Proton Radiation Therapy

Delivered April 16th, 2019. Contributors: Olatunji O., Lu J., George K. and

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Proton Radiation Therapy: IBA, Proton International, Mevion

Of the three examined companies, IBA (31.73%) has the highest global market share based on revenues, followed by Mevion Medical Systems (9.63%), and then Proton International (0.09). However, using the number of centers installed, we found that IBA had a 55.56% market share in the United States, while Proton International and Mevion Medical Systems had 26.63% and 3.70% market share, respectively. These figures have been added into the attached spreadsheet. Below is a deep dive into our findings as well as details of our research approach explaining why the United States market share data by radiation therapy units was not possible.
MethodologyIn order to identify the United States market share of IBA, Proton International, and Mevion Medical Systems, we commenced our research by exploring each company's website to first identify if they were public or private companies, which will determine our research path for finding their financial information. This was necessary since prior research had already identified the size of the proton therapy market in the United States. By searching through these companies, we found that only IBA was a public company. We were also able to locate its recent financial statement covering the 2018 fiscal year, which included the total proton therapy equipment sales globally, but not in the United States. No further information in this report gave any inkling to the equipment sales in the United States only. 

Our next approach was to conduct a press release and identify the number of equipment each company had installed in the United States in 2018 with the premise that we would then multiply the number of equipment by the average cost price of each company's proton therapy. We quickly realized certain limitations with this approach. Firstly, while deals are announced in specific years, some of the deals do not take effect until the proton therapy center was ready. For example, IBA reports that while it sold 7 proton therapy equipment in 2018, only 3 were "financially activated at year-end." Another challenge with this approach is that these companies do not reveal the price of their proton therapy equipment and data available in the public domain is inclusive of other services such as installation and multi-year maintenance. 

We also explored national and regional associations that were devoted to particle therapy or proton therapy such as the National Association of Proton Therapy (NAPT) and other oncology associations to see if they had published resources and reports on the proton therapy market in the United States that provided the requested information or at the very least enabled us to triangulate a reasonable estimate. A thorough examination of these organizations' website did not yield any tangible market size data or information. 

In the absence of revenue data specific to the United States and specific to only the units of equipment sold, we have used global revenues of the assigned companies to provide their market share. Additionally, we have provided the market share based on the number of centers in the United States. This would have been a very useful proxy for the units of equipment sold if we were able to identify the number of proton therapy rooms per center as well. Unfortunately, this data is not in the public domain. Lastly, we provided data on the number of proton therapy rooms that were installed in 2018 in the United States and the company that installed them. 
Global Market ShareGLOBAL PROTON THERAPY MARKET SIZE

According to a report by Fior Market Research, the global particle therapy market is expected to grow from $879.07 million in 2017 to $2.11 billion by 2025 at a cumulative annual growth rate (CAGR) of 11.37%. Using these data points and an online CAGR calculator, we were able to estimate the 2018 size of the global particle therapy market. 

CAGR: 11.37% 
Final value (2025 market size): $2.11 billion 
Number of periods (2018-2025): 8 years
Initial value (2018 market size): Unknown

Imputing the above values into the online CAGR calculator, the Global particle therapy market was estimated at $990 million in 2018. 

According to the same report by Fior Market Research, "The proton therapy segment was dominating the market and held the largest market share of 56.90% in 2017." Assuming this market share remained the same in 2018, then the size of the global proton therapy market is:
 56.90% of $990 million = $563.31 million

IBA

According to IBA's investor presentation covering the 2018 fiscal year, the total sales from proton therapy was EUR 160.40 million (160.40 * 1.1443 = $178.73 million). This total included EUR 86.64 million (86.64 * 1.1443 = $99.14 million) in only proton therapy equipment sales and EUR 73.75 million (73.75 * 1.1443 = $84.39 million) in proton therapy services. Unfortunately, data on the global proton therapy market limited to equipment units is behind a paywall, as such we have taken the IBA's market share from the global market size based on its overall proton therapy revenue. 

