Varian Medical Systems (VAR) expects to witness significant growth in its particle therapy business in the coming years and has been investing significant R&D (research and development) expenses towards research in the segment. The company has established three key growth initiatives for sustainable and healthy growth in the segment. The key initiatives include providing affordable proton therapy to its customers and expanding the addressable market, extending the company’s market and technology leadership, and building its service business.
Some of the other major medical device companies in the United States include Medtronic (MDT), Boston Scientific (BSX), and Abbott Laboratories (ABT). Investors can gain focused exposure to Varian Medical Systems by investing in the Health Care Select Sector SPDR Fund (XLV).
Expanding the addressable market through affordable proton therapy
Varian Medical Systems aims to offer affordable proton therapy treatment to its customers and is focusing on the operational excellence and cost effectiveness of its products. The company’s focus is on lowering the system costs through various ways like reducing the manufacturing and service costs. Moreover, the company is striving to shorten the time spent for installation of the systems, which might help in lowering the overall system costs.
Varian Medical Systems is a global leader in the proton therapy market. The company aims to extend its leadership by leveraging its expertise in this area and providing fully integrated therapy systems. Less than one percent of the radiation therapy patients today are treated with proton therapy. Thus, this provides a huge opportunity for Varian Medical Systems to extend its proton therapy application.
Building service business
Varian Medical Systems generates service revenues of around 8% to 10% of the equipment sales in the proton therapy segment. The company aims to extend its service business by bringing the projects online and improving its service margins. The company also is working on initiatives to offer project consulting and development.