Market Update: X-ray Detectors for Medical Imaging

Q4 2020 Sales Revenue

The Coronavirus pandemic continued to have a material impact on the demand for medical X-ray imaging systems during the fourth quarter. The pandemic contributed toward lower aggregate capital spending on new X-ray imaging equipment as planned installations were delayed and some healthcare systems temporarily paused investment decision making. On a constant currency basis, it is estimated that global revenues from the sale of X-ray detectors contracted by a mid-single digit during Q4 2020, compared with Q4 2019. On a comparable currency basis, global revenues contracted by a low-single digit due to a +2.1% currency tailwind as the US dollar depreciated against the Euro, Chinese Yuan, Japanese Yen and Korean Won. From an application perspective, the demand for detectors used for dental, mammography, oncology, fluoroscopy, and angiography applications continued to be lower, when compared with 2019. Some OEMs reported sequential improvement in sales activity for products related to oncology and fluoroscopy relative to the prior quarter. Lower sales revenue from these clinical segments was partially offset by increased demand for detectors used to diagnose respiratory diseases, which included detectors for mobile radiographic X-ray and computed tomography (CT) imaging systems. This pandemic related demand was accompanied by strong underlying demand for new CT systems as some countries accelerated planned investments into expanding healthcare infrastructure. From a technology perspective, the aggregate demand for amorphous silicon (a-Si) TFT, amorphous selenium (a-Se) TFT, CMOS flat-panel and CCD (image intensifiers) was lower during the quarter, compared with Q4 2019. This was partially offset by higher demand for photodiodes for CT. From a geographical perspective, sales of new x-ray imaging systems were most negatively impacted across America and Europe during the fourth quarter, driven by sustained public health measures, resulting in lower elective procedure volumes and surgeries. The demand from Asia remained subdued although sales grew for products related to CT from China.

Full-year 2020 Sales Revenue

The Coronavirus pandemic was a dominate factor driving the demand for medical X-ray imaging systems throughout 2020. The pandemic contributed toward lower aggregate capital spending on new X-ray imaging equipment as planned installations were delayed and healthcare systems temporarily paused CAPEX investment. On a constant currency basis, it is estimated that global revenues from the sale of X-ray detectors increased by a low-single-digit during 2020, compared with 2019. On a comparable currency basis, global revenues also grew by a low-single-digit due to a marginal +0.1% currency tailwind as the US dollar depreciated against the Euro, Chinese Yuan, Japanese Yen and Korean Won.

The global sales growth during 2020 was driven by a mixture of heightened demand for COVID-related products, although this demand began to ease during the second half of the year, combined with recovering demand for non-COVID related products. From an application perspective, the demand for detectors used as part of mobile general radiography and CT systems was significantly higher, driven by pandemic related surge demand as well as strong underlying demand for CT systems due to planned expansion of healthcare infrastructure within China as well as some middle-income countries. Supporting these growth areas was strengthening demand during Q4 for detectors used for dental, oncology and fluoroscopy applications, following double-digit sales declines within these segments earlier in the year. Despite signs of strengthen demand at the end of year, overall annual sales revenue from detectors for these applications remained lower during 2020, compared with 2019. Demand for these applications contracted quickly during H1 as the pandemic situation worsened in each major region. Outpatient environments, such as dental practices and mammography screening clinics ground to a halt and most interventional and elective procedures were delayed while healthcare systems prioritised the pandemic response.

