Pacs LATAM - Editing 11-Sept PDF

Latin American PACS MarketBrazil, Argentina, and Mexico
A flourishing double-digit growth market in the region
NB06-48 September 2012
Research Team
Lead Analyst Research Director
Federico Baguear
Industry Analyst Healthcare LATAM (+54 11) 4777 7060 Federico.Baguear@frost.com
Eduardo Golisano
Business Leader Unit Healthcare LATAM (+54 11) Phone number Eduardo.golisano@frost.com
Strategic Review Committee Leader
Reenita Das
Senior Vice President, Asia Pacific & Latin America
Healthcare (1) 40.88.57.93.86 (2) Rdas@frost.com
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Contents
Section Executive Summary Market Overview Definitions Segmentation Discussion Key Questions This Study Will Answer Economical Background External Challenges: Drivers and RestraintsTotal Market Forecasts and Trends Demand Analysis Market Share and Competitive AnalysisTotal Market Slide Numbers 5 11 12 15 16 17 18 19 30 38 41
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Contents
Section Argentina Breakdown Brazil Breakdown Mexico Breakdown The Last Word (Conclusions and Implications) The Frost & Sullivan Story Slide Numbers 48 79 104 130 133
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Executive Summary
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Executive Summary
The purpose of this study is to analyze the Argentinean, Brazilian, and Mexican the picture archiving communication system (PACS) market with regard to revenue, installed base, market share, and competitive scenario. In 2011, the PACS installed base in Argentina, Brazil, and Mexico reached 5.5 percent. Although the region is still far behind North America and Europe in terms of penetration of the solutions where the installed base reaches more than 70.0 percent, the high growth of the industry is likely to change this scenario in the medium and long term. The appealing return on investment (ROI) model allows for immediate cost reductions associated with replacing analog film printing and distribution with digital image viewing and communication. Hospitals and diagnostic centers are integrating and creating larger groups; IT solutions, including PACSs, are becoming a necessity for this integration and for better workflow for the institutions. There are increasing investments being made in local PACS companies, such Intel Capitals investment in the Brazilian PACS company Pixeon. There are more sophisticated products and softwares with technologies that have never been used in the healthcare area before, such as Microsofts Kinect and Cloud computing.
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Source: Frost & Sullivan analysis.
Executive Summary (continued)
The most representative and mature market for this solution is Brazil, representing 73.7 percent of the 2011 total market revenue, with an installed base of 1,483 PACSs. Mexico represents the 10.7 percent of the 2011 total market revenue, with 1,860 installed PACSs. Argentina represents 4.4 percent of the 2011 total market revenue, with 341 installed PACSs.
In 2011, the total Latin American market presented a revenue of $81.11 million and will reach $372.57 million by 2017, with a compound annual growth rate (CAGR) from 2011 to 2017 of 28.9 percent.
Mergers and acquisitions are expected to shape the evolution of the Brazilian market.
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Executive SummaryMarket Engineering Measurements

Market Overview Total PACS Market: LATAM, 2011
Market Stage Market Revenues Unit Shipments Average Contract Value Revenue at End of Forecast Period
Growth
$81.1 M
(2011)
638
(2011) (2010)
$170,000
(2011)
$372.6 M
(2017)
Base Year Revenue Growth Rate
Compound Annual Growth Rate
Customer Price Sensitivity
Degree of Technical Change
Market Concentration
27.5%
28.9%
(CAGR)
7
(scale:1 [Low] to 10 [High])
Low
(2011; scale:1 [Low] to 10 [High])
53.4%
(% of market share held by top 3 companies)
For a tabular version, click here.

Decreasing Stable Increasing
Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis.
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Slide 8 SR9 The link is not opening to the correct slide. Pls check.
Sudatta Roy, 9/4/2012
Executive SummaryMarket Engineering Measurements (continued)

Competitor Overview
Number of Competitors Number of Companies that Exited*
17
(active market competitors in base year)
0
(2011)
Average Price Values per Unit of Solution

Enterprise PACS Middle PACS Mini-PACS
$320,000
(2011)
$140,000
(2011)
$60,000
(2011)
Decreasing
Stable
Increasing
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Executive SummaryCEOs Perspective

Healthcare IT is one of the fastest growing segments in healthcare, with a CAGR of 11-17 28.9 percent. Technology will boost the healthcare market and change the future of medicine. Installed base will reach 13,870 in Brazil, Mexico, and Argentina by 2017.
New business models are enabling new adopters of the solution. By 2017, revenue will reach $372.6 million, led by Carestream, with 21.7 percent of the market share.
Source: Frost & Sullivan analysis. 10
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Market Overview
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Market OverviewDefinitions
The picture archiving communication system (PACS) is an intelligent storage system that sends, recovers, and processes images. PACS solutions provide a secure database for medical images and allow the sharing of medical images across different platforms. PACS is an IT system that can be integrated with other platforms, such as radiology information systems (RIS), hospital information systems (HIS), electronic health record (EHR), and electronic patient record (EPR), among others.
Source: Frost & Sullivan Database
The major advantages of PACS are time saving and cost reduction by reducing image hard copies, favoring diagnoses, and enabling future consultation of patients examinations. PACS is capable of comparing images on the same computer desktop screen. In addition, advanced PACSs possess 3D construction of images for research and advanced diagnostic purposes.
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Market OverviewDefinitions (continued)

The PACS market can be segmented into three types: Mini-PACSs: Small-scale systems that handle images from a single type of medical imaging modality such as computed tomography (CT), magnetic resonance imaging (MRI), or positron emission tomography (PET). In general, these solutions are more affordable for small clinics or are sold together with single modality equipment. Middle PACSs: Connect small hospitals and diagnostic imaging centers through multimodality medical imaging. Enterprise PACSs: Single, multi-specialty solutions that connect various departments within large hospitals and chains, encompassing at least three complex modalities such as MRI, CT, or PET. PACS Market Classification: LATAM, 2011 - 2017
MiniPACSs Up to 2 TB Up to 4 Yes No Middle PACSs Up to 4 TB From 5 to 8 Yes Yes Enterprise PACSs More than 4 TB More than 8 Yes Yes
Feature Storage Capacity Workstation Web Distribution RIS Integration
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Market OverviewDefinitions (continued)

Countries covered in the study: o Argentina o Brazil o Mexico
Revenue: Manufacturers revenue
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Market OverviewSegmentation
Key Takeaway: The middle PACS that connects small hospitals and diagnostic imaging centers is the most installed solution. Installed Base Breakdown Total PACS Market: LATAM, 2011
Enterprise PACSs 20%
Mini-PACSs 38%
Middle PACSs 42%
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Market OverviewDiscussion
In the beginning of the adoption cycle, IT solutions were restricted to huge hospitals and laboratories. Only large institutions could afford these solutions, having the extra budget to invest in this kind of technology. Nowadays, IT systems are a reality for medium and small healthcare institutions, although the installed base for these segments is significantly smaller. Major standards governing the RIS and PACS workflow are digital imaging and communications in medicine (DICOM ) and health level 7 (HL7). PACS is the primary module to which DICOM and HL7 standards have quickly and continuously evolved. Therefore, a brokera software and hardware unit that takes the HL7 messages and maps them to produce DICOM messages for PACS interpretationis installed to make the legacy RIS compatible with PACS. However, there are drawbacks to installing a broker: paper-based workflow is required and legacy RIS being unidirectional implies that multiple duplicative databases are produced.
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Market OverviewKey Questions This Study Will Answer
Is the market growing, how long will it continue to grow and at what rate?.
Are the existing competitors structured correctly to meet customer needs?
Is this an industry or a market? Will these companies/products/services continue to exist or will they be acquired by other companies? Will the products/services become features in other markets?
How will the structure of the market change with time? Is it ripe for acquisitions?
Are the products/services offered today meeting customer needs or is there additional development needed? Are the vendors in the space ready to go it alone, or do they need partnerships to take their business to the next level?
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Market OverviewEconomic Background

Key Takeaway: Brazil is the most populated and largest economy in the region.
PACS Market: LATAM, 2011-2017 Brazil Mexico - Argentina

3,000.00 2,500.00 GDP (Billon) 2,000.00 150 1,500.00 100 1,000.00 500.00 0.00
GDP Population IMF Rank Brazil 2,517.92 194.93 6 Mexico 1,231.64 110.00 8 Argentina 435.17 40.00 27
250 200 Population (Millions of inhabitants)
50 0
Source: International Monetary Fund. Retrieved 2011-10-14 and Frost and Sullivan analysis..
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External Challenges: Drivers and Restraints Total Market
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Drivers and Restraints

