Varian Gains Ground in Venezuela

Varian Medical Systems’ (VAR - Analyst Report) RapidArc radiotherapy systems have become available to cancer patients in Venezuela. Caracas-based GURVE Radiation Oncology Group is the first cancer treatment center in the Latin American country to provide RapidArc radiotherapy to more than 100 patients to date.

This marks increased market reach for Varian’s state-of-the-art RapidArc systems. According to the company, RapidArc can bolster long run demand for its linear accelerators, intensity-modulated radiotherapy (IMRT) and image-guided radiotherapy (IGRT) related products comprising the Oncology Systems segment.

Revenues from Oncology Systems came in at $565.4 million in the second quarter, up 11.3% year over year. Net orders for the segment rose 8.6% to $564.8 million.

Until the most recent quarter, growth in orders in the North American market and robust orders from Asia helped to drive the net orders for the Oncology Systems segment. The company believes countries in Latin America will have high growth potential for its offerings.

Fluctuation in revenues from quarterly net orders due to shipment delay, customer order timing and other factors have been a cause for concern for the company. With more orders for RapidArc from GURVE Radiation Oncology Group, Varian can expect these orders to mature into revenues in the near-term.

RapidArc can offer accurate image-guided treatment to target tumors for precision treatment and reduce the exposure of surrounding tissues and organs to radiotherapy. Experts at GURVE Radiation Oncology Group point out this focus capability of RapidArc. Additionally, treatment using RapidArc is quicker compared with other conventional radiotherapy systems. This implies a 15% increase in the number of patients treated each day for lung, brain, prostrate and gynecological and other forms of cancer.

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 - Analyst Report).

However, Varian competes with larger players in a technology-intensive industry. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, are significant challenges. We are currently “Neutral” on the stock, backed by a short-term Zacks #3 Rank (Hold).