. How do companies coordinate these presentations with other aspects of their public presence, such as peer-reviewed publications, continuing medical education (CME), advertising, and so on?

All those aspects have to be part of a comprehensive launch plan. It's like anything else in life: the better you plan, the greater your opportunities are for success. So Toshiba spends a lot of time validating the technology, the clinical efficacy of the products, and how the technology is going to improve patient care.

Does a comprehensive plan include advertising and peer-reviewed publications and presentations?

A comprehensive launch plan includes everything you mentioned. It starts off with a clinical understanding of what a product can do in the marketplace. From there, a manufacturer moves into the areas of validation, advertising campaigns, and education programs. It all fits together.

What happens if a manufacturer hits a bump in the road and a product launch planned for RSNA doesn't materialize?

We don't have much trouble with that. Since we offer products in all modalities, there are enough launches and advances to go around. We haven't found it to be a problem at any of our major meetings.

At the 2006 RSNA meeting, what Toshiba announcements were you most pleased with? Which ones received the strongest response from attendees at the meeting?

In the MRI segment, there's no question that our Vantage Atlas 1.5T MRI system got a lot of attention. With 128 channels, it's focused on enabling a patient to have multiple scans without being repositioned. We designed the system with the patient in mind—particularly the claustrophobic patient. Unless the head is being scanned, the system allows the patient to go in feet first, and the patient's head is not in the magnet. The system also features a technology called Pianissimo, which reduces ambient noise by about 90%. These enhancements—keeping patients' heads out of the gantry; offering a system with a larger, more open bore; and reducing noise—greatly improve the patient experience.

In addition, Toshiba's multiaccess hybrid lab—which is installed at Columbus Children's Hospital in Ohio-received a lot of press. It allows unfettered access to patients. It saves time and increases a patient's level of comfort.

In the ultrasound segment at RSNA, we featured our 4-D ultrasound product, which enables real-time acquisitions in 3-D. It also provides for volume data analysis, thereby removing much of the variability due to scanning by different sonographers, allowing them to provide more-consistent scans and thereby help the physician provide a quick, accurate diagnosis.

And, as I mentioned, probably Toshiba's biggest RSNA event was the one during which we discussed the promise of 256-slice CT. We had more than 700 attendees, and the event's key presenters included physicians from Johns Hopkins University (Baltimore), Brigham and Women's Hospital (Boston), and Charite in Germany. The market was very excited about what this technology could do, and many of the CT enhancements for clinical efficiency and cost-effective performance were also well received.

When discussing technology that isn't yet commercially available—such as the 256-slice CT scanner—what kind of caveats do you have to present?

We have to tell attendees, the press, and so on, that the system is a works-in-progress technology.

Can people see the unit in operation?

No. The unit is installed in three facilities in Japan and is being installed at Johns Hopkins. What attendees see are images taken from the advanced clinical researchers from those sites, who are able to use Toshiba's prototype works-in-progress units to scan patients. These research relationships have been cleared by an institutional review board.

The Toshiba Pipeline

Can you provide an overview of where Toshiba America Medical Systems fits into the overall structure of Toshiba Corp.?

Toshiba America Medical Systems is part of Toshiba Medical Systems Corp. (TMSC) in Japan. TMSC is one of Toshiba's corporations, part of the worldwide business accounting for about $4 billion in sales for medical. Toshiba America Medical Systems is the corporation's U.S. operation. There is also a European operation, a Japanese operation, and an Asia-Pacific operation, as well as sales and service activities throughout the world.

How would you describe the advantages and challenges of directing a subsidiary of a much larger multinational corporation with diversified interests?

Toshiba Medical Systems Corp. is an important part of the corporation in that it uses many of the innovations developed by its sister companies. It's also a very stable business within Toshiba's broad portfolio of businesses, some of which are quite volatile. Although it accounts for a smaller percentage of the company's overall sales, TMSC accounts for a larger percentage of the overall return. And a big part of that return is due to the U.S. market. This market tends to lead the world in innovation, and it's considered the most important medical imaging market out there. That really helps us obtain support for programs that are focused on our U.S. customers and research and development.

So your unit is not neglected by its parent company.

No. Actually, it's the opposite. Because the U.S. market is so strong in innovation and research relative to the world market, we're a very important part of the overall corporation.