Total PACS Market: Key Market Drivers and Restraints, LATAM, 20122017 12 years ROI becoming more recognized among institutions boosts PACS market 35 years 6th year
Market Drivers
Increased volume of data encourages PACS installations Consolidation of healthcare institutions is expected to require integration of databases among hospitals New PACS business models are expected to fulfill every healthcare institution budget Teleradiology expands the PACS market Rise of medical tourism is expected to enforce investments
Market Restraints
Small budget for IT solutions dissuades the installation of PACS Lack of basic infrastructure in LATAM constrains the implementation of PACS Lack of specialized IT professionals limit the work force of the PACS providers
Impact: <0000-00>
High
Medium
Low
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Drivers Explained
ROI becoming more recognized among institutions
Because it is software, the return on investment (ROI) of PACS solutions has not been as visible to the health institutions as the diagnostic imaging equipment, which generate revenue. Thus, these solutions were almost an exclusive privilege of large clinics and hospitals. Today, this scenario has evolved, and even small institutions can see the value and benefit of PACSs, such as the reduction of more than 50.0 percent of film consumption, improvement of the quality of diagnosis, and also greater flexibility in decision-making.
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Drivers Explained (continued)

Increased volume of data encourages PACS installations
The number of exams will increase with the installation of new image diagnosis equipment, with an estimated 30 percent growth rate for LATAM. The technological sophistication of state-of-the-art diagnostic imaging equipment is responsible for the increase in data management requirements because the number of images per exam can reach 3,000 per patient. Patient access to image diagnostics is increasing as well, as these become listed as a reimbursed practice. In Brazil, the number of examinations is increasing with the increased use of health plans by the population; in 2003, 31.8 million Brazilians had private health insurance. This number reached 47.6 million in 2011. This growth is highly correlated with the increased purchasing power and population of the middle class. This scenario is forecasted to continue growing in the region, where will reach 51 percent and 39 percent, respectively, by 2020. In Mexico, before 2008, most of the population did not have healthcare insurance. To deal with this, the government launched the SPSS (Seguro Popular), voluntary healthcare insurance targeted at the poor population, which provided an essential package of primary and secondary care, together with certain high-cost tertiary care. In three years, the government invested more than $40.0 billion in the program and reached over 50 million people. As a result, the number of examinations has been increasing; this scenario is forecasted to continue. The Mexican private market presents a high level of digitalization. The public market, on the other hand, presents a huge opportunity for business since the government has become the main investor in the digitalization of that segment.
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Consolidation of healthcare institutions is expected to require integration of databases among hospitals
Health providers are increasingly consolidating and forming huge groups of hospitals or diagnosis centers, laboratories, and private health plans. This consolidation makes the purchase of higher value-added products easier because the institutions can negotiate better rates due to the high demand. The groups will need IT software in order to ensure the integration of databases among hospitals. In Argentina, for example, Swiss Medical Group bought many small hospitals like Clinica Olvios and is building a new institution with 120 beds. Larger groups provide greater negotiation power to decrease costs and increase profits. In Brazil, examples of this consolidation are Fleury, Diagnstico das Amricas (DASA), Rede Dor, and the Alliar Group. In Mexico, the three main private hospital firms are StarMedica, AmeriMed, and Grupo Angeles are building new hospitals. .
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New PACS business models are expected to fulfill every healthcare institution budget
Multinational companies are developing and implementing more accessible business models that focus on the low budget market segment that do not yet have PACS solutions. These model businesses are rental, pay-per-use, and cloud-based pay-per-use.
o
Some companies offer to rent PACS software by image diagnostic modality, which means that the institution pays monthly for the type of equipment they use. Pay-per-use allows healthcare institutions to install PACS and pay for every study managed by the software. The cloud-based model provides a low-cost solution that avoids high investment in hardware such as servers, diagnostic workstations, storage, and IT staff wages. In this case, the institution pays a fixed value of approximately $2 for each exam sent to the cloud.
In Argentina, there have been partnership agreements within telecommunication and PACS companies (e.g., Telecom Argentina signed a partnership agreement with Carestream in 2009, while AGFA signed with Telefonica Argentina, and Philips offers Iron Mountain cloud services).
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Teleradiology implementation
Teleradiology is a very common concept today. A related concept, night hawking, is where images are sent to outsourcing centers at night (i.e. India), and reports are generated and sent back electronically in time for the doctors to send in their diagnosis.
Although this is becoming a very common practice and reducing costs, in Argentina, teleradiology is used just to ask for a second opinion, academia research, or to diagnose away from the medical institution.
In Mexico, the government has implemented an e-HCare for the users of the SPSS, a smart cardbased solution that allows the doctor to access a patients information and add new data to it. There are 91,000 million mobile cellular phones in Mexico (mobile penetration is 77.2 percent of total population, which ranks 11th in the world). This opens an impressive market for mHealth, which is expected to influence the PACS market.
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Rise of medical tourism is expected to enforce investments
Latin America is expected to continue to grow as hub for medical tourism, with a $7.0 billion business in 2015, led by Brazil and Mexico.
global
Brazil will present a CAGR of 28.0 percent until 2015, becoming a $2.1 billion business. Mexico will receive investments of more than $700 million for the construction of new hospitals. Healthcare IT solutions, such as PACS, are crucial to maintain the high standard of medical treatments. Medical procedure costs are significantly lower than other countries like United States, Canada, and Europe. Mexicos proximity to North America is a big advantage for the attraction of medical tourists versus Brazil or Argentina.
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Restraints Explained
Small budget for IT solutions dissuades the installation of PACSs
There is a high level of resistance to acquire IT software in hospitals, clinics, and laboratories. This is reflected in the low budget designated for these solutions in both public and private clinics and hospitals. In Brazil, not even 5.0 percent of the government funding is intended for investment in these solutions. According to the annual report of the Brazilian Association of Private Hospitals, in 2011, this number was only 3.0 percent. Multinational companies provide robust solutions, but with a high price. This represents an advantage to local companies because of the lack of investment in healthcare IT. In addition, the hourly rate of a multinational service engineer is higher than that of local companies, so system customization is very expensive. Depending on the solution provided, PACSs require an IT department in the healthcare institution. In contrast with the decreasing hardware costs, human resources are increasing due to the regional economy and lack of specialized IT engineers. In public institutions, there is a conservative attitude toward the radiology technical personnel to adopt to an advanced technology such as PACS. Moreover, in Argentina, some film distributors pay a percentage of money for the films consumed.
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Restraints Explained (continued)

Lack of basic infrastructure in LATAM constrains the implementation of PACS
In the less developed regions, the majority of facilities do not have the ability to purchase PACS without first implementing a baseline level of infrastructure, such as electric power, Internet, and telephone. Just as in many other developing regions in the world, most administrative and information management functions in LATAM are conducted in paper files. Only a small proportion of hospitals that concentrate on the most developed areas have any kind of HIS. The broadband penetration is increasing in LATAM, but is still lower than other regions; in 2011, the penetration reached 60.0 percent, compared to 90.0 percent of Europe and North America.
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Restraints Explained (continued)

Lack of specialized IT professionals limit the work force of the PACS providers
There is a lack of professionals specialized in healthcare IT solutions including PACS, both from the demand and the supply side. IT staff shortages and recruitment of IT staff is an industry-wide issue. From the supply side, the index of nationalization of these solutions is very low, and the main centers of research and development are not in LATAM. It is common that multinationals need to import people from other countries to carry out complex tasks, disrupting the quality and timeliness of services.
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Forecasts and TrendsTotal Market
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Market Engineering Measurements

Market Overview Total PACS Market: LATAM, 2011
MEASUREMENT NAME MEASUREMENT TREND
Decreasing TREND Stable Increasing
Market Stage (Nascent, Growth, Mature) Market Revenue (2011) Market Shipment Units (2011) Average Price Per Unit: Enterprise PACS Average Price Per Unit: Middle PACS Average Price Per Unit: Mini-PACS Revenue at End of Forecast Period (2017) Base Year Revenue Growth Rate Compound Annual Growth Rate (CAGR), 20112017 Customer Price Sensitivity (scale of 1 to 10, Low to High) Market Concentration (% of base year market controlled by top three competitors)
Growth $ 81.1M 638 $320,000 $140,000 $60,000 $372.5 27.5 28.9 7 53.4

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Note: *= Weighted Average Selling Price. All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
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Region Background
Brazil is considered one of the leading emerging economies together with China, India, and Russia. It is also part of the MERCOSUR with Argentina, a commercial agreement that is under a high debate due many restrictions that both countries are applying. Mexico has several commercial agreements with other countries and it is positioned well geographically near the U.S. and Canada. It is part of NAFTA (North American Free Trade Agreement). In 2012, the Mexican FDA (Food and Drug Administration), COFERIS, signed a commercial agreement with Japan to facilitate the importation of some Japanese medical devices. Brazil does not have restrictions on importation, but the government invests large amounts of money to improve the Brazilian healthcare industry. Argentina has implemented strong restrictions on imported articles. This was done with the intent to improve the local Argentinean economy.
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Total PACS Market Unit Shipment Forecast

Key Takeaway: The LATAM PACS installed base is expected to growth at a CAGR of 29.6 percent. PACS Market Unit Forecast, 20112017 LATAM CAGR = 29.6%
3,000 2,500 2,000
32.0 31.0
1,500 1,000 500 0
29.0 28.0 27.0 26.0
Mini Middle Enterprise Growth Rate
2011 253 246 135
2012 296 306 178 28.0
2013 345 381 236 28.0
2014 401 477 313 28.9 Year
2015 478 597 418 29.8
2016 569 751 560 30.5
2017 681 948 754 31.4
Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan analysis.
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Growth Rate (%)

