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Mapping Varian Medical Systems’ Geographic Strategy

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Jun. 22 2016, Updated 8:06 a.m. ET

A geographical overview of Varian Medical Systems

Varian Medical Systems (VAR) is a global medical device company that generates ~50% of its total revenues in North America and 26% and 24% of total revenues in Europe and Asia, respectively.

Varian Medical Systems has expanded strategically across geographies to tap into the favorable demographics and potential opportunities presented by markets outside the United States, especially emerging markets. The company has set up partnerships, knowledge centers, and facilities in various locations around the world.

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Geographical expansion: growth potential

Geographical expansion is one of Varian Medical Systems’ key growth strategies. As the global cancer burden is growing, the company’s leading oncology treatment portfolio has seen increasing demand. Moreover, with the changing landscape of the healthcare industry, demand for value-based care gives the company an advantage over competitors, as Varian Medical Systems offers one of the largest and broadest oncology portfolios in the industry.

Moreover, in developed markets, modernization and replacements present a potential growth opportunity in the oncology segment. In 2015, the company witnessed net sales growth of approximately 10% in the Americas, whereas the EMEA (Europe, Middle East, and Africa) region and international markets registered growth of approximately 8% and 4%, respectively. In contrast, the company witnessed a decline in net sales in the APAC (Asia-Pacific) markets in 2015.

Varian Medical Systems’ peers with geographic expansion as a key growth strategy are Thermo Fisher Scientific (TMO), C R Bard (BCR), and Boston Scientific (BSX). For diversified exposure to Varian Medical Systems, you can invest in the Guggenheim S&P 500 Equal Weight Health Care ETF (RYH), which has an exposure of 1.8% to VAR.

In the next part of this series, we’ll look at analysts’ recommendations for VAR.

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