We are a world leader in the design, manufacture, sales and services of advanced
equipment and software products for treating cancer with radiation. We also
design, manufacture, sell and service high quality, cost-effective X-ray tubes
for original equipment manufacturers, or OEMs; replacement X-ray tubes; flat
panel digital image detectors for filmless X-rays (commonly referred to as flat
panel detectors or digital image detectors) for medical, dental, veterinary,
scientific and industrial applications; and linear accelerators for security
and inspection purpose.
Our largest business segment is Oncology Systems, which designs, manufactures,
sells and services hardware and software products for treating cancer with radiation,
including linear accelerators, treatment simulation and verification products,
information management and treatment planning software, advanced brachytherapy
products and software and other sophisticated accessory products and services.
Our products enable radiation oncology departments in hospitals and clinics
to perform conventional radiotherapy treatments and offer the advanced treatment
processes of intensity modulated radiation therapy, or IMRT, image guided radiation
therapy, or IGRT, stereotactic radiosurgery and stereotactic radiotherapy, as
well as treat patients using brachytherapy techniques, which involve radiation
treatment of tumors with implanted radioactive sources. Our customers include
comprehensive cancer treatment clinics, university research and community hospitals,
private and governmental institutions, healthcare agencies, doctors' offices
and cancer care clinics worldwide.
Our second business segment is X-ray Products, which manufactures and sells
X-ray imaging components and subsystems, namely (i) X-ray tubes for use in a
range of applications including computed tomography, or CT, scanning, radioscopic/fluoroscopic
imaging, mammography, special procedures and industrial applications and (ii)
flat panel detectors for digital X-ray image capture, which is an alternative
to image intensifier tubes for fluoroscopy and X-ray film for radiography. Our
X-ray tubes and flat panel detectors are sold to large imaging system OEMs that
incorporate these X-ray imaging components and subsystems into their medical
diagnostic imaging systems and industrial imaging systems. Our X-ray tubes are
also sold directly to end-users for replacement purposes. Our flat panel detectors
are also being incorporated into next generation imaging equipment, including
equipment for IGRT and for dental CT scanning and veterinary X-ray imaging.
We have two other businesses that we report together under the 'Other' category.
Our Security and Inspection Products business, or SIP, designs, manufactures,
sells and services Linatron' X-ray accelerators for security and inspection
purposes, such as cargo screening, border protection and nondestructive examination
for a variety of applications. We generally sell our Linatron X-ray accelerators
to OEMs, who incorporate our accelerators into their inspection systems, which
are then sold to customs agencies and other government and military agencies,
as well as to commercial private parties in the casting, power, aerospace, chemical,
petro-chemical and automotive industries. Our Ginzton Technology Center, or
GTC, develops technologies that enhance our current businesses or may lead to
new business areas, including next generation digital X-ray imaging technology,
volumetric and functional imaging, improved X-ray sources and technology for
security and cargo screening applications. In addition, we are developing technologies
and products that promise to improve disease management by more precise targeting
of radiation, as well as by employing targeted energy and molecular agents to
enhance the effectiveness and broaden the application of radiation therapy.
Customer Services and Support
We warrant most of our Oncology Systems products for parts and labor for 12
months, and we offer a variety of post-warranty equipment service contracts
and software support contracts to suit customers’ requirements. We maintain
service centers in Milpitas, California; Las Vegas, Nevada; Marietta, Georgia;
Buc, France; Crawley, United Kingdom; Zug, Switzerland; Herlev (Copenhagen),
Denmark; Diegem (Brussels), Belgium; Darmstadt, Germany; Houten, The Netherlands;
Alcobendas (Madrid), Spain; Cernusco (Milan), Italy; Manama, Bahrain; Moscow,
Russia; Mumbai, Delhi, and Chennai, India; Tokyo, Osaka, Sendai, Nagoya, and
Fukuoka, Japan; Beijing, Chengdu, Shanghai and Hong Kong, China; Kuala Lumpur,
Malaysia; Singapore; Bangkok, Thailand; Belrose, Australia; Sao Paulo, Brazil;
Seoul, South Korea; Budapest, Hungary; Vienna, Austria; Helsinki, Finland and
Winnipeg, Canada; as well as field service personnel throughout the world for
Oncology Systems customer support services. Key Oncology Systems education operations
are located in Las Vegas, Nevada; Beijing, China; Mumbai, India; Zug, Switzerland
and Tokyo, Japan. Our network of service engineers and customer support specialists
provide installation, warranty, repair, training and support services, project
management, site planning, and professional services. We also have a distributed
service parts network of regional hubs and forward-stocking locations across
all major geographic areas. We generate service revenues by providing services
to customers on a time-and-materials basis, replacement part sales and through
post-warranty equipment service contracts and software support contracts. Most
of the field service engineers are our employees, but our products are serviced
by employees of distributors and/or agents in a few foreign countries. Customers
can access our extensive service network by calling any of our service centers.
Manufacturing and Supplies
We manufacture our medical linear accelerators in Palo Alto, California and
in Beijing, China. Our treatment simulator systems and some accelerator subsystems
are manufactured in Crawley, United Kingdom and some of our other accessory
products in Baden, Switzerland; Helsinki, Finland; Toulouse, France and Winnipeg,
Canada. We manufacture our high dose rate brachytherapy systems in Crawley,
United Kingdom and Haan, Germany and our brachytherapy treatment planning products
in Charlottesville, Virginia. Calypso manufactures components of their tumor
tracking and motion management products in Seattle, Washington. Our SIP linear
accelerators are manufactured in Palo Alto, California and integrated into complete
X-ray sources in Las Vegas, Nevada. We manufacture components and sub-systems
for our proton therapy products and systems in Troisdorf, Germany. We manufacture
our X-ray imaging component products in Salt Lake City, Utah; Charleston, South
Carolina; Liverpool, New York; Willich, Germany and Beijing, China. These facilities
employ state-of-the-art manufacturing techniques, and several have been honored
by the press, governments and trade organizations for their commitment to quality
improvement. These manufacturing facilities are certified by International Standards
Organization (“ISO”) under ISO 9001 (for SIP) or ISO 13485 (for
medical devices).
