And then there were three. Suppliers of X-ray film, that is.
Agfa-Gevaert Group last week agreed to buy Sterling Diagnostic Imaging, a privately held maker of X-ray film and related equipment that was spun off from DuPont in 1996.
Assuming the deal passes regulatory muster, it is expected to close by the second quarter. After the dust settles, a trio of X-ray film providers would essentially control the $1 billion U.S. market.
Agfa-Sterling would place a strong No. 2 to leader Eastman Kodak Co., Rochester, N.Y. Fuji Medical Systems, based in Stamford, Conn., ranks a distant third (See chart).
"This industry is going through some rather revolutionary changes," said G. Rodney Wolford, Sterling's chief executive officer. "We identified Agfa as a very good combination with Sterling many months ago."
Terms of the Agfa-Sterling deal were not disclosed, but industry estimates of the purchase price ranged upward of $400 million. Sterling, based in Greenville, S.C., has worldwide sales of about $500 million and a 29% share of the U.S. X-ray film market. A division of Germany's Bayer Group, Agfa-Gevaert's U.S. operations are headquartered in Ridgefield Park, N.J.
Consolidation among vendors is a fact of life for hospital managers these days. But the shakeout among vendors of X-ray film and related products has been quick and thorough.
Suppliers say they're responding to demands from healthcare buyers-led by group purchasers-who continue to press for price concessions. Simultaneously, the steady rise of high-resolution medical laser printers and completely filmless digital systems has sapped traditional film sales. By coming together, the already large companies are scaling up their traditional film businesses to cut costs while seeking the critical mass of technological expertise to survive the brave new digital world.
"Anybody who is surprised by the Agfa-Sterling deal has been living under a rock," said Jerry Cirino, president of Picker International's healthcare products division, a Cleveland-based distributor of X-ray film and supplies. "The healthcare environment has put a great deal of pressure on the film makers."
Concentration of the film business doesn't appear to worry consumers, who expect benefits from greater efficiencies and deeper technical expertise among the remaining vendors.
The Agfa-Sterling deal will make the marketplace "more competitive," predicted Pamela Parker, director for imaging and group purchasing at Consorta, a buying group based in Rolling Meadows, Ill.