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Varian’s Halcyon System Expected to Expand Market Size

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Apr. 4 2018, Updated 9:02 a.m. ET

Halcyon’s performance

On June 29, 2017, Varian Medical Systems’ (VAR) Halcyon system, its innovative linac (linear accelerator) device, secured 510(k) clearance from the FDA for treating cancer using image-guided volumetric intensity-modulated radiation therapy (or IMRT). The device has also secured CE Marking in Europe and regulatory approvals in Brazil, Taiwan, and Japan. At the end of 1Q18, the company managed to have 62 orders for the device from 20 countries. Twelve of the orders were placed in 1Q18.

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Approximately 50% of the total orders for Halcyon have been incremental, while more than 40% of them have been placed for greenfield sites. Approximately 60% of the total Halcyon orders were placed from mature markets, while the remaining 40% were from emerging markets. Approximately 90% of the total halcyon orders from emerging markets were first-time purchasers of a linac device.

The above diagram shows how Halcyon is expected to further strengthen Varian Medical Systems’ leadership in the global radiation therapy space. Halcyon could thus enable Varian Medical Systems to compete effectively for investor interest with other medical device players such as Abbott Laboratories (ABT), Edwards Lifesciences (EW), and Baxter International (BAX).

Developed market performance

With new scaled configurations and a small footprint, Halcyon is expected to enable Varian Medical Systems to be a major contender for replacing its aging line of linac devices around the world and especially in developed markets. Historically, the size of these devices proved to be a deterrent for Varian Medical Systems since the TrueBeam device was too big to fit in that space. However, with Halcyon, the company expects to target a replacement market comprised of around 2,100 cobalt units as well as aging Siemens and tomotherapy vaults. Beyond that, for some incremental orders in developed markets, the company plans to leverage the kilovoltage cone-beam CT (computed tomography) capabilities to secure higher prices.

In the next part, we’ll look at Varian Medical Systems’ international market performance.

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