07.19.16
$3.1 Billion
KEY EXECUTIVES:
Dow R. Wilson, President and CEO
Elisha W. Finney, Exec. VP, Finance and Chief Financial Officer
Kolleen T. Kennedy, Exec. VP and President, Oncology Systems
Jessica L. Denecour, Senior VP and Chief Information Officer
Sunny Sanyal, Senior VP and President, Imaging Components Business
Moataz Karmalawy, Ph.D., VP and General Manager, Particle Therapy
Vy H. Tran, Senior VP, Regulatory Affairs and Quality Systems
John W. Kuo, Senior VP, General Counsel and Corporate Secretary
NUMBER OF EMPLOYEES: 7,300
GLOBAL HEADQUARTERS: Palo Alto, Calif.
Varian Medical Systems is a new staple in the Top 30, first making an appearance in the list in MPO’s June 2012 issue. Since then, the company has maintained its standing toward the bottom of the list, though, elevated this year with substantial revenue increases in fiscal year 2015 (ended Oct. 2). But before that’s addressed...
Varian’s mission to provide diagnostic imaging and radiation oncology equipment went in a new, somewhat ironic direction in 2015 when President and CEO Dow Wilson’s wife Lynne was diagnosed with Stage 3 breast cancer. Suddenly, the company’s mission became a personal one. Lynne underwent the types of diagnostic tests and radiation therapy for which the company produces equipment.
But Wilson was optimistic, “We feel great knowing that the radiotherapy Lynne will receive will be delivered on Varian equipment engineered, built, serviced, and operated by great people,” he said. “It’s good to know that we are not fighting this alone. The Wilsons are now among the millions of families around the world who are dealing with a cancer diagnosis, and for all of us, the Varian mission is more important than ever.”
It should sweeten the narrative just a little to hear that Varian’s FY15 represented its highest revenue to date, at about $3.1 billion—a 2 percent increase from 2014. However, in contrast to 2014, which exhibited revenue increases in both product and service offerings, 2015 actually showed a decrease in product revenue, at a deficit of about $5.9 million. The company’s service offerings made up the entirety of its revenue increase, going up by 6 percent. In addition, 2015 saw domestic revenue reach $1.46 billion, representing a 9 percent increase from fiscal 2014. On the flip side, international revenue reached 1.64 billion, which represents a loss of 4 percent from FY14.
Varian’s product portfolio is split into two sectors: imaging components and oncology systems. The remaining businesses are categorized as “other,” consisting of particle therapy and the Ginzton Technology Center, the company’s research and development center. In 2015, the company’s oncology systems sector generated $2.34 billion in revenue, which is flat from 2014. Domestically, oncology systems’ sales increased 4 percent from 2014, and fell 3 percent internationally. The imaging components sector posted revenue of $611 million, a 7 percent deficit from 2014. Both domestic and international deficits contributed to the loss—they showed a 6 percent and 8 percent decrease respectively.
The decrease in product revenue can be indirectly explained by the increase in the strength of the dollar—Varian was forced to cut pricing to defend its market share against yen- and euro-based competitors. The radiographic panel products suffered the most, as prices for those pieces of equipment have halved in cost since 2013. In addition, the company’s imaging components division was struck by a large falloff in demand for cargo screening systems, which prompted gross orders for imaging components to fall by 16 percent from FY14. Across the board, product revenues showed deficits, with increase in service offerings mainly contributing to the total year revenue increase.
Where the imaging components suffered, however, the oncology division prospered, particularly in its service offerings. The company’s TrueBeam platform has reached over 1,200 installations, and in 2015, Varian introduced the VitalBeam for high-throughput radiation therapy, which also received U.S. Food and Drug Administration (FDA) 510(k) clearance that year. Varian expects the technology to offer clinics an affordable option to implement advanced image-guided radiotherapy, expanding clinical capabilities without the full capacity of a TrueBeam linear accelerator. Also gaining FDA 510(k) clearance in 2015 was a new version of Varian Treatment, which expands software support of third-party machines by connecting the company’s ARIA oncology information management system to third-party linear accelerators. For the first time, Varian’s service business exceeded the $1 billion mark, due largely to an expanding installed base and higher service contract capture rate, as well as the strong uptake for the company’s new RapidPlan treatment planning tool.
