Siemens Healthcare said it is leaving the linear accelerator business to concentrate on modalities with higher margins.
By the end of the year, Siemens will no longer sell new linacs. However, the company will still service and maintain its current install base. The company, whose headquarters is in Erlangen, Germany, makes the Artiste, Primus and Oncor systems.
Siemens did not release a breakdown of sales or margins for its linacs group, but suggested it lagged behind imaging.
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"We have seen that the business is sort of stuck in between," Matthias Kraemer, head of media relations for the global Siemens Healthcare sector, told DOTmed News. "It's going well, but not as well as we are expecting from all our businesses. If you look at the CT side, MRI side, angiography, we're in a leading position, and with the linear accelerator business, we're (doing) OK, but not performing as we're used to for other modalities."
The main companies in this sector are Elekta, Accuray and Varian Medical Systems.
The loss of the accelerator business will likely affect about 400 workers in Germany, according to reports, and the company said it would try to find them other jobs. On Wednesday, in an interview with a Swiss newspaper, a Siemens official was reported to announce that the company would slash over 1,000 jobs from its health care business.
Kraemer said the decision to quit the linacs business comes out of a recently launched initiative, Agenda 2013, which looks to maintain profitability, in part, by focusing investments in areas the company believes are going to do well over the next two years, such as emerging markets, entry-level technology and next-generation IT architecture.
"We see cost pressure already today, but you don't have to be a wizard to see that cost pressure certainly will increase," Kraemer said.
With linacs, he said his company was faced with a choice: invest heavily in linacs to create a "leapfrog technology" that would put the firm in a leading position, or invest the same amount of money in something else to get better results. The company opted for the latter, he said.
Of course, Siemens isn't pulling out of radiation oncology. Rather, the company said it's focusing on what it does best -- imaging systems. It will still develop and market products, such as its CT-on-rails, that will be used in radiation treatment planning and delivery.
Also, current linac customers can still expect maintenance, service and software updates, with the next update likely in the spring.
Customers, in fact, were told of the decision in October, Siemens said. Siemens did not release the size of its linac install base.
Looking ahead, the company said it planned to invest heavily in R&D, especially for entry-level products. A few debuted at the Radiological Society of North America last month, such as the SOMATOM Perspective, a lower-cost CT scanner, which the company is marketing toward developing countries and community hospitals in the United States, and Siemens hinted it would have similar announcements at the European Congress of Radiology in Vienna next year. The company's also focusing on countries like China, where last fiscal year the company hired 500 new employees, Siemens said.
"We're already very strong in China, seeing double digit growth. Business is thriving there. We have to accelerate there," Kraemer said.