33
30.0
Units
Unit Shipment Forecast Discussion

In 2011, 634 PACS units were sold in the Latin American market. This number is expected to reach 2,986 in 2017, with a CAGR of 29.5 percent. The sales of PACS for hospitals represented 50.8 percent of the total sales and the expected CAGR for this type of institution is 31.7 percent, in contrast with 49.2 percent of the units sold for diagnostic centers, with a CAGR of 26.9 percent. In Argentina, political decisions are forcing the requirement of PACS due to the lack of imported radiological films. In Brazil, international events will be a great opportunity for the acquisition of PACSs, mainly for the public sector. This will enable huge public tenders to be prepared for these events. In Mexico, during 2009 to 2012, the Mexican government invested more than $3 billion in healthcare programs and impacted the Mexican PACS market in 2011. These healthcare programs policies are expected to remain intact during the term of the elected president Enrique Pea Nieto until June 2012.
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Total PACS Market Revenue Forecast

Key Takeaway: The LATAM PACS market revenue is expected to growth at a CAGR of 28.9 percent.
400 350
PACS Market Revenue Forecast, 20112017, LATAM CAGR = 28.9%
32.0 31.0 30.0 29.0
Revenue ($ Million)
300 250 200
28.0 150 100 50 0 2011 8.6 30.8 41.7 2012 10.1 38.3 55.0 27.5 2013 11.7 47.7 72.7 27.7 2014 13.6 59.5 96.5 28.5 Year 2015 16.2 74.6 128.4 29.3 2016 19.2 93.7 172.0 30.0 2017 23.0 118.2 231.4 30.8 27.0 26.0 25.0
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Growth Rate (%)

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Revenue Forecast Discussion

The total PACS market revenue reached $81.10 million in 2011, and is expected to reach $372.57 million in 2017. This growth represents a CAGR of 28.9 percent. In 2011, the breakdown of the markets $81.10 million in revenue was: o o 78.3 percent for the private sector and 21.6 percent for public sector; 51.4 percent for big contracts, 38.0 percent for medium contracts, and 10.6 percent for small contracts. 42.2 percent for hospitals and 57.8 percent for diagnostic centers.
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Revenue Forecast by Region

Key takeaway: Brazilian market revenue and CAGR is the highest in the region.
Total PACS Market: Revenue Forecast by Country, 20112017 Year 2011 2012 2013 2014 2015 2016 2017 CAGR Brazil ($ Million) 59.8 76.8 99.0 128.3 167.2 219.0 288.4 30.0% Mexico ($ Million) 16.33 20.19 25.18 31.62 40.05 51.11 65.80 26.1% Argentina ($ Million) 4.94 6.42 7.84 9.64 11.93 14.73 18.33 24.4%
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Demand AnalysisTotal Market
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LATAM PACS Market Penetration Per Region and Total Number of Exams Managed by PACS Solutions
PACS Market Penetration, LATAM, 2011 PACS Market: Number of Exams Managed by PACS Solutions, LATAM, 2011
Hospitals Millons of exams managed by PACS solutions in 2011 227.4
Diagnostic Centers 382.2
Total 609.6
Sources: Brazilian Ministry of Health; Frost & Sullivan analysis.
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Total PACS Market Penetration Analysis

Total PACS Market: Market Penetration LATAM, 2011
(Market Potential) 0% 5.5% 100%

Source: Frost & Sullivan
Methodology The potential adoption of PACS solution is 100.0 percent, which includes all hospitals and diagnostic centers in the region. It is important to note that not every diagnostic center possesses image diagnostic services. As an example, biochemical laboratories are considered diagnostic centers. The average adoption is only 5.5 percent, meaning that 3,684 healthcare institutions have a PACS solution installed. This number can be divided between 1,627 hospitals and 2,057 diagnostic centers. The higher adoption is by large hospitals, where the penetration reaches 10 percent in both public and private hospitals. The smallest adoption of PACS solutions is among small public diagnostic centers, reaching a penetration of less than 1 percent. The penetration of this solution is far higher in other regions around the world. The installed base reaches almost 80.0 percent in Europe and in North America. The installed base will reach 13,876 in 2017, with a CAGR of 24.7 percent.
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Market Share and Competitive Analysis Total Market
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Competitive AnalysisLATAM Market Share

Key Takeaway: Carestream is the leading vendor in the LATAM PACS total market.
Percent of Revenue Total PACS Market: LATAM, 2011 Others* 24% AGFA 19%
GE 7% Carestream 24% Siemens 5% Philips 10% Fujifilm 11%
* A list of Other companies can be found at each country breakdown. Note: All figures are rounded. Source: Frost & Sullivan analysis.
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Competitive AnalysisLATAM Market Share per Type of Contract

Key Takeaway: Carestream and AGFA cover an average of 40 percent in every segment.
Percent of Sales PACS Market: Enterprise PACS contracts, LATAM, 2011
Others, 16.4% AGFA, 24.0%
Philips, 12.3%
Enterprise PACS Market size $41.6 M
Siemens, 7.5% Carestream , 20.7% GE, 7.8% Fuji, 11.4%

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Competitive AnalysisLATAM Market Share per Type of Contract (continued)

Percent of Sales PACS Market: Middle PACS contracts, LATAM, 2011
Middle PACS contracts Market size $30.8 M
Philips, 10.2%
Siemens, 6.0% GE, 6.7%

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Carestream , 27.0% Fuji, 6.5%

Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis. 44
Competitive AnalysisLATAM Market Share per Type of Contract (continued)

Percent of Sales PACS Market: LATAM, Mini-PACS contracts, 2011
Others, 29.7%
AGFA, 14.8%
Mini-PACS contracts Market size $8.59 M
Philips, 8.4% Siemens, 2.7%

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Carestream , 23.7% Fuji, 14.4% GE, 6.3%

Market Share Analysis

The top five PACS participants contributed 70.7 percent of total market revenue. Carestream led the market in 2011 with $18.9 million in revenue. Carestream leveraged its offering of highly costbeneficial solutions, targeting all segments. Following Carestream in market ranking are AGFA, Fuji, and Philips. The two-digit growth of the market is attractive for every participant in the PACS market, especially huge multinationals companies. Local participants like Visualmedica in Argentina and Pixeon in Brazil are well positioned in each market. They provide low-cost, tailored solutions for healthcare institutions.
PACS Market: Company Market Share Analysis of Top 5 Participants, LATAM, 2011
Companies Carestream AGFA Fuji Philips GE Others Total
Revenue ($ Million) 18.9 16.8 7.9 8.9 5.8 22.5 81.1
* A list of Other companies can be found each country breakdown. Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
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Competitive Environment
PACS Market: Competitive Structure,
LATAM, 2011
Number of Companies in the Market Competitive Factors Key End-user Groups Major Market Participants Market Share of Top 6 Competitors Other Notable Market Participants Distribution Structure Notable Acquisitions and Mergers 12 with revenues greater than $81 million Cost, performance, schedule, support, technology, reliability, contractor relationships, customer relationships A, B, C, and D Carestream, AGFA, Fuji, GE, Siemens, Philips 76.1% Pixeon (Brazil), Visualmedica (Argentina) Direct and Indirect Sales
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Argentina Breakdown
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Argentinean Market-Market Overview

Economic Background
In 2011, the reelection of the Argentinean president resulted in a continuation of the economic model. This model tends to favor local production over imports. In 2012, the government put restrictions on all imported goods, medical consumables included, among them radiological films. This has created an opportunity for new PACS installations.
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Market Background
In 2011, the Argentinian GDP was $447.6 billion and showed a 9.1 percent growth rate. Eight private insurance groups, OSDE, Swiss Medical, Galeno, Medicus, Medife, Omint, Consolidar, and Hospital Italiano, have 2.8 million affiliates. Due to the uncertainty created by import restrictions, the high inflation rate, and political unrest, investment decisions are being delayed.
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Healthcare Infrastructure
Number of Hospitals, Argentina, 2011 Distribution of Hospitals in the 5 Most Populated States, Argentina, 2011
Tucuman Mendoza Total: 3311 South 1,071 17% Inhabitants (Millions) Private Public 1.5 56.8 43.2 2.0 65.9 34.1
Capital City 3.0 77.3 22.7
Santa Fe Cordoba 3.2 61.2 38.8 3.5 75.9 24.1
Buenos Aires 15.0 66.8 33.2
The last Pan-American Health Organization analysis report revealed that Argentina has 3,311 hospitals, of which 38 percent are public institutions and 62 percent are private facilities. The total country population is 40 million citizens. Fifty-two percent of the population have medical insurance, while the remaining 48 percent receive medical attention at public institutions (universal coverage).
Sources Panamercial Health Organization; Frost & Sullivan analysis.
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Trends in the Argentinean Market
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Argentinean Market-Trend Impact on the PACS Market