From a geographical perspective, sales of new X-ray imaging systems were most negatively impacted across Asia and Europe during the first two quarters and America and Europe during the second half of the year. Unit demand recovered quickly within China during the second half although remained subdued in other parts of Asia for the remainder of the year, including from Japan and India. Sales contractions were most severe across North America and Europe, in part, due to the lower sales of ‘premium’ or ‘high-end’ products. It is estimated that the U.S. continues to be the largest market for high-end products in dollar terms. As a result, detector OEMs with portfolios concentrated with customers based in North America experienced the steepest sales contractions. OEMs with greater exposure to Asia, mainly China and Korea, achieved the strongest sales results. For example, iRay, CareRay, DRTECH, Vieworks and Detection Technology all reported double-digit sales growth from their medical portfolios during 2020. For these OEMs combined, net sales increased by approximately USD $79m (+29%)[1]. Both iRay and CareRay reporting annual sales revenue growth of over 40% adding approximately USD $52m to their portfolios. The exception among the Asian headquartered OEMs was Rayence which reported a sales contraction of approximately USD $22m (-20%). Much of this sales contraction (c. 60%) was driven by lower sales across its portfolio of intra-oral (IO) sensors and CMOS detectors for dental, mammography and industrial applications. Sales from its dental IO portfolio, which accounted for approximately 20% of total company sales during 2019, contracted by approximately -35%. Sales of CMOS detectors, which accounted for almost 40% of total company revenues in 2019, contracted by approximately -19%. The dental, mammography and industrial segments were more severely impacted by the pandemic situation and other OEMs reported similar contractions within these segments.

Sales results from publicly listed detector OEMs

Sales by technology and pricing action

From a technology perspective, the aggregate demand for photodiode and a-Si TFT detectors increased during 2020, compared with 2019. Although at earlier stages of commercialisation, and therefore comparable sales data is limited, OEMs reported that the demand for both IGZO and photon-counting detector technologies continued to gain momentum. Higher demand for photodiode, a-Si TFT, IGZO and photon-counting detectors was partially offset by lower demand for detectors utilising a-Se TFT, CMOS flat panel and CCD technology. Higher market revenues from a-Si TFT detectors were driven by increased unit demand, partially offset by a decline in the average unit sale price (ASP). The global ASP for a-Si TFT detectors is estimated to have fallen by a mid-single-digit during 2020. Lower prices were driven by a combination of continued competitive pricing action by OEMs as well as a shift in product mix away from ‘high-end detectors, presumably driven by the pandemic situation. Lower prices of a-Si TFT detectors were funded predominately by lower direct costs from procuring raw materials and major components at lower prices. Lower direct costs from labour and manufacturing have also been achieved by some OEMs due to implementing operational efficiencies as well as realising economies of scale as some OEMs expanded production capacity. Lower market revenues from CMOS detectors were driven by lower unit demand. The global ASP for CMOS (FPD & IO) detectors is estimated to have decreased by a marginal low-single-digit during 2020, compared with 2019, however this was driven by a shift in product mix rather than wide-spread pricing action from OEMs.

Global market short-term outlook

It is anticipated that uncertainty in demand will continue well into 2021 and OEMs are working on a base-line assumption that end markets for X-ray systems will not fully normalise until 2022. During 2020, there was little evidence that the pandemic resulted in a widespread cancellation of equipment orders and it is estimated that the global equipment order backlog increased by a mid-single-digit on a constant currency basis. This trend in order backlog is a strong precursor for sales growth once global healthcare systems fully normalise. The sales activity during 2021 is likely to be characterised by a drop-off in demand for COVID-related products combined with recovering demand for non-COVID related products. The exception to this is the demand for CT detectors, which is anticipated to remain strong over the coming 12-months and beyond. It is estimated that approximately 25,000 new CT systems will be needed in China over the coming 10-year period and partially in response to COVID, the Chinese government intends to accelerate new system installations over the next few years. These systems will be placed in so-called, fever clinics and emergency departments at local hospitals, to provide dedicated CT scanner rooms for patients with infectious conditions. In addition, China continues to broaden its healthcare infrastructure and strong demand for other types of X-ray systems is expected in the medium-term.

X-ray Detector research products and services:

[1] Calculation includes: iRay, Group / CareRay, Group / DRTECH, detectors only / Vieworks, medical / Detection Technology, medical. Sales revenue is converted into USD using a constant exchange rate.

Appendix

Sales Revenue Data: Download Excel File