Eastman Kodak looks to grow PACS market share with Algotec acquisition

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Eastman Kodak Co. on Tuesday put the picture archiving and communications systems (PACS) market on notice.

 The company has offered $42.5 million in cash for PACS developer Algotec Systems Ltd. in a move designed to improve Kodak's competitive position in the expanding PACS market and enable radiology departments to digitally manage and store medical images and other healthcare information.

 Kodak expects to close the transaction by the end of this year. Algotec would become part of Health Imaging's R &D operation. The company has some 70 employees worldwide and will remain based primarily in Raanana, Israel.

 Dan Kerpelman, president of Kodak's Health Imaging Group, said the addition of Algotech "will bolster our current PACS development efforts and will give Kodak greater leverage in a market growing at 15 to 20 percent annually."

 Kodak would purchase Algotec's intellectual property, including its source code for developing products in the web-enabled PACS arena. Kodak cited a Banc of America Securities' 2003 hospital CIO survey, which concluded that approximately 60 percent of CIOs in U.S. hospitals plan to purchase PACS within the next three years.

 To tap that market potential, Kerpelman said that sales and technical specialists that serve multiple product groups in Health Imaging soon will support its PACS operation exclusively.

 "We also plan to double the size of this team by year-end, putting a total of some 40 specialists into the market to serve customers," Kerpelman said in a prepared statement.

 Algotec and Kodak have collaborated on supplemental software for the development of Kodak's PACS products in May 2002. Kodak's DirectView PACS System 5 is a result of the companies' collaboration. Algotec also was the first company to receive FDA clearance for a Web-based PACS viewer.