Trend Impact on PACS market, Argentina, 20112017
Trend
Importation restrictions and increasing film costs are expected to drive the need for PACS solutions. Lack of political willingness/decisions/interest decreases the public investments in implementing PACS.
Degree of Impact
8
Impact Timing
Present
Present
Impact Ratings: 7-10 = High; 4-6 = Medium; 1-3 = Low

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Argentinean Market-Trend Impact on the PACS Market Explained

Importation restrictions and increasing film costs are expected to drive the need for PACS solutions.
In 2012, the Argentinean government restricted the number of imported articles. Radiological films are included among the medical consumables. Companies like AGFA, Carestream, and Fuji directly influence these decisions because film sales are their core business. Besides this local issue, film cost is growing due the mineral used for their fabrication. As a result of the high film cost, health providers are using CDs/DVDs to hold all of the information of the exams performed. This is specifically done in diagnostic centers. At public hospitals, this modality has been applied since the spread of the use of multi-slice tomographies, which generate multiple images. In conclusion, the need for PACS solutions will increase in the short term to replace the use of film .
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Argentinean Market-Trend Impact on the PACS Market Explained (continued)

Lack of political willingness/decisions/interest decreases the public investments in implementing PACS. Adoption of information technology systems has been slow in the Argentine healthcare industry. The government has dedicated a significantly lower number of resources to healthcare information systems, as compared to other Latin American countries such as Mexico and Brazil. There is a lack of political decisions regarding the implementation of PACSs in public institutions. Besides the fact that the government implemented restrictions on imported goods, there is not yet a clear intention of implementing PACSs in public institutions. In 2012, AGFA won a public tender to install a PACS in Hospital Grarraham, one of the largest pediatric institutions in Argentina.
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Forecasts and TrendsArgentinean Market
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Argentinean Market-Market Engineering Measurements

Market Overview PACS Market: Argentina, 2011
MEASUREMENT NAME
TREND
MEASUREMENT
Market Stage (Nascent, Growth, Mature) Market Revenue (2011) Penetration of PACS Solution (2011) Average Price Per Unit: Enterprise PACS Average Price Per Unit: Middle PACS (2011) Average Price Per Unit: Mini-PACS (2011) Revenue at End of Forecast Period (2017) Base Year Revenue Growth Rate Compound Annual Growth Rate (CAGR), 20112017 Customer Price Sensitivity (scale of 1 to 10, Low to High)
Growth $4.94 M 2% $180,000 $78,000 $14,000 $18.3 M 30% 24.4% 7
Market Concentration (% of base year market controlled by top three 71% competitors) Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
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Argentinean Market-PACS Market Penetration Analysis
PACS Market: Market Penetration, Argentina, 2011

Discussion The potential adoption of PACS solutions is 100.0 percent, which includes all hospitals and diagnostic centers in the country. It is important to remark that not every diagnostic center possesses image diagnostic services. As an example, biochemical laboratories are considered diagnostic centers. The average adoption is only 2.0 percent, meaning that 341 healthcare institutions have a PACS solution installed. This number can be divided between 250 hospitals and 91 diagnostic centers. The higher adoption is among large hospitals, where the penetration reaches 28 percent in both public and private hospitals. The smallest adoption of PACS solutions is among small public diagnostic centers, with a penetration of less than 1 percent. The penetration of this solution is far below other regions around the world. The installed base reaches almost 80.0 percent in Europe and in North America. The installed base will reach 1,452 in 2017, with a CAGR of 27 percent.
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Argentinean Market-PACS Market Unit Shipment Forecast

Key Takeaway: Investment decisions were impacted in 2011 by the presidential election.
350 300 250
PACS Market Unit Forecast, 20112017 Argentina CAGR = 25%
40.0 35.0 30.0 25.0
200 20.0 150 15.0 100 50 0 2011 43 22 14 2012 60 28 18 34.2 2013 74 33 22.00 21.7 2014 91 41 27 23.3 Year 2015 113 51 33.00 23.9 2016 140 62 42 23.9 2017 171 77 53 23.4 10.0 5.0 0.0
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Growth Rate (%)

59
Units
Argentinean Market-Unit Shipment Discussion

In 2011, 79 PACS units were sold in the Argentinean market. This number will reach 296 in 2017, with a CAGR of 25 percent. Sales in 2011 were influenced by the presidential elections in October 2011; the reelection of the Argentinean president finally resulted in a continuation of the current economic model. This decrease in 2011 sales is reflected as an increase of sales in 2012, with a growth rate of 30.4 percent. The sales of PACS for hospitals represented 63 percent of the total sales and the CAGR for this type of institution is 24 percent, in contrast with 27 percent of the units sold for diagnostic centers. Verticalization of hospitals is boosting the acquisition of PACS solutions. Large private hospitals are acquiring small and medium ones, thereby creating big groups. PACS solutions are essential in order for the institutions to fully integrate with the other hospitals of the group. Political decisions are forcing the requirement of PACS due to the lack of imported radiological films.
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Argentinean Market-PACS Market Revenue Forecast

Key Takeaway: Investment decisions were impacted in 2011 by the presidential election.
20 18 16
PACS Market Revenue Forecast, 20112017 Argentina CAGR = 24.4%
35.0 30.0 25.0 20.0 15.0 10.0 5.0
Revenue ($ Million)
14 12 10 8 6 4 2 0 2011 1.16 1.48 2.30 2012 1.62 1.85 2.95 30.0 2013 1.99 2.22 3.63 22.1 2014 2.44 2.73 4.46 22.8 Year 2015 3.03 3.42 5.49 23.9 2016 3.73 4.14 6.86 23.4 2017 4.55 5.13 8.64 24.4
0.0
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Growth Rate (%)

61
Argentinean Market-PACS Market Revenue Forecast by Size of Contract

Key Takeaway: Market share is expected to remain constant due the similar growth expected in all segments.
PACS Market Percent Revenue Forecast by Size of Contract, Argentina, 2011 and 2017
100%
80%
Revenue (%)
60%
40%
20%
0%
Small Medium Big
2011 23.4 30.0 46.6
2017 24.9 28.0 47.2
Year
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Argentinean Market-Revenue Forecast Discussion

In 2011, total sales reached $4.94 million. Sales will reach $18.3 million by 2017. This growth represents a CAGR during the period of 24.4 percent.
In 2011, the breakdown of the $4.94 million is as follows:

o 62 percent for the private sector and 38 percent for public sector; o 46.6 percent for big contracts, 30.0 percent for medium contracts, and 23.4 percent for small contracts; o 72 percent for hospitals and 28 percent for diagnostic centers.
The total PACS market revenue forecast by size of contract is expected to remain almost constant, with a CAGR from 2011 to 2017 of 24.7 percent for big contracts, 23.0 percent for medium contracts, and 25.7 percent for small contracts. Although verticalization of big hospitals would suggest an increase of big contracts, there are many small hospitals and diagnosis centers with low IT budgets that will digitalize their services and will need mini-PACS solutions. Although the average price is forecasted to decrease over the years, revenue will still grow faster than units because of the higher participation of big contracts.
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Argentinean Market-PACS Market Percent Revenue Forecast by Type of Institution

Key Takeaway: Hospitals share is expected to outgrow diagnostic centers. PACS Market Percent Revenue Forecast by Type of Institution, 2011 and 2017
100%
80%
Revenue (%)
60%
40%
20%
0%
Diagnostic Centers Hospitals
2011 63.1 36.9
2017 55.5 44.5
Year
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Argentinean Market-PACS Market Percent Revenue Forecast by Type of Institution Discussion

In 2011, diagnostic centers represented 28 percent of total revenues, reaching $1.36 million in terms of sales, while hospitals represented only 72 percent and accounted for $3.57 million in sales. Even with the higher number of institutions, the installed base of PACS solutions in diagnostic centers is lower than in hospitals: 1 percent versus 8 percent. The 17,000 Argentinean diagnostic centers are divided into 10,540 private centers and 6,460 public centers. This amount includes non-image diagnostic centers. Based on this indicator, there is just 1 percent market penetration. Our estimation is that 40 percent of the total of diagnosis centers represent the potential market for PACS.
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Argentinean Market-PACS Market Revenue Per Region and Total Number of Exams Managed by PACS Solutions
PACS Market: Concentration of Total Installed Base Per Region, Argentina, 2011
PACS Market: Number of Exams Managed by PACS Solutions, Argentina, 2011
Total Millons of exams managed by PACS solutions in 2011 The highest penetration rate is at Ciudad Autonoma de Buenos Aires the capital city. It has 172 hospitals, of which 77 percent are private, and 1,494 diagnostic centers, of which 96 percent are private. Moreover, just 26 percent of the population do not have health insurance. 53.7
Diag. Centers 8.6
Hospitals 45.1
In 2011, we estimate that 50 million exams were managed by PACSs in Argentina. However, considering the increasing market penetration, this number could reach 700 million in 2017.
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Market Share and Competitive Analysis Argentinian PACS Market
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Argentinean Market-Competitive Environment

