Global sales of high-end X-ray FPDs began to strengthen during third-quarter

Surgical C-arm X-ray System

It is estimated that global revenues from flat panel x-ray detector solutions increased by a low-single-digit (e.g. +1.5%) during the third quarter, relative to Q3 2019. Some OEMs signalled that sales activity had begun to show signs of recovery during third quarter, particularly for high-end products as well as products for oncology, mammography and dental applications. It is estimated that cumulative sales increased by a low-single-digit (e.g. +0.5%) during the first nine months of 2020.

The sales growth during the quarter was driven by a mixture of continued strong demand for radiographic detectors associated with the heightened demand for mobile x-ray systems; combined with improving demand for detectors used for dental, mammography and higher-end products. Although the quarter showed some signs of recovery, sales remained well below pre-pandemic expectations. It is estimated that the U.S. continues to be the largest market for high-end products in dollar terms, a market which has been severely negatively impacted by the Coronavirus pandemic. For value segment products, the demand from Asia and emerging markets has broadly recovered although some markets remain more vulnerable to a resurgence of Coronavirus. Detector OEMs with portfolios concentrated with customers based in the United States suffered the worst sales contractions, whereas OEMs with greater exposure to Asia achieved strong sales growth.

For example, Vieworks, iRay, DRTECH and Detection Technology all reported strong sales growth during the third quarter, contributing toward overall sales growth during 2020. For these OEMs combined, sales increased by approximately USD $18m (+29%) during the third quarter and USD $63m (+36%) during the first nine months[1]. The exception among the Asian OEMs was Rayence which reported a sales contraction of approximately USD $7.5m (-28%) during the third quarter and USD $17m (-21%) for the first nine months. Rayence has a significant portfolio of intra-oral sensors and CMOS detectors for dental, mammography and industrial applications, all segments that were more severely impacted by the pandemic situation.

Market sales contractions during the first nine months have been driven predominately by lower volumes rather than lower prices, although some price erosion continued but varied significantly by technology. For example, the ASP of TFT-type detectors was lower by a mid-single-digit (e.g. -6%), whereas the ASP for CMOS-based detectors declined marginally and showed signs of pricing stability. Despite market softness, detector OEMs are positioning themselves to take advantage of market growth when the demand for capital equipment normalises. Detector OEMs continued with their product launches, capital raises and R&D initiatives to position for future growth.

For example, iRay Technology completed its IPO on the Shanghai STAR Market, raising over USD $100m[2] in order to complete the expansion of its production facility, open new sales and service operations as well as support with existing R&D initiatives such as the development of next-generation IGZO, linear array and CMOS detectors. Varex refinanced its operations with $300m of debt and a $100m revolving credit facility, successfully extinguishing concerns around the Groups ability to continue as a going concern. Both Varex and Detection Technology continued to ramp-up their operations in Wuxi, Greater Shanghai, offering localised production, service and sales. Furthermore, Rayence established its first Chinese subsidiary ‘Rayence China’.

In terms of product launches, in September, DT launched its latest CMOS detector, the X-Panel 1412, a detector targeted at both medical and industrial markets. For medical, it is well-suited for DR and dental CBCT and panoramic applications. Earlier in the year, DT also launched the X-Panel 1615, a CMOS detector targeted toward image-guided surgery and dental applications. In August, Carestream introduced it’s a new DR detector for long length DR, the DRX-L, in the United States and Canada. During July at ECR 2020, Varex launched the 4343W detector, a lightweight wireless FPD specifically designed for the next generation of DR systems. Varex was also exhibiting its Z-platform (IGZO-based), which it is at the final stages of commercialisation. Other OEMs continued to progress with the commercialisation of IGZO-based detectors and reported strong order books for these products going into 2021. The initial focus continues to be geared toward higher-end medical applications within surgical, cardiovascular and dental clinical settings.

Extract from Global Market Sales Report

References

[1] Vieworks Group, DT Medical, iRay Group, DRTECH Group: for financial results see appendix

[2] iRay Technology, IPO Investment Prospectus. CNY converted at 0.1478 CNY/USD, 18th September 2020