(VAR) Varian Medical Systems Wins R&D 100 Award

Leading integrated radiotherapy systems maker Varian Medical Systems (VAR) recently disclosed that its image guided radiotherapy and radiosurgery system (TrueBeam) is the recipient of a 2011 R&D 100 Award conferred by R&D Magazine. This yearly felicitation recognizes 100 technologically superior products from the previous year.

R&D Awards, established by the editors of R&D Magazine, are given on an annual basis. This award is widely recognized as a hallmark of excellence and indicates that the product incorporates some of the most innovative thinking of the year.

The TrueBeam system integrates a series of technological innovations so as to coordinate imaging, delivery of treatment, the position of the patient and his/her motion. TrueBeam also has the capability to achieve a dose delivery rate that is about twice the full output of orthodox radiotherapy systems. As a result, both patients and clinics benefit from shorter duration of treatment.

Since it was launched in April 2010, Varian has booked orders for 220 TrueBeam systems from across the world. The company has either finished, or in the process of completing, 65 installations.

Varian has a portfolio of 285 U.S. patents with more than 180 patent applications in a pending state. The company was placed in the fifth position, in 2010, in the medical equipment/instruments segment of IEEE’s Patent Power Rankings. Varian expended 7% of its revenues on R&D in 2010.

Varian’s second-quarter fiscal 2011 (ended March 31) earnings beat the Zacks Consensus Estimate by a penny. Revenues shot up 11% year over year to $648 million, also beating the Zacks Consensus Estimate.

Company-wide order backlog rose 11% to $2.2 billion at the end of the reported quarter. Growth was led by an increase in net orders for TrueBeam system, Oncology services, X-Ray tubes and panels as well as security systems.

Varian is a leading manufacturer of integrated radiotherapy systems for treating cancer and a premier supplier of X-ray tubes for diagnostic imaging applications. The company operates in a technology-driven environment where success depends on the use of new technology, product development and upgrades. In the radiation oncology market, Varian competes with Accuray (ARAY).

Varian is poised to increase its market share in radiation oncology. It is currently enjoying a healthy demand for its coveted RapidArc and TrueBeam radiotherapy technology, which is meaningfully contributing to its oncology net order growth.

However, Varian aggressively competes with well-funded competitors for a limited pool of sales volume. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, provide headwinds. We currently have a long-term Neutral rating for the stock, supported by a short-term Zacks #3 Rank (Hold).

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