Economic Moats for ABT Molecular Imaging, Inc.
Michael Templin

My company, ABT-Molecular Imaging, is a four-year-old company that manufactures nuclear generators that are used to make nuclear isotopes and radiopharmaceuticals. These isotopes are used in medical diagnostic imaging, primarily PET. PET is an acronym for Positron Emission Tomography, a device similar to a CT or MRI, except it images bodily functions rather than bodily structures. PET isotopes have a short half-life, meaning that they lose half their potency over a set period of time. FDG, the most commonly used drug, has a half-life of 110 minutes. Carbon-11 (C11) has a half-life of twenty minutes. As a result of these physical properties, a PET scanner must be near a generator in order to get access to the required drugs.
Conventional generators, also called cyclotrons, weigh fifty tons and require an operating space of four thousand square feet. Their all-in cost in the United States, including facility costs, is about six million dollars. Their annual operating expenses, including four full-time employees, are six hundred thousand dollars. In the US, Western Europe and Japan, where PET is a widely used modality, FDG is commercially distributed. One conventional cyclotron, regionally located, can make enough FDG to supply twenty scanners. Cyclotrons are sold by Siemens, General Electric and IBA, a Belgian company.
Our machine is smaller, easier to use and less expensive to operate than the machines currently in the market. The total investment for our product, including facility costs, is two million dollars, in a space of only three hundred square feet. Our machine is also much more cost efficient in operating costs by a factor of four. The downside of our machine is that it can produce only enough FDG to meet the needs of one scanner.
As a result of our product’s advantages and disadvantages, our target customer is not the commercial distributor that buys our competitors’ cyclotron, but the PET scanner user that wants or needs their own generator. We are targeting countries in which PET has not been used, primarily Emerging Market countries, where commercial distribution of PET drugs is either too costly or not available. A list of our first customers includes sites in Columbia, Saudi Arabia, Iran, Bulgaria and Kazakhstan. Our other target customers are research centers using PET in human and pre-clinical studies that want better control of their PET isotopes. Our first four customers in this segment are in the US and UK.
When I think of our economic moats, our product differentiation is a clear advantage over our competitors.