GE, Pittsburgh Hospital Establish Imaging Business

By: Associated Press
By: Associated Press

HARTFORD, Conn. (AP) -- General Electric Co., the international conglomerate with a stake in everything from jet engines to network television, is investing $20 million in technology that will allow doctors to share and transmit images of microscopic human tissue.

The partnership with a Pittsburgh hospital marks GE's entrance into a $2 billion market and could help expand its GE Healthcare division.

GE Healthcare and the University of Pittsburgh Medical Center are each putting up $20 million to establish Omnyx LLC, a business to develop and commercialize technology allowing doctors to store and display on computers, digital images of human tissue from microscope slides, allowing colleagues anywhere to participate in consultations.

Jeffrey Romoff, president and chief executive of the University of Pittsburgh Medical Center said the deal "puts together the people - GE - that know the technology and the market with us, who know the science and the patient care."

GE Healthcare, a division of Fairfield-based GE, already manufactures imaging for radiology and cardiology.

"Pathology imaging is a natural extension that GE would likely want to get into," said Gene Cartwright, chief executive of Omnyx. "I think the intent is to provide freedom and generate more of an entrepreneurial environment outside GE or any other big company so we can move more quickly," Cartwright said.

Other companies, such as Aperio Technologies Inc. in Vista, Calif., already are in the business of scanning biopsies and transforming computers into virtual microscopes. Aperio CEO Dirk G. Soenksen welcomed GE's new venture.

"It will do tremendous things to accelerate the market. It's a major move on the chess board," he said. "There's certainly enough business for everybody. It won't take business away from others, it will make the market bigger."

The advantage for doctors, researchers and medical teachers is that biopsy images can be shared electronically and vast amounts of information can be stored in databases.

Transforming biopsies and human tissues into digital images also helps improve the study and diagnosis of diseases such as cancer and micro-organisms that can lead to lung ailments such as tuberculosis, said George Michalopoulos, chairman of the Department of Pathology at the University of Pittsburgh Medical Center.

Omnyx promises to come up with a product in about two years that will speed up scanning materials from a slide into a digital file from between two and five minutes now to about half a minute, he said.

GE and the University of Pittsburgh Medical Center believe Omnyx could reap revenue of $500 million - 25 percent of the worldwide market - in three or four years, said Wendy Zellner, spokeswoman for the medical center.

GE's $20 million investment is a virtual drop in the bucket. The company's first-quarter profits fell 6 percent this spring but still registered at $4.3 billion.

Nat Pernick, a Bingham Farms, Mich., pathologist and president of http://www.pathologyoutlines.com , which offers a textbook on surgical and clinical pathology, said digital equipment can cost up to $100,000, which makes it affordable to hospitals, universities and other organizations rather than doctors' offices.

"It's hard to justify spending $100,000," he said. "If you're a big institution you could do it."

A spokeswoman for GE Healthcare said its equipment will be competitively priced, but because it is not yet on the market, a dollar amount is not available.

The market could be limited, with about 16,000 pathologists in the U.S., Pernick said.

The new venture could be a boon for GE Healthcare, which faced recent financial problems but is expected to do well in the long-term. Profit for GE Healthcare fell 3 percent, to about $3 billion last year as revenue rose by 3 percent, to nearly $17 billion.

The business was hurt by a 20-month shutdown of its surgery business in Utah over quality control concerns. It reopened May 5 after satisfying requirements of a consent agreement with the federal government.

GE Healthcare also has been hit with reduced federal Medicare and Medicaid spending.

Jeff Immelt, GE's chief executive, told investor analysts last month that growth in GE's health care business this year will be in the single digits, but he expects stronger growth in the long term.

Matt Collins, an analyst at Edward Jones in St. Louis, agreed. He cited a rising middle class outside the United States, an aging population that will rely on medical equipment and an increased use of digital equipment.

"It's been a tough couple of years but over the longer term I think this business has some good growth drivers," he said.


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