Does that present challenges as well as benefits? Is your unit obliged to be ahead of the pack whether it wants to be or not?

Like most things in life, it's a double-edged sword. The parent corporation wants our unit to have strong clinical research partners and to understand what's happening in our marketplaces. We receive the support to do that, and we have a strong marketing group that keeps us on the leading edge of what's happening in healthcare and the U.S. medical field.

Toshiba is one of four international manufacturers to produce a full range of imaging products. How tough is it for the company to compete in all those areas at once?

The imaging sector is dominated by world-class companies. Toshiba differentiates itself in two ways: we offer the best technology possible, and we are committed to customer satisfaction and after-sales support.

Does having a full range of imaging technologies create opportunities that other companies in the imaging field don't have?

Toshiba takes the best of each technology and focuses on enhancing the level of care that it can provide for the patient. For example, CT is now being used for diagnosis of cardiovascular disease. And in many cases, the results are faster, more accurate, and less invasive than a cardiac cath. Then, if the patient requires an intervention, they can go to the cath lab for an interventional treatment.

Also, the user interfaces on Toshiba's equipment are similar among the modalities, which makes for easy cross-training of technologists. Some modalities, such as CT and ultrasound, are geared toward diagnostics, whereas cardiac and vascular are geared for interventional use. These modalities complement each other.

Is there an area that you feel is underexplored at the moment?

I don't think so. We see tremendous opportunities in all the modalities we offer.

And you're going after all of them?

Absolutely.

How is clinical testing of imaging modalities and applications carried out? Does this differ from clinical research in other medical fields?

Toshiba recognizes the value and importance of multicenter trials. That is why the company has made tremendous investments in its coronary evaluation on 64-slice CT (CorE 64) clinical trial, which compares cardiac CT to cardiac cath diagnostics for cardiovascular disease. Eight centers around the world are comparing CT exams with cardiac cath, and they're seeing a difference.

How does clinical research such as the CorE 64 trial contribute to the success of the company?

Good clinical research is critical. That's why we install beta systems. Soon Toshiba will be installing its 256-slice system at Johns Hopkins University, where we will get clini- cal data from both radiology and cardiology.

In order to be responsible about bringing this technology to the marketplace, Toshiba has to ensure that it enables physicians to do something they haven't been able to do with existing technologies. It must offer greater efficiencies, improved productivity, lower cost, or other clinical advances. That's how manufacturers must operate in today's market. Working with clinical partners enables us to discover possibilities with new technologies. That's why we use clinical advisory boards and seek candid feedback from their members on system features.

The clinical research that Toshiba is doing must provide the foundation for a lot of peer-reviewed publications.

Absolutely. That's a major part of the conferences that Toshiba sponsors. In addition to RSNA and the American College of Cardiology convention, our company sponsors 20 or 30 other conferences at which people compare clinical data and discuss how technology advances are going to improve healthcare.

To what extent do those contribute to ultimately obtaining reimbursement for new applications?

Reimbursement is a small part of what we do on the research and development side. The main goal is to demonstrate a technology's advances relative to existing technologies in terms of efficiency and earlier diagnosis. Those advances need to be put in context in the overall imaging market.

Changing Sites

In recent years there has been considerable growth in the number of self-standing imaging centers—sites at locations distinct from hospitals. How has this change affected the customer base for imaging companies?

Imaging centers account for a significant percentage of the diagnostic imaging market. As a result of changes such as those brought on by the Deficit Reduction Act, there has been a shift back and forth in imaging volume between imaging centers and hospitals.

With a customer base that is shifting back and forth between hospitals and self-standing centers, it must be difficult to figure out to whom Toshiba is selling. Does that change Toshiba's strategy in any way?

Not really. Toshiba's product portfolio covers the hospital market, the imaging center market, medical group practices, and physician offices. Our full product portfolio spans vertically across cardiology, radiology, and oncology as well as other specialties.

Are there particular products in the Toshiba line that are designed to work better in certain settings?

Toshiba focuses on three key objectives: being patient focused, achieving optimum system performance, and fostering long-term customer-focused relationships. These features—particularly patient-focused technology—have really helped our imaging center customers be more competitive in their marketplace, which is extremely competitive.

These centers can differentiate themselves by being more focused on their patients and their customers, who are referring physicians. Toshiba has developed customizable marketing programs to help physicians target customers in their markets.

