​ASX-listed 3D Medical makes AU$60m hospital data play

3D Medical has acquired US diagnostic image management company Mach7 Technologies in a AU$60 million deal that will see the Australian company take on the global hospital market.
Written by Asha Barbaschow, Contributor

Australian Securities Exchange (ASX)-listed 3D Medical has scooped up US-based Mach7 Technologies in a bid to bolster the global presence of its vendor neutral diagnostic technology.

According to Dr Nigel Finch, chairman of the Melbourne-based 3D printing firm, the AU$60 million acquisition gives 3D Medical monopoly of the global marketplace, with hospitals previously locked into sticking with a single vendor for their diagnostic machines.

Finch said that within a hospital, there is a rich set of Digital Imaging and Communications in Medicine (DICOM) data, which is stored as its own file format. This DICOM data is created each time an X-ray, magnetic resonance imaging (MRI), or computerised axial tomography (CAT) scan is performed, with Finch saying this data is often completely siloed.

"For example, in radiology, they have a number of different modalities and for each of those modalities there may be one or more equipment providers -- and there's many diagnostic imaging companies like, GE, Siemens, Phillips, Konica, LG," he said.

"For more than 30 years, the model has been that they sell a hospital an expensive piece of machinery, for example, a Siemens ultrasound system. The ultrasound system needs a software platform to interpret that data, and the software platform is proprietary to the diagnostic imaging machine, so you're then forced to buy a licence for a picture archiving and communications system (PACS).

"You end up with a whole suite of products which you've also paid for -- heaven forbid if you ever want to view any of that medical imaging data, you'll also need a viewer."

Finch said that what Mach7 does is essentially unlock the data by putting it on to a common platform.

"It's conceivable inside a hospital that there could be, just in radiology alone, 4 or 5 different modalities -- 4 or 5 different companies that they've used over the years to buy that technology. You end up with 16 different siloed databases, 16 different versions of software that needs to be maintained, and 16 different viewers and software platforms so then you've got the IT department maintaining 16 different servers, 16 different software systems, and different viewers," he said.

"When you start to talk to hospitals you realise how frustrating this is to have all this technology, but you cannot share or move around the data. Mach7 is kind of like the Google Translate for the data."

According to Finch, the global PACS market is worth approximately $2.7 billion, and that is just the software licence aspect of it, with over $500 million worth of PACS licences up for renewal each year.

"This is US technology and we've brought it to Australia so we're bringing this absolute world-class, export potential technology into an Australian tax base, listing it on the ASX," he said. "It's a very big business, with a massive disruptive technology."

With the market value aside, Finch said that Mach7's business model proved to be complementary with what 3D Medical was already interested in.

3D Medical is a medical specific three-dimensional printing and holographic projection, and now data integrations firm, that Finch said aids medical professionals by having a realistic model of the anatomical part they are dealing with.

In June, 3D Medical, along with Oral and Maxillofacial, successfully developed and implanted a 3D-printable and customisable titanium jaw joint for use in corrective jaw surgery.

In an Australian medical first, a 32-year-old male patient from East Melbourne underwent a five-hour operation where the metal jaw joint was implanted.

Finch said that despite the Mach7 acquisition, his company will still continue with 3D printing.

"Having mastery over that DICOM data is going to be really important for anything to do in the medical space around 3D printing," Finch said. "If you can't access the data, you can't print anything -- the data becomes the architectural plans for anything that you're going to build."

Since first teeing up with Mach7, 3D Medical began building a patient portal that allows the patient to control their data and give permission for it to be shared across multiple medical practitioners and practices.

In Australia, the companies partnered with Telstra Health, with Finch saying they leveraged off the telco's ambition to provide the infrastructure across Australia.

"Telstra Health reckon that in ten years' time they'll be generating as much revenue from the transmission of health data than they are in mobile phones today," Finch said.

"When we first got to know Mach7, we brought the distribution rights to Australia and other territories and immediately appointed Telstra as the reseller of that in Australia."

Looking forward, Finch said to expect the announcement of two deals with large Australian health-related organisations, as well as a fistful of leads in the pipeline.

Despite an already promising local outlook, 3D Medical will be looking to deepen Mach7's US presence, with Finch saying the country is a few years ahead of the rest of the world when it comes to identifying the cross-platform issue plaguing its hospitals.

With no other vendor-neutral platform in the market, Finch believes 3D Medical has at least a two year start on its competition, believing the technology strategy for hospitals is going to be moving towards a vendor-neutral approach.

Earlier this month, 3D Medical signed a five-year licence agreement with Penn State Milton S. Hershey Medical Center, an academic centre in Pennsylvania.

Under the terms of the deal, 3D Medical will provide the backbone architecture for the centre's DICOM data generated by its radiology and cardiology departments, as well as the migration of legacy data onto the Mach7 Enterprise Imaging Platform.

3D Medical found itself listed on the ASX just over a year ago after performing a reverse takeover of Safety Medical Products, a company formerly involved in the manufacture and distribution of single use syringes.

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