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January 2015
© 2015 VARIAN MEDICAL SYSTEMS. ALL RIGHTS RESERVED.
VARIAN MEDICAL SYSTEMS Jefferies Healthcare Conference
June 2, 2015
2 | VARIAN MEDICAL SYSTEMS
Forward-Looking Statements
• Forward-Looking Statements
• Except for historical information, this presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements concerning industry outlook, including growth drivers;
the company’s future orders, revenues, backlog, or earnings growth; future financial results; market acceptance of
or transition to new products or technology such as our Edge™ radiosurgery system, TrueBeam™ and
radiographic flat panel detectors, image-guided radiation therapy, stereotactic radiosurgery, filmless X-rays, proton
therapy, and security and inspection, and any statements using the terms “could,” “believe,” “expect,” “outlook,”
or similar statements are forward-looking statements that involve risks and uncertainties that could cause the
company’s actual results to differ materially from those anticipated. Such risks and uncertainties include global
economic conditions; the impact of the Affordable Health Care for America Act (including excise taxes on medical
devices) and any further healthcare reforms (including changes to Medicare and Medicaid), and/or changes in
third-party reimbursement levels; currency exchange rates and tax rates; demand for the company’s products; the
company’s ability to develop, commercialize, and deploy new products; the company’s ability to meet Food and
Drug Administration (FDA) and other regulatory requirements for product clearances or to comply with FDA and
other regulatory regulations or procedures; changes in the regulatory environment, including with respect to FDA
requirements; the company’s assessment of the goodwill associated with its particle therapy business, challenges
associated with the successful commercialization of the company’s particle therapy business; the effect of adverse
publicity; the company’s reliance on sole or limited-source suppliers; the impact of reduced or limited demand by
purchasers of certain X-ray products; the company’s ability to maintain or increase margins; the impact of
competitive products and pricing; the potential loss of key distributors or key personnel; challenges to public tender
awards and the loss of such awards or other orders; and the other risks listed from time to time in the company’s
filings with the Securities and Exchange Commission, which by this reference are incorporated herein. The
company assumes no obligation to update or revise the forward-looking statements in this presentation because of
new information, future events, or otherwise.
2
3 | VARIAN MEDICAL SYSTEMS
TO HELP SAVE
MILLIONS OF LIVES
EVERY YEAR, EVERYWHERE.
OUR VISION:
4 | VARIAN MEDICAL SYSTEMS
Technology Leader in Growing Markets
• Varian Oncology Systems
– Radiotherapy
– Radiosurgery
– Brachytherapy
• Varian Imaging Components
– X-Ray Tubes
– Digital Flat Panels
– Security & Inspection Products
• Varian Particle Therapy
– Proton therapy
5 | VARIAN MEDICAL SYSTEMS
FY15 Focus on Our “Big 5” Strategic Priorities
Go Global
Grow Software and Services
Innovate
Commercialize Protons
Drive Operational Excellence
6 | VARIAN MEDICAL SYSTEMS
Oncology Systems
7 | VARIAN MEDICAL SYSTEMS 7
60% of global installed base
>35m treatments annually
≈7,000 Varian Accelerators
8 | VARIAN MEDICAL SYSTEMS
Source: U.S. Census Bureau
Pe
op
le 6
0 Y
ea
rs a
nd
Old
er
( in
Millio
ns)
Cancer Needs Growing with Aging Populations
0
200
400
600
800
1000
1200
1400
2010 2030
>80% Rise in world
population
over 60
9 | VARIAN MEDICAL SYSTEMS 9
10,000 Linacs Needed
Source: IAEA and World Health Organization
* Machines include Linac and Cobalt Units
Radiotherapy Machines
per Million People
Over 64 Years
10 | VARIAN MEDICAL SYSTEMS
New Products Drive Growth
45% of FY2014 orders came
from products introduced in
the last 5 years
11 | VARIAN MEDICAL SYSTEMS
Promising SBRT Results in Lung Study
"Technologies have developed in
the last few years that have
yielded game-changing,
paradigm-shifting approaches,
allowing us to reconsider
how radiation is delivered in
combination with surgery,
chemotherapy, and other
systemic therapies.”
Dr. Robert Timmerman,
UT SW Medical Center
12 | VARIAN MEDICAL SYSTEMS
VitalBeam* Introduced
• Based on TrueBeam
platform
• High quality, high
throughput
• Affordable
• Upgradable
• Optimized for
radiotherapy
• Introduced at ESTRO
2015
* CE mark and FDA 510(k) clearance
pending. VitalBeam is currently not
available for sale in any market.