Imaging and Information

Toshiba's competitors GE Healthcare and Siemens Medical Solutions are building businesses in molecular imaging—combining in vitro diagnostics with imaging modalities—and in healthcare information technologies. Does Toshiba have any interests in these fields?

We evaluate new and emerging technologies on an ongoing basis. However, Toshiba is focused on the diagnostic imaging market. Our strategy has allowed us to differentiate ourselves from the competition and to be successful in the marketplace, as evidenced by our 25% year-over-year growth for the past three years and the highest customer satisfaction ratings in the country. It's hard to see any disadvantages to doing that.

I guess 25% year-over-year growth is a pretty big advantage.

Absolutely.

Does Toshiba Corp. have an overall strategy for developing its medical businesses?

Toshiba's annual corporate investment is more than $3 billion from an R&D perspective. That number includes all of the Toshiba businesses. We spend our time evaluating which areas will benefit most from the medical research portion. For example, we just made a multimillion-dollar investment in a Toshiba Medical Research Institute in Chicago. Such an investment demonstrates our commitment to the U.S. medical imaging market.

Our competitors have made some acquisitions in areas that Toshiba hasn't identified as being central to its growth. Right now, rather than acquisitions such as those being undertaken by other companies, we are focused on our customers and on creating best-in-class partnerships.

Do other Toshiba business units contribute to Toshiba America Medical Systems in some way?

Our unit focuses on the key areas from the medical perspective. We're responsible for maintaining a focus on patients, developing our technology, optimizing system performance, and developing long-term customer relationships. However, we do get some cross-functional advantages from our sister companies, such as those that develop laptops, copiers, and phone systems. We also gain an advantage through our key partners, including Vital Images Inc. (Minnetonka, MN) and McKesson (San Francisco). McKesson is one of the leaders in healthcare information technologies (IT), picture archiving and communications systems (PACS), and information systems. Toshiba recently partnered with McKesson on a mini-PACS, which was introduced at RSNA.

Our companies have similar values and common goals in the marketplace. McKesson prides itself on its customer satisfaction much in the way Toshiba does. Both companies are ranked number one in their fields by MD Buyline and KLAS, two independent firms. There are many similarities in the marketplaces in which Toshiba will offer McKesson's technologies, and both companies share the same customer base and the same value system.

Growth Engines

How important is acquisition to the growth strategy of Toshiba America Medical Systems?

Our company can acquire other companies, but it's not a strategy central to our core values. We try to partner with companies like McKesson and Vital that have synergies we can leverage. Most of our growth and technology advances come from our internal sister companies. For example, the detector for our CT and the probes for our ultrasound systems are developed from proprietary technology that we get from our sister ceramics division.

How do you coordinate the future of the Toshiba America Medical Systems business with its sister divisions? Do the divisions meet on a regular basis?

Such coordination is done on an almost weekly basis. Our marketing group is vertically integrated throughout business units, and it hosts teleconference calls on an almost weekly basis. In addition, we have engineers and research personnel going back and forth between the United States and Japan on an almost weekly basis. So it's an ongoing, continuous effort.

How does the budgeting process work?

From an R&D perspective, there is a full-year budgeting meeting that takes place, and that is followed up with regional meetings on a quarterly basis. It's a changing environment, and we want to ensure we're doing what's best for both the company and for the healthcare system.

Are these all coordinated on a multinational level?

Yes.

That's an impressive level of communication.

Yes, it is.

Many medtech companies measure their R&D investment as a percentage of sales revenues, but that's tough to evaluate when you are part of a much larger entity. How does Toshiba measure its R&D investment in medical technologies?

From an overall corporate standpoint, Toshiba invests about $3 billion annually. During budgeting meetings, representatives from individual businesses discuss specific projects that they feel are important in their marketplace. During that time, they lobby for as much of the R&D dollars as they can get. Toshiba has a strong commitment to the healthcare system in the United States, so our business commands a good percentage of what's necessary to fund the projects that we see as being important in the marketplace.

At these meetings, how does Toshiba America Medical Systems present information about its desired projects?

The reports we present are fairly extensive. We collect data and input from our clinical advisory boards and our research partners at various universities. Then, based on their clinical perspectives, we identify and present what we think are the key drivers in the marketplace.

So once again, you are working closely with your physician partners.

Absolutely. It's critical. Regular communication with advisory boards and research partners makes a tremendous difference, and that helps Toshiba differentiate itself in the marketplace.

