Kodak, the world leader in dental X-ray film, expects this acquisition to vault the company into the leading position in the DPMS and dental digital radiography market much the same way that the company's 1998 acquisition of Imation's medical imaging business boosted Kodak to the market-leading position in medical dry laser printing.

"We will be able to offer choices within a full spectrum of dental imaging products and services from traditional film to digital radiography and photography," says Dan Kerpelman, the president of Kodak's health imaging group, and senior vice-president, Eastman Kodak Company.

"We will also be able to provide innovative IT to digitally integrate dental images with patient health records. This info-imaging capability, ultimately, will enable dental professionals to manage patient care from the front office all the way through treatment with high-quality Kodak images at key points in the process. Such marrying of imaging and information is at the core of our growth strategy for the health imaging group," he adds.

PracticeWorks currently is the leader of a growing market for DPMS in the US and has made solid inroads in Europe and other parts of the world. Trophy Radiologie was the first company to develop and sell intra-oral dental digital X-ray detectors and is the worldwide market leader in dental digital radiography, or DR. (DR allows dentists, orthodontists and oral surgeons to capture high-resolution digital images.) DPMS allows dentists to manage a variety of dental front office functions, such as scheduling, billing and record keeping, and is evolving into a more complete patient management tool that extends to treatment planning and delivery.

Kodak estimates that worldwide industry sales of DPMS exceed $200 million annually and are expected to grow 8-10% per year. The company also estimates that current dental digital radiography sales worldwide total $100 million to $120 million annually, yet the penetration rate of DR remains low in the US and other large markets. About 13 per cent of dental offices in the US account for these sales, according to the leading trade publication Dental Products Report, along with a correspondingly low percentage of dental offices in the rest of the world.

"The market opportunity is significant," says Kerpelman. "And what makes it significant is this key fact: While dental DR has been available for a number of years, the time has now arrived where its value is becoming important not just to early adopters, but also to more mainstream practitioners."

Coupled with DPMS software, DR can integrate images and information in ways that enable dentists to save time and money and to increase productivity. Image quality of such systems also has improved dramatically. Moreover, the growing trend among insurers to handle claim submissions electronically with digital images and information attached is prompting many dental practices to adopt digital systems.

Accordingly, Kodak expects DR adoption to reach approximately 30 per cent in the US by 2007, with a compound annual growth rate of about 20 per cent, as dentists become more familiar with the technology and its benefits for improving productivity and overall efficiency in the dental practice.

Says Kerpelman: "During the same period, adoption will accelerate considerably in other parts of the world, as the level of dental care continues to improve in key global markets." PracticeWorks and Trophy Radiologie already have benefited from these trends. Both have reported double-digit growth rates in revenue and earnings. The combined revenue of PracticeWorks and Trophy Radiologie for the full-year 2002 totals approximately $141 million.

"With its 100-year history in the radiographic film business, Kodak is in a unique position to advance imaging and information technology in the dental practice," says Richard Hirschland, vice-president, health imaging group, and the general manager of Kodak's dental business. "Radiographic film will continue to be an important product in our portfolio; but with this acquisition, Kodak will be in a position to also help guide dental professionals along the evolutionary path of dental radiographic imaging."

Upon closing, Kodak will add the product lines of the two companies into the portfolio marketed by the dental business in its health imaging group. The dental business, along with other businesses in the health imaging group, competes in the $97-billion global healthcare info-imaging market created by the convergence of imaging and information technology. The agreement is subject to regulatory approvals and to approval by PracticeWorks shareholders. Pending these approvals, the deal is expected to close by the end of 2003.

Kodak's health imaging group is a world leader in developing, manufacturing, and marketing intelligent imaging products from analogue to digital. Its portfolio includes computed radiography and digital radiography systems, laser imagers, picture archiving and communications systems (PACS), radiology information systems, dental imaging and services, and traditional mammography and x-ray film systems.

The group, with annual revenues of $2.3 billion, has served the global health care community for more than 100 years. The health imaging group is the second-largest business within Kodak, which had sales last year of $13.2 billion.

Kodak India, a subsidiary of Eastman Kodak, was the first photographic company to set up operations in India in 1913. The health imaging division commenced operations in India in early nineties. Since then the business has grown manifold from a mere Rs 1 crore in 1992 to Rs 100 crore in 2002. Kodak health imaging in India has a comprehensive portfolio of image information products, services, applications and integrated systems, including the latest in x-ray films, laser films and medical laser printers for CT and MRI.