PACS Market: Competitive Structure, Argentina, 2011
Number of Companies in the Market Competitive Factors Key End-user Groups Major Market Participants Market Share of Top 5 Competitors Other Notable Market Participants Notable Acquisitions and Mergers 9 with revenue greater than $4.9 M USD Installation, service maintenance, integration, price, technology Hospitals and diagnostic centers AGFA, Carestream, Fuji, Philips, Visualmedica 91.3% GE, NetMed Solutions, IMDC n/a
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Argentinean Market-Argentinean Competitive Factors and Assessment

Philips has entered aggressively into the market, representing 7.4 percent of the market share in 2011. The company has installed PACSs in large and important healthcare institutions, such as CEMIC, Centro de Diagnostico Rossi, and Hospital Austral, among others. In contrast to Philips, GE and Siemens decreased their sales force on the PACS division and focused more on selling modalities like CT, MRI, and XR. There are two new local PACS companies: Net Med Solutions, distributor of Pixeon in Argentina covering all segments, and IMDC, focusing mainly in the mini and middle PACS segment. The PACS solution has zero-tolerance for downtime. Therefore, the customer evaluates the technical service before buying a PACS. This means that customer service is one of the main factors that make a company more or less competitive. The customer normally evaluates the response time and the cost of the service.
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Argentinean Market-Competitive AnalysisMarket Share

Key Takeaway: Local competitor Visualmedica is well positioned in the market.
Percent of Sales Total PACS Market: Argentina, 2011 IMDC, 2.4% Visualmedica, 16.6% Net Med, 2.3% Siemens, 0.5% GE, 3.5% Philips, 7.4% Carestream, 29.2% Fuji, 13.0% AGFA, 25.1%
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Argentinean Market-Competitive AnalysisMarket Share Per Type of Contract

Key Takeaway: AGFA and Carestream lead the Enterprise PACS Market
Percent of Sales PACS Market: Enterprise PACS contracts, Visualmedi Argentina, 2011
ca 8% Siemens 3% GE 4% Philips 9% Net Med 3% RAIM 2% Others 2% AGFA 27%
Enterprise PACS contracts Market size $2.33 M
Fuji 18%
Carestrea m 26%
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Argentinean Market-Competitive AnalysisMarket Share Per Type of Contract (continued)

Key Takeaway: Local company Visualmedica is well positioned in the market.
Percent of Sales PACS Market: Middle PACS contracts, Argentina, 2011
GE 2% Philips 4% Fuji 2% Siemens 0% Net Med 2% Visualmed ica 23%
IMDC 2%
Carestrea m 37%
AGFA 28%
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Argentinean Market-Competitive AnalysisMarket Share Per Type of Contract (continued)

Key Takeaway: Local company Visualmedica is well positioned in the market.
Percent of Sales PACS Market: Mini-PACS contracts, Argentina, 2011
GE 5% Philips 9% Siemens Net Med 0% 2% Visualmed ica 19%

Fuji 18% IMDC 4%
AGFA 20% Carestrea m 23%

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Argentina Market Share Analysis

The top five PACS participants contributed 90.6 percent of total market revenue. Carestream led the market in 2011, with $1.44 million in revenue. Carestream leveraged its offering of highly costbeneficial solutions, targeting all segments. Following Carestream in market ranking were AGFA, FUJI, and Philips. The local participant Visualmedica is well positioned in the Argentinean market. They provide low-cost, tailored solutions for healthcare institutions. Although the two digit growth of the market is attractive for every participant, multinational companies have some concerns about the political and economic uncertainty created by the government. PACS Market: Company Market Share Analysis of Top 5 Participants Argentina, 2011 Companies Carestream AGFA Fuji Philips Visualmedica Others Total Revenues ($ Million) 1.44 1.24 0.62 0.35 0.82 0.51 4.94
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Local Company Profiles
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Visualmedica
Company Information
Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio 1998 Argentina Argentina Details
Company History
Argentina
Visualmedica is a Argentinean company focused on PACS and RIS solutions. Visualmedica signed partnership with ICRco (USA) to commercialize products in the digital radiology area. This joint venture allows them to sell the digital radiology equipment with an IT solution included.
PACS, RIS, HIS
Recent M&A
Visualmedica leverages a very aggressive growth strategy in Argentina. It provides simple and low-cost solutions for every healthcare institution. Generally,Visuamedica offers the first IT-integrated solution to institutions that do not have digital systems.
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NetMed Solutions
Company Information
Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio 2008 Argentina Argentina NetMed Solution is the Argentinean distributor of Pixeon. Their general manager has much experience in this field. They provide solutions for every segment. Details
Company History
Brazil
PACS, AYCAN, Paper-Print
Recent M&A
Intel capital invested in Pixeon
They first installed PACS Aurora at Hospital Favaloro, and in 2012, they installed PACS in the San Camilo clinic that holds 120 beds .
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IMDC
Company Information Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio n/a Uruguay Argentina, Uruguay Details IMDC is the Argentinean distributor of CharruaSoft. CharruaSoft is a DICOM and Imaging Uruguayan software company. They started developing DICOM applications in 1996. They worked together with ImageSystems from Germany in the creation of the DICOM viewer K-PACS/iQ-View and with Med-sX from France to implement a DICOM paper printing system PrintSCP. The company is continuously improving their product line and also develops custom software according to our customers needs. Company History
Uruguay
PACS, CharruaSoft
Recent M&A
IMDC offers a wide range of solutions, including paper print, full DICOM storage, and more. CharruaSoft has been awarded a loan by the Uruguayan Government agency for financing the FDA certification process of their main products: CharruaPACS and Charrua Workstation.
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Brazil Breakdown
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Brazilian Market Overview

Economic Background
The international monetary fund ranked Brazil as the 6th biggest economy of the world, with a GPD of $2,492.90 billion and a population of 192.0 million.
Brazil is considered one of the leading emerging economies together with China, India, and Russia.
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Brazilian Market Overview

Healthcare Infrastructure
Healthcare Infrastructure: Number of Hospitals Per Region, Brazil, 2011 Healthcare Infrastructure: Distribution of Hospitals Per Region And Type, Brazil, 2011
North 483 (8%) Northeast 1,750 28% Center-West 780 Southeast 12% 2,210 35% South 1,071 17%
Total: 6,294
Private Philanthropic Public
Brazil Total 43.4 23.5 33.0
Cente r-West 52.8 11.5 35.6
South 41.0 36.1 22.9
South east 43.2 35.1 21.7
North east 39.9 11.8 48.3
North 47.0 5.0 48.0
The number of hospitals has been stable in the last five years, between 6,300 and 6,400. Both categories from Ministry of Health philanthropic (nonprofit institutions) and private hospitals are privately funded. In the South and Southeast, the two main regions in terms of GDP, philanthropic hospitals have a significant participation. In North and Northeast regions, public hospitals are the majority.
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Forecasts and TrendsBrazil Market
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Brazilian Market Engineering Measurements

Market Overview PACS Market: Brazil, 2011
MEASUREMENT NAME
TREND
MEASUREMENT
Market Stage (Nascent, Growth, Mature) Market Revenue (2011) Penetration of PACS Solution (2011) Average Price Per Unit: Enterprise PACS (2011) Average Price Per Unit: Middle PACS (2011) Average Price Per Unit: Mini PACS (2011) Revenues at End of Forecast Period (2017) Base Year Revenue Growth Rate Compound Annual Growth Rate (CAGR), 20112016 Customer Price Sensitivity (scale of 1 to 10, Low to High)
Growth $59 M 6.0% $650,000 $300,000 $80,000 $288 M 28.0% 30.0% 7
Market Concentration (% of base year market controlled by top three 51.8% competitors) Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.
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Brazilian PACS Market Penetration Analysis

PACS Market: Market Penetration, Brazil, 2011

Discussion The potential adoption of PACS solutions is 100.0 percent, which includes all hospitals and diagnostic centers in the country. Nowadays, the average adoption is only 6.0 percent, meaning that 1,483 healthcare institutions have a PACS solution installed. This number can be divided between 537 hospitals and 946 diagnostic centers. The higher adoption is among large hospitals, where the penetration reaches 20.0 percent in both public and private hospitals. The smallest adoption of PACS solutions is among small public diagnostic centers, reaching a penetration of only 2.0 percent. The penetration of this solution is far below that of other regions around the world. The installed base reaches almost 80.0 percent in Europe and in North America. The installed base will reach 4,634 in 2017, with a CAGR from 2011 to 2017 of 20.9 percent.
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Brazilian PACS Market Unit Shipment Forecast

Key Takeaway: The years that precede major international events represent higher growth for the market.
800 700 600
PACS Market Unit Forecast, 20112017 Brazil CAGR = 29.8%
27.0 26.5 26.0
Units
500 400 300 200 100 0 2011 44 92 58 2012 48 115 77 23.7 2013 50 144 103 23.8 2014 52.00 181.00 138.00 24.9 Year 2015 52 228 186 25.6 2016 47 288.00 252.00 26.0 2017 35 365 342 26.4
25.0 24.5 24.0 23.5 23.0 22.5 22.0
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Growth Rate (%)

