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EXPANDING MARKETS, PROFITABILITY
Dow Wilson, President and CEO
Varian Medical Systems
JP Morgan Healthcare Conference
January 12, 2016
Varian Businesses
Oncology Systems ($2.7B)
Technology products and services for radiotherapy, radiosurgery,
brachytherapy, and services supplied to hospitals and clinics
Market and technology leader
$1B service business
Particle Therapy ($317M)
Proton therapy systems and service
Imaging Components ($605M)
X-Ray tubes, flat panel detectors and software for imaging
equipment manufacturers and system integrators
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
Series 1
Series 1
FY
2015 G
RO
SS
OR
DE
RS
$3.6
B
Growth Strategies
Go Global
Build Software & Services
Innovate
Commercialize Protons
Operational Excellence
Increase Revenues
Strengthen Profitability
Oncology Systems
Market Environment Growing global cancer burden
Economic driven healthcare transformation – move to affordable, accessible, quality care
Expansion, investment in emerging & frontier markets
Modernization, replacements in developed markets
Service opportunity
Cancer Burden Rising 25 Million People
2012 2030
New Cancer Cases 14.1 Million 24.6 Million
Cancer Deaths 8.2 Million 13 Million
Needed by 2035
Coverage of radiotherapy services according to country as determined by global equipment
databases, an activity-based operations model, cancer incidence, and evidence-based estimates
of radiotherapy need.
20,000+ linacs
Expanded software,
service infrastructure
Greatest need in lower
and middle income
countries (LMIC)
Lancet Reccommendations Call to Action / LMIC Target
By 2020 80% of
countries should
have cancer plans
that include
radiotherapy.
Population Based
Cancer Control
Plans
25% increase
in RT capacity
from 2015 to
2025.
Expansion of
Access to
Radiotherapy
$46B of investment
by 2025 to establish
radiotherapy
infrastructure and
training in LMIC.
Sustainable
Financing to
Expand Access to
Radiotherapy
80% of LMIC to
include RT services as
part of universal health
coverage by 2020.
Align Radiotherapy
Access with Universal
Health Coverage
Varian Market Development
Expanding global team
Partnering to build access to cancer care
Governments
Financiers
Clinicians
Patient advocacy groups
Promoting awareness
Lancet Oncology Commission
Media outreach
Directions in Innovation Knowledge-Guided Oncology | Intelligent Treatment Delivery
Advanced Data Analytics
The Next Big Milestone –
High Definition Radiotherapy
Treatment Ideal:
100% of dose to the tumor; 0% to healthy tissue.
INTELLIGENT TREATMENT DELIVERY:
Works in Progress
4π Dose Compression for Lung SBRT
INTELLIGENT TREATMENT DELIVERY:
IMRT
PATIENT 1
PATIENT 2
VMAT HDRS
64 Gy
15 Gy
Courtesy of Ke Sheng, UCLA
Expanding Software Offerings
New Data Analytic Tools
RapidPlanTM
Insightive AnalyticsTM
VelocityTM
QuumulateTM
Infor™ interoperability
EPIC, Cerner, McKesson
Cloud-based offering with SaaS model
FlatIron alliance
ADVANCED DATA ANALYTICS
ADVANCED DATA ANALYTICS:
RapidPlan™ Ramp Up
300+ Orders
3,800 Potential Installs
Disease Site Models
Prostate
Prostate (+lymph nodes)
Head & Neck
Lung SBRT
More Models Coming
KNOWLEDGE-GUIDED ONCOLOGY:
InSightive™ Analytics
50+ Orders
3,800 potential installs
Efficiency tool
Identifies clinical bottlenecks
Streamlines workflow
Lowers cost of care
Increases access to care
ADVANCED DATA ANALYTICS
ADVANCED DATA ANALYTICS:
Iterative CBCT Gaining Clarity
A game changer!
Now we can see soft tissue!
Affordable, quality, real-time alternative
to MR imaging
TrueBeam platform upgrade
~1,200 current installs
INTELLIGENT TREATMENT DELIVERY:
TrueBeam 2.0 Iterative CBCT
Works in Progress
Long Term Oncology
Growth Drivers
$2.7B business
Gaining global share
Largest installed base
$1B in recurring service revenue
Winning product portfolio
Demographics increasing need
Number of
treatment rooms
to increase by
over 4x
Proton Therapy World Market Report (Edition 2015), MEDraysintell.