13 | VARIAN MEDICAL SYSTEMS
Data Analytics Driving Software Growth
Oncology Software
RapidPlan
InSightive Analytics
Qumulate QA
Velocity
Flat Iron
Partnership
RapidPlan
$200M 5-Year Opportunity
14 | VARIAN MEDICAL SYSTEMS
Upgrades Create Growth Opportunity
Upgrade
6DOF Couch
RapidArc
MLC / PV
TrueBeam 2.0
OBI
SRS Package
$440M 5-Year Opportunity
15 | VARIAN MEDICAL SYSTEMS
Growing Oncology Services to $1B
• 40% of FY14 OS Revenues
• Delivers strong profitability
16 | VARIAN MEDICAL SYSTEMS
Long Term Oncology Growth Drivers
• Demographics
• Multi-Year Agreements
• Emerging Markets
• Service &
Software
• System
Upgrades
• Aging
Installations
4-6% Annual Growth
Opportunity
17 | VARIAN MEDICAL SYSTEMS
Imaging Components
18 | VARIAN MEDICAL SYSTEMS
• X-ray Tubes
• Linear Accelerators
• Workstations
• Flat Panel Detectors
Designs & Manufactures
• Equipment Manufacturers
• Aftermarket Distributors
• Security System Integrators
Sells to
Imaging Components
19 | VARIAN MEDICAL SYSTEMS
Varian Share in Imaging Components Market
Flat Panel Detector Diagnostic and CT
Tubes
65%
24%
11%
Modality OEMs
Varian
Other
42%
35%
23% Modality OEMs
Varian
Other
20 | VARIAN MEDICAL SYSTEMS
Imaging Growth Initiatives
• Grow with current OEM customers
• Add new customers in Asia, Brazil
• Extend leadership in tubes, panels with new capabilities
• Expand software offerings
• Focus on industrial market
• Develop/acquire new product lines
7-9% Annual LT Growth
Opportunity
21 | VARIAN MEDICAL SYSTEMS
Particle Therapy
22 | VARIAN MEDICAL SYSTEMS
Value of protons - lower complications, costs?
Head & neck cancer study suggests protons could have lower costs through lower complications Dr. Steven J. Frank, M D Anderson
23 | VARIAN MEDICAL SYSTEMS
Varian Particle Therapy Projects
KFMC-King Fahd
Medical Center
Scripps Proton
Therapy Center PTC St. Petersburg,
Russia
University of
Maryland
Rinecker Proton
Therapy Center
Cincinnati Children’s
Hospital Georgia PT
Center (Emory)
Clinical In Development
Contracted Dallas
Holland
Aarhus
Deals Won UCLH (UK)
The Christie (UK)
Three centers treating;11 more to come
Paul Scherrer
Institute National Taiwan
University
24 | VARIAN MEDICAL SYSTEMS
Proton Market: 2012–2015 YTD Share of Orders
62% FY15 Win Rate
(# rooms)
3%
29%
3% 5%
3% 8%
49%
1.3B Signed Contracts
Hitachi
IBA
Mevion
Mitsubishi
ProNova
Sumitomo
Varian
* 62% of all rooms ordered in 2015
25 | VARIAN MEDICAL SYSTEMS
Proton Project Potential
1000 treatment rooms
by 2030
$2.5B by 2030
Source: MEDraysintell
26 | VARIAN MEDICAL SYSTEMS
Long Term Growth Drivers - Protons
• Demand for Optimal
Dose Distribution
• Evolving Technology
– Clinical capability
– Cost efficiency
27 | VARIAN MEDICAL SYSTEMS
Long-Term Growth Opportunities
28 | VARIAN MEDICAL SYSTEMS
Long-Term Growth Targets
Revenue • OS aiming for mid single digit growth
• IC aiming for mid-to-high single digit growth
• PT aiming for > $250M 5-8%
Gross
Profits
• Maintain gross margin at current levels –
Service v. Geo
• Pricing pressures mitigated by cost
reductions
5-8%
Operating
Profits
• Proton becomes profitable – more Service
• R&D and SG&A grow slower than Revenue
8-10%
Goal: Drive Operating Earnings Faster Than Revenue
Double Digit EPS Growth