85
25.5
Brazilian Market Unit Shipment Discussion

In 2011, 194 PACS units were sold in the Brazilian market. This number will reach 926 in 2017, with an average CAGR over the period of 29.8 percent.
The sales of PACSs for hospitals represented only 32.0 percent of the total sales; however, the CAGR for this type of institution is 34.2 percent, in comparison with 27.4 percent of the units sold for diagnostic centers.
The integration of hospitals is boosting the acquisition of PACS solutions. Big hospitals are acquiring small and medium ones, creating big groups. PACS solutions are essential for the institutions to fully integrate with the other hospitals in the group.
The international events that Brazil will hostthe 2016 Olympic Games and the 2014 Football World Cupwill also be a great opportunity for the acquisitions of this solution, mainly for the public sector. This will enable huge public tenders in order to be prepared for these events.
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Brazilian PACS Market Revenue Forecast

Key Takeaway: The PACS market doubled the growth rate of the total healthcare IT total market in Brazil.
350 300
PACS Market Revenue Forecast, 20112017 Brazil CAGR = 30.0%
32.0 31.0
Revenue ($ Million)
200 29.0 150 100 50 0 2011 3.53 23.28 33.02 2012 3.81 29.04 43.92 28.3 2013 4.03 36.34 58.63 29.0 2014 4.15 45.60 78.56 29.6 Year 2015 4.12 57.41 105.67 30.3 2016 3.74 72.52 142.76 31.0 2017 2.79 91.93 193.72 31.7 28.0 27.0 26.0
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Growth Rate (%)

87
250
30.0
Brazilian PACS Market Revenue Forecast by Size of Contract

Key Takeaway: Large contracts will increase due to the consolidation of healthcare institutions.
PACS Market Percent Revenue Forecast by Size of Contract, Brazil, 2011 and 2017
100% 80%
Revenue (%)
60% 40% 20% 0%

Small Medium Big
2011 5.9 38.9 55.2
2017 1.0 31.9 67.2
Year
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Brazilian Market Revenue Forecast Discussion

Total PACS market revenue was $59.8 million in 2011, and will reach $288.4 million in 2017. This growth represents a CAGR of 30.0 percent over the forecast period.
In 2011, the breakdown of the $59.8 million were as follows: o o 80.4 percent for the private sector and 19.6 percent for public sector; 55.2 percent for big contracts, 38.9 percent for medium contracts, and 5.9 percent for small contracts; 36.9 percent for hospitals and 63.1 percent for diagnostic centers.
Due to the integration trend, the large contracts are forecasted to increase more than the average, with a CAGR from 2011 to 2017 of 34.3 percent. Small contracts are forecasted to decrease its participation, and in 2017 will represent less than 5.0 percent of total revenue.
Although the average price is forecasted to decrease over the years, revenue will still grow more than units because of the higher participation of big contracts.
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Brazilian PACS Market Percent Revenue Forecast by Type of Institution

Hospitals grow revenue at a higher CAGR than diagnostic centers.
PACS Market Percent Revenue Forecast by Type of Institution, Brazil, 2011 and 2017
100%
80%
Revenue (%)
60%
40%
20%
0%
2011 63.1 36.9
2017 55.5 44.5
Year
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Brazilian PACS Market Percent Revenue Forecast by Type of Institution Discussion

In 2011, diagnostic centers represented 63.1 percent of total revenues, reaching $47.5 in terms of sales, while hospitals represented only 36.9 percent of total revenues and accounted for $29.2 in sales.
The larger representation of diagnostic centers in the total revenue is basically due to the greater number of clinics in comparison with hospitals. There are more than 17,000 diagnostic centers in Brazil, while there are only 7,536 hospitals.
Even with the greater number of institutions, the installed base of PACS solutions in diagnostic centers is lower than in hospitals: 5.6 percent versus 7.1 percent.
It is valuable to mention that public diagnostic centers represent only 2.6 percent in the penetration of the solutions; the number of public clinics is not very representative either, at only 6.0 percent.
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Brazilian PACS Market Revenue Per Region and Total Number of Exams Managed by PACS Solutions
PACS Market: Concentration of Total Installed Base Per Region, Brazil, 2011
PACS Market: Number of Exams Managed by PACS Solutions, Brazil, 2011
North 30 (2%) Northeast 222 15% Center-West 267 Southeast 18% 564 38% South 400 27%
Total Exams managed by PACS solutions in 2011 300,218.4
Diagnostic Centers 186,097.7
Hospitals 114,120.7
Total: 1,483
The Brazilian installed base is not divided equally among regions. The North represents only 2.0 percent , while the Southeast has the higher number of PACS solutions, representing 38.0 percent of the total.
In 2011, more than 300 million exams were managed by PACS solutions in the country. However, due to the small penetration of the solution , more than 2 billion exams were not managed by the solution.
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Market Share and Competitive Analysis Brazilian PACS Market
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Brazilian Competitive Environment

Brazil, 2011
Number of Companies in the Market Competitive Factors Key End-user Groups Major Market Participants Market Share of Top 5 Competitors Other Notable Market Participants 8 with revenues greater than $60 M USD Installation, service maintenance, integration, price, technology, Hospitals and Diagnostic Centers AGFA, Carestream, Fuji, Philips, GE 67.9% Medical Systems, Microdata, Pixeon Microdatas acquisition by MV Sistemas Notable Acquisitions and Mergers Intel Capital invested in Pixeon Whebs acquisition by Philips WPDs acquisition by AGFA
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Brazilian Competitive AnalysisMarket Share

Key Takeaway: Global participants dominate all segments; local participants are increasing their footprint.
Total Market Size: 60 M USD Percent of Sales PACS Market: Brazil, 2011 Others, 14.2% AGFA, 23.6%
Pixeon, 6.1%
Philips, 8.1%
Microdata, 6.0%
Carestream, 17.3%
Medical Systems, 5.8%
GE, 7.9%
Fuji, 11.0%
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Brazilian Competitive AnalysisMarket Share Per Type of Contract

Key Takeaway: AGFA and Carestream represent the 46.9 % of the enterprise PACS contracts
Percent of Sales PACS Market: Enterprise PACS contracts, Brazil, 2011 Others,
12.3% Agfa, 33.7% Pixeon, 4.3%
Enterprise PACS contracts
Philips, 7.8%
Microdata, 4.2% Medical Systems, 4.1% GE, 10.3%
Carestrea m, 13.2% Fuji, 10.1%

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Percent of Sales PACS Market: Middle PACS contracts, Brazil, 2011
Medical Systems, 7.4% GE, 5.1% Fuji, 12.5% Pixeon, 7.9% Microdat a, 7.8% Philips, 9.0%
Middle PACS contracts
Carestre am, 21.5%

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Percent of Sales PACS Market: Mini-PACS contracts Brazil, 2011 Medical
Systems, 10.6% GE, 4.3% Fuji, 9.3% Microdata, 10.9% Philips, 5.8% Pixeon, 11.1%
Mini-PACS contracts
Carestrea m, 27.6% Agfa, 6.4%
Others, 14.0%
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Brazilian PACS Market Share Analysis

The top five PACS participants contributed 67.9 percent of total market revenue. AGFA led the competition in 2011 with $14.1 million in revenue. AGFAs focus on the excellence in the service installation and maintenance and the highly sophisticated solutions made the company the market leader. Its penetration in big contract volume is more than 10.0 percent of the second position. Carestream continued to leverage its offering of highly cost-beneficial solutions, primarily targeting the medium and low-end segment. Following Carestream in market ranking are Fuji, Philips, and GE. The two-digit growth of the market is attractive for every competitor in the PACS market, especially huge multinationals.
PACS Market: Company Market Share Analysis of Top 5 Participants, Brazil, 2011
Companies AGFA Carestream Fuji Philips GE Others Total
Revenue ($ Millions) 14.1 10.3 6.6 4.9 4.7 19.2 59.8
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Medical Systems
Company Information Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio 1990 Brazil Brazil, Argentina Medical Systems is a Brazilian company focused on PACS and RIS solutions. The company has been developing software since 1990 and has 6 products in its portfolio. Medical Systems is included on the cartao BNDES program, which enables the company to offer better financing conditions to its clients. Details Company History
Brazil
PACS, RIS, HIS
Recent M&A
Medical System is always looking for partnerships as the main part of its strategy. In 2010, Medical System signed a partnership with Pixeon in order to integrate its solutions. Medical systems provides the RIS solution and Pixeon the PACS solution. The company is now working on prototypes for this integrated system. The company is expanding in Latin America and is already negotiating contracts in Mexico; in addition, it has two clients in Argentina.
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Microdata
Company Information Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio 1999 Brazil Brazil Details Company History The acquisition of Microdata by MV Sistemas is an important strategic step in Microdatas product portfolio, which can take advantage of the leading market position that MV has over the other healthcare IT segment in Brazilthe hospital information system (HIS) market in Brazil. In addition to the strong brand of MV Sistemas, Microdata can also associate its products with Vivos name, a company acquired by the multinational Telefonica, which formed the partnership in the beginning of 2012. Microdata can take advantage of the distribution and sales channel of Telefonica around the globe in order to expand its product penetration.
Brazil
RIS/PACS
Recent M&A
Adquisitiion of Microdata by MV Sistemas
Microdata developed and launched a unique PACS software in 2011 in partnership with Amil, an important network of hospitals and health insurers in Brazil. The software stores and distributes radiological images with an application, and when in connectivity with Microsoft Kinect, which is a technology developed by Microsoft to use in the Xbox 360, allows the participants to interact with the game without needing a joystick in the hands.
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Pixeon
Company Information Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio 2003 Brazil Plans to expand to LATAM Details Pixeon is the first Brazilian company to develop equipment completely locally in the IT segment. It is one of the most important companies in the sector. The main product of Pixeon is PACS Aurora. In April 2010, Pixeon signed a partnership with Shimadzu (Japan) to commercialize products in the digital radiology area. This joint venture allows them to sell the digital radiology equipment with an IT solution included. The main target of this alliance is public and private hospitals looking for a complete solution. Company History
Santa Catarina, Brazil
PACS, teleradiology
Recent M&A
Intel
Pixeons office is located in Santa, Catarina but the company is building its headquarters in So Paulo. Pixeon expanded its business to Latin America in order to become the leading suppliers in the region. In November of 2010, the company opened its first office in Buenos Aires. With the new office in So Paulo and the expansion to other countries in Latin America, the company is expecting to grow at rate of 35.0 percent annually. The company had revenues for $2.0 million in 2010. Source: Frost & Sullivan analysis.
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Mexico Breakdown
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Market Overview
Economic Background
The international monetary fund ranked Mexico as the 14th largest economy of the world with a GDP of $1,154.784 billion and a population of 110 million. Mexico has several commercial agreements with other countries and it is positioned well geographically near the U.S. and Canada. It is also part of NAFTA (North American Free Trade Agreement). The Mexican FDA ,COFERIS, signed a commercial agreement with Japan to facilitate the importation of some Japanese medical devices
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Mexican Market OverviewHealthcare Public Resources Per region