Patients Treated to 2030
21 | VARIAN PARTICLE THERAPY
Hitachi - 3
IBA - 17
ProNova - 4
Varian - 22
Sumitomo - 1
2015 Treatment Rooms Ordered
Varian Establishing Market Leadership Position
22 | VARIAN PARTICLE THERAPY
Commitment
Varian develops
proton treatment
planning;
provides
information
systems for
proton centers
Varian purchases
ACCEL
Instruments
Superconducting
cyclotron clinical
at PSI
Complete
treatment system
delivered to
Rinecker Proton
Center, Munich
(>1,500 patients)
First US
ProBeam®
system delivered
to Scripps Health
in San Diego
Start of clinical
operation at
Scripps Health in
San Diego
6 orders
Compact launch
Eclipse™ proton
algorithm
Several installs
underway
1990s 2007 2009 2011 2014 2015
History of Proton Program
23 | VARIAN PARTICLE THERAPY
Varian Projects Overview
SCRIPPS PT CENTER 3 Rotational and 2 Fixed Beam Rooms
KFMC-KING FAHD MEDICAL CENTER 3 Rotational and 1 Fixed Beam & 1Eye Tx
UNIVERSITY OF MARYLAND 4 Rotational and 1 Fixed Beam Room
GEORGIA PT CENTER (EMORY) 4 Rotational and 1 Fixed Beam Room
PTC ST PETERSBURG, RUSSIA 2 Rotational Gantries
RINECKER PROTON THERAPY CENTER 4 Rotational Gantries and 1 Fixed Beam Room
UT SOUTHWESTERN MEDICAL CENTER 4 Rotational and 1 Fixed Beam Room
CINCINNATI CHILDREN’S HOSPITAL 3 Rotational Rooms
PAUL SCHERRER INSTITUTE (PSI) 1 Gantry Room
NATIONAL TAIWAN UNIVERSITY
2 Gantries 1 Fixed Beam Room
AARHUS PTC - DENMARK 2 Gantries
UK PROTON THERAPY CENTERS UCLH London - 3 Gantries
The Christie Hospital, Manchester - 3 Gantries
HOLLAND PTC 2 Rotational Gantries 1 Fixed Beam
NEW YORK PTC
3 Gantries 1 Fixed Beam Rm 1 RR
Why We’re Winning……
• Precision IMPT with Pencil-Beam Scanning
• Fastest Patient Throughput
• Varian Best in Class Oncology Product Suite
• Eclipse treatment planning
• ARIA OIS, data analytics
• Cone Beam CT Imaging/motion management
• Commitment to Innovation, Integration
FY15 Challenges
Panel prices eroding;
FX helping competitors grab share
Lost $50M panel customer to insourcing
SIP market freezing; tenders delayed/stopped
65%
24%
11%
OEMs
Varian
Other
X-Ray Tubes: Units 3% Sales (1%)
42%
30%
28% OEMs
Varian
Other
Flat Panels: Units 2% Sales (7%)
Source: Market Share Estimates based on Varian analysis
2015 PRICE/MIX/FX IMPACT
FY15 Successes
Added MeVis/Claymount components
Gained share in tube aftermarket; VIC team
winning in China
Grew orders >10% in industrial tubes/panels
Imaging Growth Trends
Ongoing growth in diagnostic imaging
Market transforming: analog to digital
Industrial/NDT market expanding; New digital applications emerging
Security/Inspection investments continuing
75,000+ units/yr
2-3% CAGR
1M+ installed units Only about
10% digital
400+ system
integrators
$300M+/yr spent on
film
1,000+ Cobalt
systems to be
replaced
<5% cargo
containers scanned
today
Investment Summary (NYSE: VAR)
Market and technology leader
• Radiation Oncology
• Particle Therapy
• Imaging Components
Favorable demographic/economic/technical trends
Promising product portfolio and pipeline
>$1B recurring revenues from service and software
Strong balance sheet, cash flow, stock buy backs
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