Accuray, RaySearch Laboratories Ink RayCare Agreement - Analyst Blog
Accuray Inc. ARAY will offer RaySearch Laboratories’ upcoming oncology information system (OIS) RayCare, as per a recent agreement. The collaboration will enable Accuray to offer an integrated solution by combining RayCare with its TomoTherapy and CyberKnife solutions.
RaySearch Laboratories is well known for its RayStation product, which is a treatment planning system for external beam therapy using photons, electrons and/or protons. The upcoming RayCare (possible launch date 2017) is developed using RayStation algorithms for higher performance radiotherapy. The OIS will also feature advanced clinical resource optimization, superior workflow automation and adaptive radiation therapy.
An OIS helps oncologists to move beyond basic automation and convert EMR data into aggregated, multidimensional information to support important decision-making in treatment and improving patient outcome. This is why demand for OIS systems continues to rise in the developed markets of North America and Europe as well as in emerging markets of Asia-Pacific.
Per data from ReportBuyer, the global OIS market is estimated to grow at a CAGR of 8.5% from 2014 to 2019. Asia-Pacific is forecasted to be the fastest growing region with the highest CAGR of 11.5% in the next five years.
Meanwhile, demand for radiotherapy services in the region is poised for major growth, primarily driven by China. Increasing occurrence of cancer, replacements of older radiotherapy systems and higher reimbursement levels for radiation therapy are some of the primary reasons supporting this growth.
In such a scenario, the integration of RayCare with Accuray’s legacy products will help it to fast penetrate these markets. Additionally, the international launch of its InCise Multileaf Collimator MLC for the CyberKnife M6 System will help Accuray gain significant contracts. This will eventually drive top-line growth at the company.
The addition of RayCare to Accuray’s product portfolio will also improve its competitive position against the likes of Varian Medical VAR and Elekta in the North American and European markets.
However, we note that Accuray’s CyberKnife system involves significant capital spending, with many healthcare providers reluctant to spend, primarily owing to the prevailing sluggish macro-economic conditions. Moreover, we are concerned about the unfavorable foreign exchange rate, which continues to impact the company’s top line.
Stocks to Consider
Currently, Accuray has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the medical instruments sector are RTI Surgical RTIX, Varian and Masimo Corp MASI. RTI Surgical sports a Zacks Rank #1 (Strong Buy) while both Varian and Masimo carry a Zacks Rank #2 (Buy).
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