Fiscal year 2015 saw the introduction of two new types of futuristic technologies. First was the company’s ProBeam technology. Using TrueBeam to enable high definition radiation therapy and high definition radiosurgery, Varian demonstrated how more of the prescribed radiation dose could be compressed into a tumor, barely affecting healthy surrounding tissue by controlling the movements of the accelerator and robotic treatment couch simultaneously.
“Unlike other similarly-priced systems, the entry-level ProBeam Compact can deliver the beam and generate images from 360 degrees around the patient, providing a greater range of treatment options,” said Jan Timmer, senior manager of product marketing for the company’s particle therapy division.
Varian also unveiled iterative cone-beam computed tomography (CT) imaging technology in 2015, which permits diagnostic-quality CT images, supporting image-guided treatments. In its annual report, the company hinted that this will be “among the many features offered on a new Multi-Modality Imaging Console that will be available to clinics within the next 24 months.”
Varian’s particle therapy business, which makes targeted proton beam technology that treats cancerous cells, looks to be a promising growth area for the company based on fiscal 2015’s activity. This sector lies outside of the company’s main offerings of imaging components and oncology, comprising its “other” business category along with the Ginzton Technology Center. Varian spent $245.2 million on research and development in 2015, an 8 percent increase over FY14.
The particle therapy business booked orders for six proton systems to be installed in the United States and Europe, totaling gross orders of over $310 million. Actual revenue in that sector amounted to $150 million, representing a 200 percent increase from 2014’s revenue and helping offset the revenue decrease in oncology systems and imaging components. “With the tremendous progress made in 2015, we are committed to continuing our investment in protons with a vision of making it a profitable mainstay in Varian’s cancer treatment offerings,” said Wilson.
As for Varian’s 2015 acquisitions, integration of Velocity Medical Solutions software acquired in 2014 was completed, added to existing products to aggregate unstructured treatment and imaging data from diverse systems at the clinical process. Integration of dose calculation software from Transpire Inc. first gained in 2014 was also completed for the company’s BrachyVision and Eclipse systems in 2015, improving image guidance tools and delivering high-precision radiotherapy for cancer treatment. In August 2015, Varian also acquired Netherlands-based X-ray imaging components supplier Claymount Investments B.V., expanding the company’s line of components and integrated subsystems.
KEY EXECUTIVES:
Dow R. Wilson, President and CEO
Elisha W. Finney, Exec. VP, Finance and Chief Financial Officer
Kolleen T. Kennedy, Exec. VP and President, Oncology Systems
Jessica L. Denecour, Senior VP and Chief Information Officer
Sunny Sanyal, Senior VP and President, Imaging Components Business
Moataz Karmalawy, Ph.D., VP and General Manager, Particle Therapy
Vy H. Tran, Senior VP, Regulatory Affairs and Quality Systems
John W. Kuo, Senior VP, General Counsel and Corporate Secretary
NUMBER OF EMPLOYEES: 7,300
GLOBAL HEADQUARTERS: Palo Alto, Calif.
Varian Medical Systems is a new staple in the Top 30, first making an appearance in the list in MPO’s June 2012 issue. Since then, the company has maintained its standing toward the bottom of the list, though, elevated this year with substantial revenue increases in fiscal year 2015 (ended Oct. 2). But before that’s addressed...
Varian’s mission to provide diagnostic imaging and radiation oncology equipment went in a new, somewhat ironic direction in 2015 when President and CEO Dow Wilson’s wife Lynne was diagnosed with Stage 3 breast cancer. Suddenly, the company’s mission became a personal one. Lynne underwent the types of diagnostic tests and radiation therapy for which the company produces equipment.
But Wilson was optimistic, “We feel great knowing that the radiotherapy Lynne will receive will be delivered on Varian equipment engineered, built, serviced, and operated by great people,” he said. “It’s good to know that we are not fighting this alone. The Wilsons are now among the millions of families around the world who are dealing with a cancer diagnosis, and for all of us, the Varian mission is more important than ever.”
It should sweeten the narrative just a little to hear that Varian’s FY15 represented its highest revenue to date, at about $3.1 billion—a 2 percent increase from 2014. However, in contrast to 2014, which exhibited revenue increases in both product and service offerings, 2015 actually showed a decrease in product revenue, at a deficit of about $5.9 million. The company’s service offerings made up the entirety of its revenue increase, going up by 6 percent. In addition, 2015 saw domestic revenue reach $1.46 billion, representing a 9 percent increase from fiscal 2014. On the flip side, international revenue reached 1.64 billion, which represents a loss of 4 percent from FY14.
