Behind the scenes at Varex Imaging

New brands, proven experts lead a new era in the CT tube market

August 13, 2018
by Lauren Dubinsky, Senior Reporter
From technological innovations to new companies emerging to disrupt the market, it’s been a busy year for the CT tube industry.

In late February, Chronos Imaging acquired Philips’ Dunlee CT tube facility in Aurora, Illinois for an undisclosed amount, breathing new life into the U.S. production of these vital and sophisticated scanner components.

“Given the current market gaps and unmet demand for alternatives to existing CT tube solutions to both OEM and replacement CT tube markets, we considered ourselves very fortunate to capture this opportunity,” Rob Piconi, executive chairman of Chronos Imaging, told HealthCare Business News.

As part of the deal, the company will produce third-party CT replacement tubes for Philips that will continue to be sold under the Dunlee brand. Philips stated at the time that this will enhance its commitment to its third-party tube replacement business and increase its competitiveness in this segment.

“The unique opportunity to acquire an existing and proven CT manufacturing facility, equipment and associated personnel with a reputation of high-quality production and performance – there was no other opportunity in the world that was available in this market segment,” said Piconi.

The CT tube market has historically been a difficult market to break into. That’s largely due to very high barriers to entry, including the cost of technology development and access to R&D, and experienced manufacturing engineering expertise.

Piconi noted that a very high capital expenditure of $30 million-plus is required to obtain the equipment and facilities and achieve long product cycles to develop and deliver new generation CT tubes.

The right people make all the difference
Despite all of those hurdles, Richardson Healthcare successfully entered the market in August 2014. But you may be asking, “how did they do it?”

The key ingredient was the extensive experience of the company’s executive vice president and general manager. Patrick Fitzgerald’s resume includes positions with TREX Medical Corporation, Continental X-ray Corporation, Eureka X-ray Tube Corporation and Dunlee.

With Fitzgerald as president, Dunlee was able to develop a portfolio of products and services designed to lower costs for hospitals and healthcare providers.

But it’s not just him – Fitzgerald’s team at Richardson also has similar backgrounds, with years of experience at Dunlee, Eureka and even GE Healthcare. They have the necessary expertise in specialized parts preparation cleaners, high-temperature vacuum furnaces, and the other nuanced skills that are required to produce quality CT tubes.

"It's a very capital-intensive business, and then you add that to the fact that there aren't that many engineers who know that technology well,” said Fitzgerald. “We were fortunate, in that a good many of our people came with extensive experience from other companies.”

In May, Richardson introduced its first new CT replacement tube, the ALTA750. It’s a replacement for the CXB-750D/4A tube, which is also known as the Varex Imaging MCS-078, and is compatible with a range of Canon Medical Systems (previously Toshiba) CT scanners.

"When you're developing a replacement like this one, you are developing a form-fit-function replacement for the original OEM tube,” said Fitzgerald.

His team started the development process by evaluating the performance of the original OEM tube, including the focal spot size and dose radiation output. They then analyzed the intellectual property that may be in use in the product and developed their own reverse-engineered design.

The experience that Fitzgerald and his team gained at Dunlee came in handy with this project because reverse engineering of tubes was a core competence for the company.

Richardson validated the tube by performing in-house testing on OEM CT scanners in their factory in LaFox, Illinois and at their service training and development center in Fort Mill, South Carolina. They ran those assemblies 24/7 from November 2017 to early March, and then began to install the tubes in clinical sites in the U.S.

They met all of their internal and external testing criteria and filed their initial report with the FDA. They conducted a final design review of the product and released the ALTA750 for sale in late May.

The company also contracted an internationally known physicist, Dr. Robert Dixon, to conduct an independent evaluation of the tube’s compatibility with the OEM CT scanner. He concluded that the tube exhibited “comparable performance to the Toshiba Aquilion CT scanner in both dose and image quality arenas.”

Making big moves
Richardson is not the only tube developer with its eyes on Canon’s fleet of CT systems. Varex Imaging Corporation has had a multi-decade long relationship with Toshiba Medical Systems (now Canon) to supply CT tubes and other X-ray imaging products. Toshiba Medical/Canon renewed its three-year pricing agreement for CT tubes with the Varex in March 2017 that’s worth up to $385 million.

After its spin-off from Varian Medical Systems in January 2017, Varex began making big moves to bolster its position in the imaging space, including the $276 million acquisition of PerkinElmer’s digital detectors imaging business.

Varex also has a one-year pricing agreement with Canon to supply other imaging components, such as digital detectors and high-voltage connectors. Annual sales for those components have ranged from $20 million to $30 million.
Varex builds CT tubes for the OEM space as well as replacement tubes for competitive products. Canon is the company’s biggest customer, but Varex also supplies components to almost every other OEM.

“The biggest thing we have going for us is the fact that we have proven expertise as the largest independent X-ray tube manufacturer,” said Mark Jonaitis, senior vice president and general manager of X-ray sources at Varex. “Companies that don’t primarily manufacture their own X-ray tubes often come to us for their specialty products or for their mainstream products.”

Varex is known for developing and manufacturing CT tubes for OEM customers’ next-generation CT scanners, as well as providing replacement CT tubes. The company also supplies tubes for CT scanners that are relatively low-volume and specialized. Many OEMs would rather have Varex build the tubes for them than make their own R&D commitment to it.

Varex also gets business from CT scanners at the tail end of their product life cycle.

“Most OEMs know that we build replacement products,” said Jonaitis. “Rather than building all the way to the end of life cycle of a product, they truncate it and buy our tube to finish out the scanner life cycle.”

Chronos Imaging is also doing well on the business end of things. In mid-June, the company secured the sale and shipment of 100 CT tubes from the facility in Aurora.

Piconi said that this achievement couldn’t have been possible without the experience and capabilities in product realization and quality operations performance of his employees.

Like Richardson, many of the Chronos employees have between 20 to 30 years of experience in the industry.

Given the previous announcements in June 2017 that Dunlee planned to shut down the Aurora facility, Chronos needed to articulate a very clear vision, strategy and execution plan for the future that people could rally behind and get excited about.

“We believe we made a good start, but are more excited about what we will be delivering in the future,” said Piconi.

A future with more remote monitoring
According to GE Healthcare, more than 40 scans are lost, on average, due to one tube failure. In addition, tube failures lead to an estimated $64,000 in lost revenue annually.

At the most recent Radiological Society of North American annual meeting, GE showcased its Tube Watch service, which remotely monitors tubes and predicts failures before any disruption occurs.

The service is currently available for the Revolution EVO CT scanner and Optima 660 with Performix Plus tube.

“Using Tube Watch plus physics-based models for the components in the tube, we are able to help to predict impending failures, enabling our customers to schedule proactive service of the tube or replacement of the tube prior to the tube failing during an inappropriate time in a hospital,” said Carey Rogers, chief engineer at GE.

GE built a number of features into its CT systems to extend tube lifetime, including warmups before exams and calibrations that ensure the system is working properly.
Carey Rogers
But a CT tube is still a consumable and does fail after some period of time, said Rogers.

Tube Watch’s proactive part delivery and service scheduling service could potentially reduce downtime by up to 75 percent.

“We are always trying to improve the reliability of X-ray tubes and generators, with a focus to minimize any interruptions to the customer,” said Rogers.