UPMC And University Of Pittsburgh Make Millions Through Commercialization Of Intellectual Property
Stentor, Inc. sale to Philips Electronics means a gain of $36M for UPMC and more than $10M for the University of Pittsburgh
PITTSBURGH, July 6, 2005 — Royal Philips Electronics announced today that it will acquire Stentor, Inc., a leading provider of picture archiving and communications systems (PACS) used for storing, managing and distributing digital radiology images. Philips will pay approximately $280 million in cash for Stentor, Inc., subject to regulatory approval. A company created by the University of Pittsburgh Medical Center (UPMC), Stentor, Inc., is based on the intellectual property of the University of Pittsburgh and UPMC researchers working collaboratively and both organizations will reap the benefits of this merger.
“Today’s merger of Stentor, Inc., a leader in medical image and information management, into Philips Electronics, a multi-national leader in the sale of health care technology, is a stunning example of how technology developed by the University of Pittsburgh Medical Center (UPMC) and the University of Pittsburgh can be transferred to the private sector for a sizable return on investment,” stated Talbot Heppenstall, treasurer, UPMC.
Over the past eight years, UPMC has invested, $9.1 million in Stentor. After yesterday’s transaction, UPMC’s total return on investment will be $45.1 million, or a gain of $36 million over investment. The financial benefits accrue not only to UPMC, but also to the University of Pittsburgh, which will receive approximately $10.8 million in proceeds from the Stentor sale.
Stentor was created to commercialize an idea developed by Paul Chang, M.D., director, division of radiology informatics, UPMC and professor of radiology, University of Pittsburgh School of Medicine. In 1998, he invented a software product in the UPMC Radiology Informatics Laboratory that made it possible to view X-rays and other medical images electronically over ordinary networks of personal computers. This novel technology enhanced patient care by making access to records by physicians and other health care professionals who need them more efficient, convenient and affordable. The new software product was put into practice within UPMC and received high praise from medical professionals.
UPMC recognized from the onset the commercial value of this intellectual property, and with the University, secured its patent protection.
UPMC then transformed this idea into a product and created a company around it, Stentor, Inc. UPMC not only helped create this commercial venture, but also financed its growth by becoming the principal private investor in Lancet Capital (formerly Caduceus Capital), a venture capital fund, launched in 1999. As the first SBIC (Small Business Investment Company) to have an academic medical center as its sponsor, Lancet Capital invested in Stentor, allowing Dr. Chang’s idea to grow into a $283 million business.
“I am gratified that Stentor’s products will benefit not only UPMC and Stentor’s current customer base of approximately 200 hospitals throughout the United States, but also future customers worldwide as a result of the Philips acquisition,” said Dr. Chang in response to today’s announcement.
Health care providers at UPMC have been (and continue to be) instrumental in creating and validating the fundamental designs of the Stentor PACS software. This collaboration will continue and expand with the Philips merger.