Varian Medical Systems, the market leader in radiation oncology systems, reports weak international orders influenced by tough macroeconomic factors.

Marie Thibault

January 28, 2016

3 Min Read
Global Pressures Impacting Orders for Radiation Oncology Systems

Marie Thibault

The TrueBeam System is one of the radiation oncology systems sold by Varian Medical Systems.

A tumultuous global backdrop led to some weakness in orders for linear accelerator maker Varian Medical Systems. The company, the biggest player in radiation therapy linacs used to treat cancer, highlighted factors affecting its market, like an unpredictable economy, political tension, and plummeting oil prices. 

While Varian's North American oncology gross orders grew 3% year-over-year, gross orders in Europe, Middle East, and Africa (EMEA) declined 5% year-over-year in constant currency and Asia Pacific gross orders decreased 7% year-over-year in constant currency, according to a company release.

Dow Wilson, Varian president and CEO, told analysts on the company's first quarter fiscal year 2016 earnings call, "Global markets have been weakened by ongoing political unrest, weak oil prices, and economic uncertainty. In EMEA, for example, Russia announced further delays in its cancer plan, Germany scaled back investments, and the Middle East was negatively impacted by political unrest and falling oil prices," according to a Seeking Alpha transcript of the call. Japanese orders were also influenced by "economic uncertainty," Wilson said.

Still, the company's management team struck an optimistic tone about the future of the radiation oncology business. Wilson pointed again to a study from The Lancet Oncology Commission, which he also discussed on a prior earnings call in October 2015, that calls for thousands of new radiotherapy systems, mainly in low- and middle-income countries. 

Building cancer practices in developing nations is clearly part of the company's strategy to continue growing. According to the Seeking Alpha transcript, Wilson said this week: 

We're focused on global market development through our Access to Care Initiative . . . [to] bridge the gap between the growing need for modern radiotherapy treatment machines in developing countries and a lack of trained personnel to operate them. This program is already working in Africa and Vietnam, and we took steps during the quarter to initiate this program in India through an education partnership with Apollo Hospitals Group. This program will train radiation technologist[s] in India."

A new system is another factor that may help grow the developing markets portion of the company's business. Last October, Varian announced its lower cost VitalBeam platform, targeted at emerging markets, had received CE Mark and FDA 510(k) clearance.

On this week's earnings call, Wilson also emphasized the relatively stable nature of the radiation oncology field and the continuing need for cancer treatments. "The cancer business remains a terrific business for us . . . our funnel still looks good. And we think that the cancer business unfortunately weathers its economic downturns . . . people get cancer regardless of economics."

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Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie

[Image courtesy of VARIAN MEDICAL SYSTEMS, INC.]

About the Author(s)

Marie Thibault

Marie Thibault is the managing editor for Medical Device and Diagnostic Industry and Qmed. Reach her at [email protected] and on Twitter @MedTechMarie.

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