Varian Medical Systems: Expanding in Proton Therapy

In 1Q18, Varian Medical Systems’ (VAR) Particle Therapy segment reported product sales of $27 million, which is a YoY (year-over-year) rise of 2%. It was mainly driven by two new orders for the company’s proton therapy platform, the ProBeam Compact Single room system from the University of Alabama and the University of Miami. The company has also benefited from clinical room handovers by the Proton Therapy Center in Russia and the Holland Proton Therapy Center.

In 1Q18, Varian Medical Systems’ Particle Therapy segment reported service sales of $2 million, which is a YoY decline of 49%. The company expects to witness revenue and margin variability in future quarters as it continues to gradually ramp up its operational scale.

At the end of 1Q18, Varian Medical Systems had 23 customer sites. Seven of them were operational with installed proton therapy systems, while the remaining 16 are currently being developed under contract. The company also had a total of 70 rooms either installed with proton therapy systems or under contract for development. The system is operational in 24 rooms across five countries.

On January 30, 2018, Varian Medical Systems announced the acquisition of Sirtex Medical, thus expanding Varian’s addressable market in the interventional oncology segment, a minimally invasive type of therapy to treat solid cancers. The interventional oncology segment was estimated to be worth $0.7 billion in 2017 and is expected to reach a market value of $1 billion by 2022. The upcoming interventional oncology segment may help Varian Medical Systems compete effectively with other medical device players such as Baxter International (BAX), Boston Scientific (BSX), and Medtronic (MDT).

The deal added Sirtex’s leading product, the SIR-Spheres Y-90 resin microsphere, a targeted internal radiation therapy for certain inoperable liver cancers, to Varian’s portfolio. The product is already approved in multiple international markets for treating certain liver cancers by providing high-dose radiation therapy directly to the malignant tumor while limiting exposure to surrounding healthy tissue. To know more about the deal rationale, please refer to Rationale behind Varian Medical’s Acquisition of Sirtex Medical.