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Varian Gets Clearance in China

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Oncology and X-Ray products company, Varian Medical Systems (VAR - Free Report) recently revealed that China's State Food and Drug Administration has given it clearance to sell the Unique offering, which is a medical linear accelerator for cancer therapy with sophisticated types of image-guided radiotherapy.

The Unique system may be utilized to provide RapidArc therapy as well as intensity-modulated radiotherapy and accurately focus on tumors while reducing collateral damage to adjacent healthy cells. The Unique system may be used to treat different types of cancers.

It is estimated that over 2.2 million fresh cancer cases come up in China each year. Many cancer institutions function on two or even three shifts to meet the demand for radiotherapy. In order to reduce backlog, the Ministry of Health in China has decided to permit hospitals to sharply increase the number of accelerators. For its part, Varian developed the Unique system keeping in mind the growing requirements of China and other countries.

The Unique radiotherapy system is the first radiotherapy system equipped for beam shaping, image guidance and RapidArc know-how. Varian’s Eclipse therapy planning software is integrated with the system. Unique may be used to provide RapidArc therapy, as much as four times more rapidly than orthodox intensity-modulated radiotherapy.     

Varian is currently selling two versions of its system namely the Unique Power Edition which is a somewhat basic upgradeable setup and the Unique Performance Edition which is an integrated version for RapidArc radiotherapy.

Varian is a leading manufacturer of integrated radiotherapy systems for cancer treatment, 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 - Free Report) .

Varian is poised to increase its market share in radiation oncology. It currently enjoys a healthy demand for its coveted TrueBeam technology, which has meaningfully contributed to its net order oncology growth. Varian’s TrueBeam was designed to treat tumors with beams of high speed and precision. It incorporates several technological innovations such as positioning the patient and managing his/her motion. It can dispense dosage roughly four times faster than that possible with earlier equipment.

Moreover, Varian enjoys a strong balance sheet marked by low debt and moderate cash. The company from time to time uses a part of its healthy cash flow for share repurchases.

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 Varian. The stock retains a Zacks #4 Rank, which translates into a short-term Sell rating.

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