Siemens to Acquire CTI

Siemens Medical Solutions (Erlangen, Germany), a division of Siemens AG (Munich), has announced its intention to buy CTI Molecular Imaging Inc. (CTI; Knoxville, TN), a manufacturer of positron emission tomography (PET) equipment and related molecular imaging products and systems. In what is described by both companies as a “friendly acquisition,” Siemens will purchase all outstanding CTI shares in a deal valued at around $1 billion.

News of the acquisition is not considered particularly surprising. The two companies have been working together since 1987 in a joint venture known as CTI PET Systems, in which Siemens became a distributor of CTI’s products. The deal is for all of CTI’s business units, including CTI PET Systems, PETNET Solutions, CTI Mirada Solutions, CTI Molecular Technologies, and CTI Concorde Microsystems.

CTI’s operations will remain in Knoxville, and the unit will become part of Siemens Medical Solutions USA Inc. (Malvern, PA).

Reinhardt: A natural progression.

Commenting on the acquisition, Erich Reinhardt, PhD, president and CEO of Siemens Medical Solutions, said “This step is a natural progression in our long-time association with CTI, and reflects Siemens’s overall strategy to transform the delivery of healthcare by developing trendsetting innovations that improve patient care while reducing costs.”

Ronald Nutt, PhD, president and CEO of CTI Molecular Imaging, concurred with Reinhardt’s assessment and added, “This will benefit PET imaging’s continued advancement as well as enhance the future of molecular imaging.”

CTI’s Nutt: Enhancing the future.

PET is one of the major medical imaging technologies. However, unlike x-ray, computed tomography (CT), magnetic resonance imaging (MRI), and ultrasound—which reveal the structure of organs—PET can reveal their metabolic functioning. The technology can often enable diseases to be detected at the molecular level even before anatomical changes occur or symptoms become manifest. Currently, PET scans are most widely used in cardiology, neurology, and oncology applications.

PET has been hailed as a promising technology for the early detection and treatment of a wide range of diseases. But relatively high costs and reimbursement resistance from both government and private insurers have stymied adoption of the technology as a primary diagnostic resource.

The U.S. market for medical imaging equipment is currently valued at around $6.6 billion, and is expected to grow at more than 7% through 2008. But market forecasts for PET are decidedly mixed. Some reports continue to cite slow growth, particularly attributable to reimbursement problems. Others suggest that the emerging movement known as “personalized medicine,” which seeks to detect and diagnose diseases at the molecular level, will spur adoption and growth of PET systems.

Reitermann: New opportunities.

“The big picture here is about molecular medicine,” says Michael Reitermann, president of the nuclear medicine division at Siemens Medical Solutions. “Molecular imaging lets doctors detect disease at the cellular level, before a tumor has formed. This is a field that’s been developing rapidly in the last five years, which is why we want to participate in it and take control in the molecular imaging space. Molecular imaging creates whole new opportunities to treat disease, and we are strategically evaluating those opportunities right now.”

One of the fastest growing imaging markets is for PET/CT scanners, which combine PET’s biological examination with CT images of structural detail. Reitermann says that the acquisition of CTI will enable Siemens to explore the potential of combining the advantages of PET with other imaging modalities, particularly MRI.

The acquisition has been approved by the boards of both companies and is expected to close in the second quarter of this year, pending regulatory approvals.

CTI, with 963 employees, reported revenue of $402 million for the fiscal year ending September 30, 2004. Siemens Medical Solutions employs 31,000 in 120 countries and reported revenues of $9.46 billion during the same period. Siemens’s primary competitors in the medical imaging market are GE Healthcare (Chalfont St. Giles, UK) and Royal Philips Electronics (Amsterdam, The Netherlands).

© 2005 Canon Communications LLC

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