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GE sees strong future with its ultrasound business

When Mike Washburn went to work for General Electric Co. 22 years ago, the company had only a sliver of the ultrasound market.

Today, GE Healthcare leads the world in market share, and its ultrasound business generates $2 billion a year in revenue.

In his time with the company, Washburn has seen advances in ultrasound technology that once seemed far-fetched, and he expects the changes in the next 20 years will be just as remarkable.

“The runway of what we can do is significant,” said Washburn, chief engineer for the general imaging ultrasound group in Wauwatosa.

The general imaging ultrasound group – one of six within the business – is responsible for the Logiq E9, GE’s top-selling ultrasound machine.

The unit employs about 230 people, including 65 engineers, in Wauwatosa. The final assembly and customization of the Logiq E9 also is done in the city.

GE recognized that the advances in ultrasound imaging would result in new uses and new markets. The ultrasound business generates more revenue than magnetic resonance imaging, or MRI, and CT machines, and GE Healthcare sees more growth ahead.

“Ultrasound has a fantastic opportunity going forward,” said Anders Wold, president of the ultra sound business.

The business is based in Horten, Norway, about 60 miles from Oslo, the result of what was then GE Medical Systems’ acquisition of Diasonics Vingmed in 1998.

The acquisition gave GE a strong presence in the echocardiography and cardiovascular market.

It was followed by the acquisition of Kretztechnik AG, an Austrian company strong in the obstetrics and gynecology market.

Omar Ishrak, now chief executive of Medtronic Inc., a medical device and technology company based in Minneapolis, was the general manager of global ultrasound business at the time and is credited with building the business.

Ultrasound is the largest business segment within GE Healthcare Systems, which, in turn, is the largest unit within GE Healthcare, which had revenue of $18.1 billion in 2011.

Other businesses within GE Healthcare Systems, based in Wauwatosa, include ventilators, equipment for delivering anesthesia, incubators for neonatal intensive care units and imaging equipment.

In all, GE Healthcare employs more than 6,500 people in Wisconsin, more than 70% of them with degrees from Wisconsin colleges and universities.

Diverse business

The ultrasound business in some ways is a microcosm of General Electric itself: a collection of businesses focused on different market segments and different global markets.

The business has both product managers for specific market segments and regional managers for specific parts of the world.

The market segments include cardiovascular; women’s health; point of care, such as emergency department and sports medicine; primary care; and information technology. Prices range from $7,900 for a hand-held ultrasound to $200,000 for its most advanced model.

GE’s ultrasound business has been posting double-digit growth in a market that is growing in the single digits.

“The real challenge is how to grow faster than a market, and not everyone can,” said Harvey Klein, president of Klein Biomedical Consultants Inc., who has followed the ultrasound market since 1975.

Every company that’s been No. 1 in market share also has fallen from that perch.

“The guns are always aimed at the market leader,” Klein said.

GE Healthcare’s biggest competitors in ultrasound are Royal Philips Electronics, Toshiba Corp. and Siemens AG. But GE also faces competition from more than 60 small competitors in China at the low-end of the market , in which an ultrasound for general imaging may sell for $20,000.

GE Healthcare nonetheless plans to remain in that market despite the competition and tight margins, hoping to avoid the common mistake of giving competitors a base from which they can develop higher-priced products and enter new markets over time.

It also believes that innovations in its lower-priced ultrasound machines can result in improvements in its more expensive and sophisticated models.

“The innovation can go from the bottom up and from the top down,” said Brian McEathron, the vice president who oversees the general imaging ultrasound group.

Low-priced ultrasound machines are not going to drive growth, Klein said.

But sales in emerging markets, such as India, are showing the strongest growth. And remaining in the market for low-priced machines positions GE Healthcare for when customers in emerging markets move onto more advanced ultrasounds.

“They don’t want to lose out on any segment of the market,” Klein said.

Finding new uses

The potential can be seen in China. Despite an abundance of competitors, the country generates about $200 million a year in revenue for GE’s ultrasound business.

The ultrasound machines made in Wauwatosa are at the other end of the market: The Logiq E9 sells for $150,000 to $200,000 and is the ultrasound generally used by radiologists. It is designed to get images of different parts of the body, such as the breast, thyroid, liver or abdomen.

That brings its own set of technological challenges. But it also can result in new uses. Liver disease is an example.

In the future, ultrasound may be able to gauge the stiffness of liver tissue, which becomes more fibrous as disease progresses, said Washburn, the chief engineer for general imaging. This can be done to a limited degree today, but someday it may enable doctors to do fewer liver biopsies.

Another example of how advances in ultrasound technology can lead to new markets is breast mammography.

In November, GE Healthcare bought U-Systems Inc., which had developed an ultrasound system to screen for breast cancer in women with more than 50% of dense breast tissue.

Women with dense breast tissue are at a higher risk of breast cancer. Yet, dense tissue and a tumor both show up as white on a X-ray, decreasing mammography’s effectiveness.

“You are looking for a marshmallow in a cloud,” said Paul Mullen, chief marketing officer and general manager for point of care ultrasound.

Other growing markets include sports medicine, cardiovascular and veterinary medicine.

GE Healthcare also has hopes for hand-held ultrasounds. That market has developed slowly, though medical schools have been early adopters.

Wold believes hand-held ultrasounds will become as ubiquitous as stethoscopes in 10 to 20 years.

The business’ varied markets will bring different challenges, from around the world, Wold said.

“The challenge,” he said, “is to be local and to be global.”