Varian’s product portfolio is split into two sectors: imaging components and oncology systems. The remaining businesses are categorized as “other,” consisting of particle therapy and the Ginzton Technology Center, the company’s research and development center. In 2015, the company’s oncology systems sector generated $2.34 billion in revenue, which is flat from 2014. Domestically, oncology systems’ sales increased 4 percent from 2014, and fell 3 percent internationally. The imaging components sector posted revenue of $611 million, a 7 percent deficit from 2014. Both domestic and international deficits contributed to the loss—they showed a 6 percent and 8 percent decrease respectively.
The decrease in product revenue can be indirectly explained by the increase in the strength of the dollar—Varian was forced to cut pricing to defend its market share against yen- and euro-based competitors. The radiographic panel products suffered the most, as prices for those pieces of equipment have halved in cost since 2013. In addition, the company’s imaging components division was struck by a large falloff in demand for cargo screening systems, which prompted gross orders for imaging components to fall by 16 percent from FY14. Across the board, product revenues showed deficits, with increase in service offerings mainly contributing to the total year revenue increase.
Where the imaging components suffered, however, the oncology division prospered, particularly in its service offerings. The company’s TrueBeam platform has reached over 1,200 installations, and in 2015, Varian introduced the VitalBeam for high-throughput radiation therapy, which also received U.S. Food and Drug Administration (FDA) 510(k) clearance that year. Varian expects the technology to offer clinics an affordable option to implement advanced image-guided radiotherapy, expanding clinical capabilities without the full capacity of a TrueBeam linear accelerator. Also gaining FDA 510(k) clearance in 2015 was a new version of Varian Treatment, which expands software support of third-party machines by connecting the company’s ARIA oncology information management system to third-party linear accelerators. For the first time, Varian’s service business exceeded the $1 billion mark, due largely to an expanding installed base and higher service contract capture rate, as well as the strong uptake for the company’s new RapidPlan treatment planning tool.
Fiscal year 2015 saw the introduction of two new types of futuristic technologies. First was the company’s ProBeam technology. Using TrueBeam to enable high definition radiation therapy and high definition radiosurgery, Varian demonstrated how more of the prescribed radiation dose could be compressed into a tumor, barely affecting healthy surrounding tissue by controlling the movements of the accelerator and robotic treatment couch simultaneously.
“Unlike other similarly-priced systems, the entry-level ProBeam Compact can deliver the beam and generate images from 360 degrees around the patient, providing a greater range of treatment options,” said Jan Timmer, senior manager of product marketing for the company’s particle therapy division.
Varian also unveiled iterative cone-beam computed tomography (CT) imaging technology in 2015, which permits diagnostic-quality CT images, supporting image-guided treatments. In its annual report, the company hinted that this will be “among the many features offered on a new Multi-Modality Imaging Console that will be available to clinics within the next 24 months.”
Varian’s particle therapy business, which makes targeted proton beam technology that treats cancerous cells, looks to be a promising growth area for the company based on fiscal 2015’s activity. This sector lies outside of the company’s main offerings of imaging components and oncology, comprising its “other” business category along with the Ginzton Technology Center. Varian spent $245.2 million on research and development in 2015, an 8 percent increase over FY14.
The particle therapy business booked orders for six proton systems to be installed in the United States and Europe, totaling gross orders of over $310 million. Actual revenue in that sector amounted to $150 million, representing a 200 percent increase from 2014’s revenue and helping offset the revenue decrease in oncology systems and imaging components. “With the tremendous progress made in 2015, we are committed to continuing our investment in protons with a vision of making it a profitable mainstay in Varian’s cancer treatment offerings,” said Wilson.
As for Varian’s 2015 acquisitions, integration of Velocity Medical Solutions software acquired in 2014 was completed, added to existing products to aggregate unstructured treatment and imaging data from diverse systems at the clinical process. Integration of dose calculation software from Transpire Inc. first gained in 2014 was also completed for the company’s BrachyVision and Eclipse systems in 2015, improving image guidance tools and delivering high-precision radiotherapy for cancer treatment. In August 2015, Varian also acquired Netherlands-based X-ray imaging components supplier Claymount Investments B.V., expanding the company’s line of components and integrated subsystems.