Varian Medical (VAR) Signs Distribution Deal With Bionix

Palo Alto, CA-based manufacturer of medical devices and software, Varian Medical Systems, Inc. (NYSE:VAR) , announced that it has signed a distribution agreement with Toledo, OH-based Bionix Radiation Therapy. Per the agreement, Varian Medical would distribute Bionix’s propreitory brachytherapy applicators. Varian will market the Bionix Esophageal Applicator (E-App) and the Anorectal Applicator (AR-1) in North America.

Of the above two applicators, E-App is a disposable brachytherapy applicator. It is designed specifically for the treatment of cancers. The E-App features five independently operable balloons that maintain the central position of the source catheter in both straight and curved anatomy. This allows for closer proximity of the target to the source while maintaining distance from healthy tissue.

The second applicator, AR-1 is a disposable brachytherapy applicator. It is designed specifically for the treatment of anal and rectal cancers. The dual balloon design of the AR-1 allows exophytic tumors to press closer to the source catheter. This creates the ability to deliver a very high dose to the tumor, while sparing healthy tissue.

Future Trend

We note that the global radiotherapy market is expected to reach a worth of $7,544.8 million by 2020, at a CAGR of 6.2%. Taking the bountiful prospects in the global niche space into consideration, the latest development should boost investor’s confidence.

Share Price Performance

A promising portfolio combined with robust initiatives has been favoring this Zacks Rank #3 (Hold) company, which has delivered positive earnings surprise in 12 of the last 14 quarters. We note that shares of Varian Medical have declined 0.2% over the past three months against the broader industry, which grew 0.5% in the same time frame.

Our Take

Varian Medical operates in a technology-driven environment where success depends on innovation and frequent product updates. The company has been successful on the R&D front as evident from year-over-year expansion in its top line. The company has approximately $1 billion revenue opportunity from its various Oncology and Imaging Component products over the next five years.

Apart from enjoying a dominant market share in conventional radiotherapy, we believe that proton therapy holds significant promise for Varian Medical. This is because ProBeam Compact proton therapy system is superior to other external beam radiotherapies in precisely locating cancerous tumors and cause lesser side-effects to surrounding tissues. Proton therapy system uses the same interface used by the company in its TrueBeam platform.

Finally, the company’s strong overseas presence is expected to enable it to leverage this opportunity in emerging markets. In line with growing demand for cancer treatment in overseas markets, Varian Medical’s sales, in Europe, Africa and particularly Asia, are growing at a faster rate than in the domestic market.

Do Medical Stocks Interest You? Check These

Investors may consider better-ranked stocks from the same sector such as Edwards Lifesciences Corporation (NYSE:EW) , Fresenius Medical Care Corporation (NYSE:FMS) and IDEXX Laboratories, Inc. (NASDAQ:IDXX) .

Notably, Edwards Lifesciences and Fresenius Medical sport a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock has returned 5.5% over the last three months.

Fresenius Medical yielded a strong return of 8.3% year to date. The stock has a long-term expected earnings growth rate of 10%.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. Additionally, the stock represents an impressive one-year return of 39.3%.

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