Article preview from IN VIVO - June 2008
Radiation oncology is a very attractive market indeed. It's a $3 billion-plus capital equipment market predicted to experience a compound annual growth rate of 10 to 15% in the next several years, with the image-guided segment expected to grow at a 35% rate. Approximately 30% of the market is up for grabs over the next three years, as institutions replace old and obsolete equipment. Can small company TomoTherapy sustain the lead it has gained with a new image-guided system that increases the precision of cancer targeting and spares normal tissues, once entrenched multi-billion dollar radiation oncology companies begin to offer aggressive competition? Find out...
TomoTherapy: Niche Player or Not?
In radiation oncology, David is taking precise aim at Goliath, as newcomer TomoTherapy competes against much larger capital equipment manufacturers on the basis of, it believes, superior cancer-targeting technology.
- Image-guided radiation therapy is the fastest growing segment of radiation oncology, and young company TomoTherapy has grabbed a technological advantage by designing CT imaging capabilities, from the ground up, into its radiation therapy delivery system.
- TomoTherapy has exquisite timing; it has entered the market with advanced technology at a crucial time in the replacement market for radiation oncology systems—roughly 30% of the installed base is ready for an upgrade.
- In just five years on the market, TomoTherapy has vaulted to the third position in a market previously dominated by much larger players—Varian, Elekta, and Siemens--by offering unmatched precision in terms of desired dose distribution to tumors and the ability to spare normal tissues.
- TomoTherapy has grown revenues to almost $300 million in a short time, but to grow from this level, it now must overcome the perception that its system should be reserved for only the most complex and difficult cases—niche markets—by educating the market that it has a versatile system that advances the field of cancer care. At the same time, much larger competitors are introducing new systems that compete with TomoTherapy.
From the very start, TomoTherapy was not the typical medical device start-up. It's based in Wisconsin, it operates in a capital equipment segment that has to do with particle physics, not an easy sell for investors, and it raised its early-stage capital (approximately $42 million) from Mid-western venture capital firms, not the bicoastal VCs usually associated with medtech investing. Founded in 1997, TomoTherapy Inc. launched a new system for radiation oncology in 2003, and proceeded to go public, raising $187 million in an initial public offering in 2007 [200730079]. It has vaulted from relative obscurity to the number three spot in a market dominated by much larger, multinational firms.
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Companies mentioned in this article:
Accuray Inc.
Agfa-Gevaert Group
BrainLab AG
Elekta AB
General Electric Co.
GE Healthcare
GE Healthcare Technologies Inc.
GE Marquette Medical Systems
Siemens AG
Siemens Medical Solutions
TomoTherapy Inc.
US Dept. of Energy
Lawrence Livermore National Laboratory
University of Wisconsin
Varian Medical Systems Inc.