Region
1. Northwest Region: Baja California, Baja California Sur, Sonora, Chihuahua, Sinaloa, Durango 2. Northeast Region: Coahuila, Nuevo Len, Tamailipas % of Total Population
12.8
Public Primary Care Institutions 2317
Beds/1,000 inhabitants
8.33
9.4
1499
3. West Region: Nayarit, Jalisco, Colima, Michoacn 4. North Central Region: Aguas Calientes, Zacatecas, San Luis Potos, Guanajuato, Queretaro 5. South Central Region: Estado de Mexico, Distrito Federal, Morelos 6. South Western Region: Chiapas, Oaxaca, Guerrero
12.0
2543 2084
8.25 7
11.2
23.0
2,200
0.92
10.7
4,298
4.67
7. South Eastern Region: Yucatn, Quintana Roo, Campeche, Tabasco 8. East Region: Veracruz, Puebla, Hidalgo, Tlaxcala
5.6
1,414
4.67
14.0
3,816
6.75
All figures are rounded. The base year is 2011. Source: INEGI and Frost & Sullivan analysis.
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Mexican Market OverviewPublic and Private Spending

Of total health spending, 47.0 percent comes from out-of-pocket payments. The portion of the population able to afford out-of-pocket payments remains stable; the increase of public facilities and the quality of attention reduces the number of people from lower social classes using private facilities. Although the private market keeps investing in bigger proportions than public, approximately 52.0 percent of the total population is covered by public health insurance positioning Mexico as leader public healthcare provider in the region. . Since 2009, the federal governments objectives have been focused on universal coverage and the improvement of public services to reduce out-of-pocket expenditures, which were successfully decreased from 57.0 percent in 2000 to 47.0 percent in 2011. For 2012, Felipe Calderon estimated a budget over 6 billion pesos to reach these objectives.
Out-of-pocket payments
Mexico leads the public healthcare investment in the region
The main objective of the government is to provide universal coverage by 2012 to 2013
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Mexican Market overview

Healthcare IT Segment Breakdown
There are 91.363 million mobile cellular phones (mobile penetration is 77.2 percent of total population, 11th in world rank). This open an impressive market for mHealth, which is still in the initial stage. Medical imaging on mobiles is going to develop quickly, since one of the main competitors in the area just obtained the FDA certificate and is expected to boost the Mexican market with a visor for medical images compatible with other EMR, HIS and PACS systems. By 2011, only 9 percent of all hospitals had installed a PACS system. However, the number is expected to reach to 23.1 percent by 2016, with a market size of $19.5 million. Even when the PACS market has a market share divided among 8 very strong participants (4 of them control over 65 percent of the total market), the entrance of new competitors is going to reduce prices in the coming years. The government has implemented an e-HCare for the users of the SPSS, a smart card-based solution. It allows the doctor to access the patients information and add new one on to it.
Source: CIA and Frost & Sullivan analysis.
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Forecasts and TrendsMexico Market
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Mexican Market Engineering Measurements

Market Overview PACS Market: Mexico, 2011
MEASUREMENT NAME
TREND
MEASUREMENT
Market Stage (Nascent, Growth, Mature) Market Revenue (2011) Penetration of PACS Solution (2011) Average Price Per Unit: Enterprise PACS (2011) Average Price Per Unit: Middle PACS (2011) Average Price Per Unit: Mini PACS (2011) Revenues at End of Forecast Period (2017) Base Year Revenue Growth Rate Compound Annual Growth Rate (CAGR), 20112017 Customer Price Sensitivity (scale of 1 to 10, Low to High)
Growth $16.33 M 8.0% $130000 $55,000 $25,000 $65 M 23.6% 26.1% 7
Market Concentration (% of base year market controlled by top three 55.5% Note: All figures are rounded. The base year is 2010. Source: Frost & Sullivan analysis. competitors)
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Mexican PACS Market Penetration Analysis

There are still more than 23,000 healthcare institutions without a PACS solution, considering hospitals and diagnostic centers.
PACS Market: Penetration Analysis, Mexico, 2011

Discussion The potential adoption of PACS solution is 100.0 percent, which includes all hospitals and diagnostic centers in the country. Nowadays, the average adoption is only 8 percent, meaning that 1,860 healthcare institutions have a PACS solution installed. This number can be divided between 840 hospitals and 1,020 diagnostic centers. The higher adoption of PACS is large private hospitals where the penetration reaches 12 percent. The smallest adoption of PACS solution is among small public diagnostic centers, reaching a penetration of only 2 percent. The penetration of this solution is far lower than other regions around the world. The installed base reaches almost 80.0 percent in Europe and in North America. The installed base will reach 7075 in 2017 with a CAGR from 2011 to 2017 of 25 percent.
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Mexican PACS Market Unit Shipment Forecast

Key Takeaway: Every segment is expected to grow at a two-digit rate.
PACS Market Unit Shipment Forecast, 20112017 Mexico CAGR = 25.6%
1,600 1,400 1,200
35.0 30.0 25.0 20.0
Units
1,000 800 15.0 600 400 200 0 2011 166 132 63 2012 197 162 81 21.9 2013 241 198.00 103.00 23.2 2014 297 244 134 24.5 Year 2015 385 300.00 172.00 27.0 2016 502 372 223 28.0 2017 668 461 290 29.4 10.0 5.0 0.0
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Growth Rate (%)

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Mexican Unit Shipment Discussion

In 2011, 361 PACS units were sold to the Mexican market. This number will reach 1,472 in 2017, with an average growth of the period of 26 percent.
The sales of PACS for hospitals represented 41 percent of the total sales. However, the CAGR for this type of institution is 27.5 percent, in comparison with 49 percent for the units sold for diagnostic centers.
The integration of hospitals is boosting the acquisition of PACS solutions. Big hospitals are acquiring small and medium ones, creating big groups. PACS solutions are essential in order for institutions to fully integrate with the other hospitals of the group.
It is important to notice that between 2009 and 2012, the Mexican government invested more than 3 billion US dollars in healthcare programs and impact the Mexican PACS market in 2011.
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Mexican PACS Market Revenue Forecast

Key Takeaway: Mexican PACS market is expected to grow with a 26.1% CAGR
70 60
PACS Market Revenue Forecast, 20112017 Mexico CAGR = 26.1%
35% 30% 25% 20% 15% 10% 5%
Revenue ($ Million)
40 30 20 10 0 2011 3.91 6.07 6.36 2012 4.63 7.43 8.14 23.60% 2013 5.66 9.10 10.42 24.62% 2014 6.98 11.21 13.44 25.64% Year 2015 9.02 13.76 17.26 26.66% 2016 11.76 17.01 22.36 27.67% 2017 15.65 21.09 29.07 28.69%
0%
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Growth Rate (%)

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50
Mexican PACS Market Revenue Forecast by Size of Contract

Key Takeaway: Big contracts are expected to increase due to the consolidation of healthcare institutions.
PACS Market Percent Revenue Forecast By Size of Contract, Mexico, 2011 and 2017
100% 80%
% Revenue
60% 40% 20% 0%

Small Medium Big
2011 23.93% 37.16% 38.91%
2017 23.78% 32.05% 44.17%
Year
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Mexican PACS Market Revenue Forecast Discussion