Reimbursement has become an area of major concern among imaging companies. What do you see as the key issues in this area? What can companies do to safeguard reasonable rates of reimbursement?

It comes down to education. Manufacturers must educate the general public and Congress on the value of imaging. Our company works through the National Electrical Manufacturers Association (NEMA; Rosslyn, VA) and the Access to Medical Imaging Coalition to help communicate the value of these technologies.

Medical imaging has dramatically changed how physicians measure, manage, diagnose, treat, and think about medical illnesses and conditions. Medical imaging has transformed medicine. Innovations made in the imaging sector have enabled physicians to make faster, more- precise diagnoses that are much less invasive to the patient. Medical imaging is now essential for virtually all major medical conditions and diseases, and medical imaging is growing at roughly the same rate as other areas of healthcare.

There are a lot of formulas that go into establishing reimbursement rates. Is there a fundamental misunderstanding in the way that costs for medical imaging are recorded?

Fundamentally, it comes down to education again. That's why manufacturers are investing in initiatives to educate the public and Congress. They need to understand the value of imaging and its future potential. A lot of effort is being poured into these educational initiatives.

You mentioned the public and Congress. What about policymakers at the Centers for Medicare and Medicaid Services and other third-party payers? Do they understand this field?

They are definitely in need of education as well. Physicians groups and our industry are making every effort to help support that education.

The Future, Near and Far

How would you gauge the pace of clinical and technological development in the field of imaging?

I've been in the industry for 35 years, and the pace of development has always been exciting. Clinical and technology advancements continue at a phenomenal rate.

How would you rank the funding available to researchers in the field relative to the opportunities?

It's easy to argue that there is never enough funding. The key is being able to select the opportunities that deliver the greatest return. The greatest opportunities provide the ability to make diagnoses previously not possible. There are also great opportunities in advances that increase productivity and reduce the overall costs to the healthcare system.

In the imaging field, are the technologists prepared to operate new generations of sophisticated machinery?

The medical community is producing high-quality technologists and healthcare personnel. Most major universities and larger hospitals have strong educational systems across the board. In some modalities, there are specific programs that help technologists develop their understanding of specialized equipment, such as cardiac ultrasound or oncology systems.

Toshiba is contributing to such education with its new training center. Who comes to the center and what kind of training do they receive?

The reason we made such a large investment in training is because our company's technology is very sophisticated. It performs many clinical procedures and has many protocols.

One of Toshiba's key differentiators is that the company provides three phases of training. We take technologists out of their everyday environment and bring them to our world-class training center, where they spend a dedicated week with a peer group of technologists from across the country. They have a chance to discuss the system's operations and clinical applications. After that week, Toshiba spends a week training the technologists at their own site. This allows them to have physician-specific training depending on how that individual facility wants to use the machine. And then, about a month after that, Toshiba follows up again with specialized training to focus on specific clinical procedures the physician may want to accomplish. The program we offer is accredited, so they receive credits toward their technology certification.

In what areas do you think the field's next breakthroughs are likely to develop? How long will it take to make them happen?

It looks like genetics will likely offer significant breakthroughs in personalized medicine, enabling targeted prevention and treatment. These advances are probably 10–15 years away, but they will have a significant impact on the practice of medicine.

How do you think that that is going to relate to the field of imaging?

The best way of summing up what's happening with imaging is to quote Elias A. Zerhouni, MD, head of the National Institutes of Health. He said that imaging will continue to increase in value as it becomes more predictive, preemptive, and preventative. Technologies that succeed will enable physicians in a cost-contained environment to provide faster, more-accurate diagnosis, and improve patient treatment. I believe that Toshiba falls right in line with that. Toshiba's practices promote the value of imaging, and we are continually trying to make our equipment more preventive and preemptive.

In terms of addressing opportunities already identified, where do you think the field of imaging will be a decade from now?

It's always hard to predict the future. But I can tell you that we will continue work with our research partners to develop technologies that can reduce the costs of healthcare, and enable faster and more-accurate diagnosis. Emerging technologies will help extend and enhance the quality of patients' lives.

Toshiba is committed to the imaging marketplace, and we try to do what's right for our customers in both how we develop our products and how we support them after the sale. This enables our customers to reduce costs and continue to provide what they provide best, and that's patient care.

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