Manufacturing processes at our various facilities include machining, fabrication,
subassembly, system assembly and final testing. We have invested in various
automated and semi-automated equipment for the fabrication and machining of
the parts and assemblies that we incorporate into our products. We may, from
time to time, invest further in such equipment. Our quality assurance program
includes various quality control measures from inspection of raw materials,
purchased parts and assemblies through on line inspection. We outsource the
manufacturing of many major subassemblies and perform system design, assembly
and testing in house. We believe outsourcing enables us to reduce or maintain
fixed costs and capital expenditures, while also providing us with the flexibility
to increase production capacity. We purchase material and components from various
suppliers that are either standard products or customized to our specifications.
We obtain some of the components included in our products from a limited group
of suppliers or from a single source supplier, such as the radioactive sources
for high dose afterloaders, klystrons for linear accelerators; transistor arrays
and cesium iodide coatings for flat panel detectors and specialized integrated
circuits, X-ray tube targets, housings, glassframes and various other components;
and radiofrequency components, magnets and gantry hardware for proton therapy
systems. We require certain raw materials such as tungsten, lead and copper
for Oncology Systems and SIP; copper, lead, tungsten, rhenium, molybdenum zirconium,
and various high grades of steel alloy for X-ray tubes, and high-grade steel,
high-grade copper and iron for the VPT business.
Competition
The markets for radiation therapy equipment and software are characterized
by rapidly evolving technology, intense competition and pricing pressure. We
compete with companies worldwide.
Our Oncology Systems customers' equipment purchase considerations typically
include: reliability, servicing, patient throughput, precision, price, payment
terms, connectivity and clinical features. We sell our products on a total value
to the customer basis. We believe we compete favorably with our competitors
based upon our strategy of providing a complete package of products and services
in the field of radiation oncology and our continued commitment to global distribution
and customer service, value-added manufacturing, technological leadership and
new product innovation. We strive to provide technologically superior, clinically
proven products for substantially all aspects of radiation therapy that deliver
more precise, cost-effective, high quality clinical outcomes that meet or exceed
customer quality and service expectations. However, our ability to compete may
be adversely affected when purchase decisions are based solely upon price, since
our products are generally sold on a total value to the customer basis. This
may occur if hospitals and clinics give purchasing decision authority to group
purchasing organizations that focus solely on pricing as the primary determinant
in making purchase decisions. Therefore, the impact of any such factors could
have a negative effect on our pricing, sales, revenues, market share and gross
margins and our ability to maintain or increase our operating margins.
We are the leading provider of medical linear accelerators and related accessories.
In radiotherapy and radiosurgery markets, we compete primarily with Siemens
Medical Solutions, Elekta AB, Tomotherapy Incorporated and Accuray Incorporated.
With our information and image management, simulation, treatment planning and
radiosurgery products, we also compete with a variety of companies, such as
Elekta AB, Philips Medical Systems, Computerized Medical Systems, Inc., North
American Scientific, Inc., Nucletron B.V. and Siemens Medical Solutions. In
respect of our BrachyTherapy operations, our primary competitor is Nucletron
B.V. For the service and maintenance business for our Oncology Systems products,
we compete with independent service organizations and our customers' internal
service organizations.
The market for X-ray tubes is extremely competitive. Some of the major medical
diagnostic imaging systems companies, which are the primary customers for our
X-ray tubes, also manufacture X-ray tubes for use in their own imaging systems
products. While we believe we are one of the leading independent suppliers of
X-ray tubes, we must compete with these in-house X-ray tube manufacturing operations
for business from their affiliated companies. As a result, we must have a competitive
advantage in one or more significant areas, which may include lower product
cost, better product quality or superior technology and performance. We sell
a significant volume of our X-ray tubes to OEM companies such as Toshiba Corporation,
Hitachi Medical Corporation, Shimadzu Corporation, Philips Medical Systems and
GE, all of which have in-house X-ray tube production capability. In addition,
we compete against other stand-alone, independent X-ray tube manufacturers such
as Comet AG and IAE Industria Applicazioni Elettroniche Spa. These companies
compete with us for both the OEM business of major diagnostic imaging equipment
manufacturers and the independent servicing business for X-ray tubes. The market
for flat panel detectors is also very competitive. We incorporate our flat panel
detectors into our next generation equipment for IGRT within our Oncology Systems
and also sell to a number of OEMs, which incorporate our flat panel detectors
into their medical diagnostic, dental, veterinary and industrial imaging systems.
Our significant customers include Toshiba Corporation, Sound Technologies, Inc.
and Imaging Sciences International Inc. We primarily compete against GE, Trixell,
Canon, Inc. and Hologic, Inc. in our flat panel detector product line.
Our SIP products are sold to OEMs, who incorporate our accelerators into their
inspection systems, which are then sold to customs agencies and other government
and military agencies, as well as to commercial private parties in the casting,
power, aerospace, chemical, petro-chemical and automotive industries. We compete
with other OEM suppliers in the market for security and inspection purposes
primarily outside of the United States, and our major competitor in this market
is Nuctech Company Limited. The market for our Security and Inspection products
used for nondestructive testing in industrial application is very small and
highly fractured. There is no single major competitor in this market.