In 2011, total sales reached 16.33 million and will reach $65.80 millions by 2017. This growth represents a CAGR of 26.1 percent over the forecast period.
In 2011, the breakdown of the $16.33 million were as follows: o 18 percent for the private sector and 72 percent for public sector; o 39 percent for big contracts, 37 percent for medium contracts, and 24 percent for small contracts. o 41 percent for hospitals and 49 percent for diagnostic centers.
Due to the integration trend, big contracts are forecasted to grow more than the average, with a CAGR from 2011 to 2017 of 29 percent. Medium and small contracts are forecasted to decrease its participation, and in 2017 will represent 32 and 24 percent of total revenues.
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Mexican PACS Market Percent Revenue Forecast by Type of Institution

Hospitals revenue and CAGR are higher than diagnostic centers.
100%
PACS Market Percent Revenue Forecast by Type of Institution, Mexico, 20112017
80%
% Revenue
60%
40%
20%
0%
2011 46.6% 53.4%
2017 43.0% 57.0%
Year
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Total PACS Market Percent Revenue Forecast by type of institution Discussion

In 2011, diagnostic centers represented 46.6 percent of total revenues, reaching $7.60 million in terms of sales, while hospitals represented 53.4 percent and accounted for $8.78 million in sales.
Even with the higher number of Institutions, the installed base of PACS solutions in diagnostic centers is lower than in hospitals: 6 percent versus 16 percent.
In public diagnostic centers, the penetration of the PACS was 3 percent in 2011, with 27 installed PACS. It is important to highlight that the 1,020 public clinics are not so representative, accounting for only 6.0 percent of the total Mexican diagnostic centers.
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Market Share and Competitive Analysis Total Market
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Competitive Environment
Mexico, 2011
Number of Companies in the Market Competitive Factors Key End-user Groups Major Market Participants Market Share of Top 5 Competitors Other Notable Market Participants Notable Acquisitions and Mergers 9 with revenues greater than $16.33 million Installation, service maintenance, integration, price, technology, Hospitals and Diagnostic Centers AGFA, Carestream, Fuji, Philips, Siemens 67.9% EyMSA, SMH, TeleRadiologia
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Competitive AnalysisMarket Share

Key Takeaway: Multinational companies leverage the market share.
Percent of Sales Total PACS Market: Mexico, 2011
Teleradiologia, 2.0% Siemens, 16.8% AFGA, 13.8%
Carestream, 21.9% Philips, 16.9%
SMH, 5.0% EYMSA, 5.0% GE, 10.7%
Fuji, 8.0%
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Competitive AnalysisMarket Share Per Type of Contract

Key Takeaway: Global participants dominate all segments.
Percent of Sales PACS Market: Enterprise PACS contracts, Mexico, 2011
Siemens, 21.0% Philips, 20.0% TeleRadiol ogia, 2.0% Agfa, 11.0%
Enterprise PACS contracts Market size $6.35 M
SMH, 4.0% EYMSA, 4.0%
Carestrea m, 23.0% GE, 9.0% Fuji, 6.0%

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Percent of Sales PACS Market: Middle PACS contracts, Mexico, 2011
Siemens, 18.0% TeleRadio logia, 2.0% AGFA, 14.0% Carestrea m, 22.0%
Philips, 18.0% SMH, 4.0% Fuji, 5.0% EYMSA, 4.0% GE, 13.0%
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Percent of Sales PACS Market: Mini-PACS contracts, Mexico, 2011
Siemens, 8.0% Philips, 10.0% SMH, 8.0% TeleRadiol ogia, 2.0% Agfa, 18.0%
EYMSA, 8.0% GE, 10.0% Fuji, 16.0%
Carestrea m, 20.0%
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Market Share Analysis

The top five PACS participants contributed 80.9 percent of total market revenue. Carestream led the competition in 2011 with $3.57 million in revenue. Carestream continued to leverage its offering of highly cost-beneficial solutions. Following Carestream in market ranking are Philips, Siemens, AGFA, and GE. The two-digit growth of the market is attractive for every participant in the PACS market, especially large multinationals.
PACS Market: Company Market Share Analysis of Top 5 Participants Mexico, 2011
Companies Carestream Siemens Philips AGFA GE Others Total
Revenues ($ Million) 3.57 2.74 2.75 2.25 1.75 3.25 16.33
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SMH
Suministros Para Uso Medico y Hospitalario, SA de CV
Company Information
Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio Recent M&A n/a Mexico Mexico China, Germany PACS, RIS, HIS Details A Mexican distributor of medical equipment, SMH sells low- and midtech systems to small and mediumsized hospitals, clinics, and freestanding imaging centers. Until recently, it imported EBM PACSs from China, but now also handles the German IQ Systems brand to cover its IMSS sales, because the Institute restricts its purchases to items from countries with whom Mexico has a free-trade agreement.
Company History
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Electronica y Medicina, S. A. (EYMSA)

Company Information
Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio Recent M&A Through a technology-sharing agreement in 2006 with Guardian Technologies, EYMSA acquired the PACS expertise it lacked to be able to adapt its RIS software to existing image digitalization systems. EYMSA has been quite successful in the government sector (e.g., IMSS) where it has built many hybrid PACSs. The systems are considered inexpensive and user-friendly.
Company History
Details 1979 Mexico Mexico n/a Diagnostic imaging equipment, RIS, PACS A Mexican manufacturer and distributor of electronic components for medical equipment, EYMSA also offers technical support for imaging and other medical equipment. In operation since 1979, it gained a reputation in the early years for maintaining and repairing imported medical equipment when the severe import restrictions of the day hampered the acquisition of spare parts.
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TeleRadiologia Medica
Company Information
Parameter Founded in Country of Origin Geographic Presence Production Site (PACS) Healthcare Portfolio Recent M&A n/a Mexico Mexico Canada Diagnostic imaging Equipment, RIS, PACS Teleradiologia Medica is the Mexican distributor of RamSoft. Details
Company History
RamSoft is a Canadian leading IT software and services company, dedicated to developing and delivering innovative medical imaging, radiology workflow, teleradiology and billing solutions for the Radiology market.
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The Last Word
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The Last WordThree Big Predictions
PACSs will become crucial software through which to integrate healthcare platforms.
Penetration will reach North American and European standards in 15 years.
The PACS industry will become a $700 million industry by 2020.
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Legal Disclaimer
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Market Engineering Methodology
One of Frost & Sullivans core deliverables is its Market Engineering studies. They are based on our proprietary Market Engineering Methodology. This approach, developed across the 50 years of experience assessing global markets, applies engineering rigor to the often nebulous art of market forecasting and interpretation. A detailed description of the methodology can be found here.
Source: Frost & Sullivan research.
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Latin American PACS MarketBrazil, Argentina, and Mexico

A flourishing double-digit growth market in the region

NB06-48 September 2012

Strategic Review Committee Leader

Healthcare (1) 40.88.57.93.86 (2) Rdas@frost.com

Source: Frost & Sullivan analysis.

Executive Summary (continued)

Source: Frost & Sullivan analysis.

Executive SummaryMarket Engineering Measurements

Base Year Revenue Growth Rate

Compound Annual Growth Rate

Customer Price Sensitivity

Degree of Technical Change

For a tabular version, click here.

Executive SummaryMarket Engineering Measurements (continued)

Average Price Values per Unit of Solution

Source: Frost & Sullivan analysis.

Executive SummaryCEOs Perspective

Source: Frost & Sullivan Database

Market OverviewDefinitions (continued)

Feature Storage Capacity Workstation Web Distribution RIS Integration

Market OverviewDefinitions (continued)

Revenue: Manufacturers revenue

Source: Frost & Sullivan analysis.

Enterprise PACSs 20%

Middle PACSs 42%

Source: Frost & Sullivan analysis.

Market OverviewKey Questions This Study Will Answer

Are the existing competitors structured correctly to meet customer needs?

Source: Frost & Sullivan analysis.

Market OverviewEconomic Background

PACS Market: LATAM, 2011-2017 Brazil Mexico - Argentina

250 200 Population (Millions of inhabitants)

External Challenges: Drivers and Restraints Total Market

Drivers and Restraints

Source: Frost & Sullivan analysis.

Source: Frost & Sullivan analysis.

Drivers Explained (continued)

Drivers Explained (continued)

Source: Frost & Sullivan analysis.

Drivers Explained (continued)

Source: Frost & Sullivan analysis.

Drivers Explained (continued)

Source: Frost & Sullivan analysis.

Drivers Explained (continued)

Source: Frost & Sullivan analysis.

Source: Frost & Sullivan analysis.

Restraints Explained (continued)

Source: Frost & Sullivan analysis.

Restraints Explained (continued)

Forecasts and TrendsTotal Market

Market Engineering Measurements

Total PACS Market Unit Shipment Forecast

3,000 2,500 2,000

1,500 1,000 500 0

29.0 28.0 27.0 26.0

Mini Middle Enterprise Growth Rate

2011 253 246 135

2012 296 306 178 28.0

2013 345 381 236 28.0

2014 401 477 313 28.9 Year

2015 478 597 418 29.8