TomoTherapy: Niche Player or Not?
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?
You may also be interested in...
The merger of Accuray and TomoTherapy would combine two of the 11 medical device companies that went public in 2007, a class of companies that has produced mixed results.
Short of investing in the kinds of products that must demonstrate five-year survival rates, the field of cancer offers many near term investment opportunities, and large markets to support them. As noted in US Disease Incidence and Prevalence, a report recently published by the Medtech Insight division of FDC-Windhover, like many diseases, the incidence of cancer increases with age. More than 10.8 million people in the US have a history of cancer; and in 2008, at least 1.4 million more people will be diagnosed. According to the Medtech Insight report, breast cancer has the highest prevalence rate, followed by prostate and colorectal cancers.
The health care sector has traditionally provided a haven for investors seeking the security of an industry blessed with a rock solid customer base. After all, consumer confidence plays a limited role in the bulk of health care decisions. But IN VIVO's survey of 62 publicly traded medical device companies shows the sector has taken a beating along with the rest of Wall Street. Surprisingly, potentially vulnerable sectors, like orthopedics and big ticket equipment, have shown a remarkable resiliency.