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How Varian Medical Stays On Top

Executive Summary

Varian Medical Systems has built a strong franchise in the lucrative but complex specialty niche of radiation oncology through focused leadership, quality of product, and strong ties to customers. As it rolls out its current generation of planning and treatment systems, it has learned to be a provider of not just capital equipment, but also integrated systems. The challenge has been changing corporate culture.

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Building a new product market is never easy, and the chances for a start-up in capital equipment are especially slim. Accuray has the scars to prove it. But after a long haul, it appears to be succeeding in building a market in radiosurgery.

Accuray: Building the Radiosurgery Market

Building a new product market is never easy, and the chances for a start-up in capital equipment are especially slim. Accuray has the scars to prove it. But after a long haul, it appears to be succeeding in building a market in radiosurgery.

Accuray: Tightly Targeting Tumors

While open surgery remains the traditional primary treatment option for solid tumors, ten years ago a procedure called frame-based radiosurgery was commercially introduced in the US to treat brain tumors. Radiosurgery uses an intense dose of high energy radiation to destroy a tumor with precise targeting in order to avoid damaging healthy tissue. This requires patients to have a stereotactic metal frame screwed into their skulls to accurately target the tumor. The frame also limits radiosurgery's applicability largely to intracranial tumors, which constitute only 10% of all solid tumors. Accuray has developed a frameless radiosurgery system, the CyberKnife, which has proven effective in treating head and neck tumors without the frame's discomfort, and is looking to expand its application to other body tumors. Having survived several rocky periods since its 1990 launch, Accuray must now show it can survive selling capital equipment, an area historically harsh on start-up companies, both in terms of competing against larger entrenched competitors and in convincing customers to acquire new costly systems.

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