Ã¯Â¿Â½PAGE Ã¯Â¿Â½ Ã¯Â¿Â½PAGE Ã¯Â¿Â½1Ã¯Â¿Â½ Business Research
Current Business Research Project Paper
Koungnum M Brown
University of Phoenix
Research and Evaluation I / RES 341
September 20, 2006
Varian Medical Systems Incorporated designs and produces integrated systems of equipment and software for treating cancer with radiation as well as cost-effective x-ray tubes for original equipment manufacturers (OEMs) and replacement x-ray tubes and imaging subsystems. The Company's operations involve two primary segments: Oncology Systems and X-Ray Products.
Oncology Systems designs, manufactures, sells and services hardware and software products for radiation treatment of cancer, while X-Ray Products is involved in the design and manufacture of subsystems for diagnostic radiology. The Ginzton Research Center, Varian's research facility, also manufactures and sells Varian's Brach therapy products and services. Varian Medical has recently signed a sole source agreement to supply many cancer centers with advanced radiotherapy systems for treating cancer. Recent agreements demonstrate Varian's success domestically, and most importantly, globally.
The radiation therapy industry currently enjoys a growing global demand for quality health care and Varian emerges as the dominant player in the radiation oncology market providing for customers and patients alike. Medical products and supplies as a whole declined by 17.9% in 2003 compared to a 5.2% decline in 2002. The radiation therapy industry advanced on the average of 40%. Approximately 50% of the industry revenues are generated from overseas business transactions, and Varian Medical Systems provides no exception. Selected by many economic professionals to carry this success for at least the next 10 years, Varian's long term success will ultimately depend on a strong global policy.
Before 2001, linear accelerator sales were brisk, but competitors slowly caused pricing to deteriorate, subsequently net profit numbers suffered. After the Medicare reimbursement changes in 2001 (a 300% increase in most cases),