Kodak bids for Algotec in push to expand PACS presence

In a move aimed at bolstering its PACS development efforts, Eastman Kodak Health Imaging has signed a deal to acquire Israeli PACS and 3-D image processing developer Algotec for $42.5 million in cash.

For Kodak, the deal was the next logical step in the development of its relationship with its PACS development partner, providing Kodak ownership of Algotec’s source code and intellectual property, said Kodak spokesperson John LaBella.

"By owning this PACS technology, we will be able to more readily develop and launch enhancements to our current DirectView PACS System 5 platform -- which Algotec helped develop -- and advanced future products," Labella told AuntMinnie.com.

The two firms have been working closely together since May 2002, when they formed a PACS partnership. The collaboration yielded System 5, a Web-based PACS network that is now being commercialized.

Once the deal closes, Algotec will become a wholly-owned subsidiary within Kodak Health Imaging, and will serve as a "center of excellence" for development of Kodak PACS and 3-D imaging technologies, Kodak said. The acquisition is expected to be completed by the end of the year.

Algotec’s team, which is composed mostly of research and development personnel, will become part of Health Imaging’s R&D operation. Founded in 1993, Algotec has 70 employees. In addition to its well-known ImagiNet PACS activities, Algotec has also emphasized 3-D image processing development. At next week’s RSNA meeting, the vendor is scheduled to show a range of 3-D functionality, including the capability of its MediPrime diagnostic reading station software to serve as a full-featured 3-D processing workstation.

Algotec’s base in Raanana, Israel will remain its principal location, Kodak said.

Algotec founder and CEO Dr. Menashe Benjamin will join Kodak in a senior R&D and strategic business advisor role following the acquisition.

As a result of the pending acquisition, Algotec will no longer sell its PACS technology directly to customers. As for Algotec’s dealers, Kodak will weigh on a case-by-case basis whether it makes sense for both parties to continue the relationship, LaBella said.

Algotec’s existing customers will be provided with continuity during the transition and after the integration, LaBella said.

"Our plan is to consult extensively with Algotec’s customers on the future of their products before determining the appropriate direction," he said. "Whatever decisions are made, Kodak will take every effort to communicate with and assist Algotec’s customers."

Kodak said that it is currently reviewing Algotec’s portfolio and will provide more information at a later date.

Kodak is also making changes in its field operations to target the PACS market. Sales and technical specialists who serve multiple product groups will now be assigned to support Kodak’s PACS program exclusively, the company said. Kodak added that it plans to double the size of this team by the end of 2003, for a total of approximately 40 specialists.

The moves also coincide with Kodak’s decision to bring its RIS 2010 radiology information system to the U.S. market in 2004. RIS 2010, which is already available in Europe and Australia, will be released in additional countries at a later date, Kodak said.

By Erik L. Ridley
AuntMinnie.com staff writer
November 18, 2003

Related Reading

Algotec, November 12, 2003

Kodak receives FDA approvable letter, November 11, 2003

Kodak lands large VA order, November 4, 2003

Kodak launches healthcare IT services, October 30, 2003

Kodak medical sales edge up on global growth, October 23, 2003

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