Market Share: ($178.73 million/$563.31 million) * 100 = 31.73%

PROTON INTERNATIONAL

Proton International has an estimated revenue of $530,000. Therefore, its global market share is:
($530,000/$563.31 million) * 100 = 0.09%

MEVION MEDICAL SYSTEMS 

Mevion Medical Systems has an estimated revenue of $54.23 million. Therefore, its global market share is: ($54.23 million/$563.31 million) * 100 = 9.63%
United States Market Share Using Number of CentersAs of 2018, there were 27 proton therapy centers in the United States. Based on available data, IBA installed 15 centers, Mevion Medical Systems installed 8 centers, while Proton International reports that it has one center in the United States. Therefore, the market share based on the number of centers is:

IBA: (15/27) * 100 = 55.56%
Mevion Medical Systems: (8/27) * 100 = 26.63%
Proton International: (1/27) * 100 = 3.70%
2018 Only Market Share of Proton Therapy Sales in the United StatesIn 2018, there were only 12 proton therapy rooms installed in the world. Of this total, 3 were in the United States and were all installed by Mevion Medical Systems. This means that in 2018, Mevion Medical Systems had a 100% share of the United States proton therapy market. On the global scale though, IBA installed 7 of the 12 proton therapy rooms installed globally, which represents 58% market share. IBA is followed by Mevion Medical Systems with 4 rooms (34%), and Hitachi with 1 room (8%). 

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Proton Radiation Therapy: Top 3

In the project spreadsheet, we have entered the top three companies aside from IBA, Mevion, and Proton International in the proton radiation therapy market based on the number of units installed/sold. These are Varian (15.91%), Hitachi (13.64%), and ProNova (6.82%). In 2018, only three proton therapy rooms were installed. They were all installed by Mevion Medical Systems. Below we have detailed our research methodology as well as our findings. 
MethodologyIn order to identify the top three proton therapy equipment providers based on the number of units sold, we commenced our research by searching for reports from credible platforms and market research companies since these reports are likely to contain the market share of the leading companies. While there are many reports available, we found that most of these reports focus on the size and growth rate of the industry, while also listing the key players; although, it must be noted that these reports are behind paywalls. A report by Valuates lists IBA, Mevion, Hitachi, Verian, and Optivus as some key players in the industry without listing the market share of each company, either by the number of proton therapy units sold or otherwise. 

We also explored national and regional associations that were devoted to particle therapy or proton therapy such as the National Association of Proton Therapy (NAPT) and other oncology associations to see if they had published resources and reports on the proton therapy market in the United States that provided the requested information or at the very least enabled us to triangulate a reasonable estimate. We found a comprehensive list of all the proton therapy centers in the United States on NAPT's website. We believed if we could identify the number of proton therapy rooms in each center, as well as the supplier of the equipment, we could triangulate the market share of each supplier. Leveraging press releases, news reports, and details of the proton therapy centers' website, we were able to identify the number of rooms in each center, as well as the company that supplied the equipment at each center. 

To do this, we have created another spreadsheet with information on the proton therapy centers, the number of proton therapy rooms in each, and the proton therapy unit supply. We have taken supply to each room as one unit. Please note that while Proton International is a key player in the United States proton therapy market, we found that it does not supply proton therapy, rather, it offers a turnkey solution for proton therapy projects including financing, construction, and general project management and administration. Example of such instance can be found here, a project with the University of Alabama at Birmingham, in which Verian is supplying the proton therapy system.
Overall MArket Share in the United States based on number of units installedBased on our analysis in the spreadsheet, we found that there are 88 proton therapy rooms in the United States. The following is how these rooms break out among the players in the United States:
Varian: 14 rooms 
Hitachi: 12 rooms 
ProNova: 6 rooms 
IBA: 45 rooms 
Mevion: 11 rooms 

Therefore, the market share for each company based on the number of rooms/units (each room requires proton therapy equipment) installed is:

Varian: (14 rooms/88 rooms) * 100 = 15.91%
Hitachi: (12 rooms/88 rooms) * 100 = 13.64%
ProNova: (6 rooms/88 rooms) * 100 = 6.82%
IBA: (45 rooms/88 rooms) * 100 = 51.14%
Mevion: (11 rooms/88 rooms) * 100 = 12.5%

Therefore, the top three companies asides IBA, Mevion, and Proton International in the proton radiation therapy market based on the number of units installed are Varian (15.92%), Hitachi (13.64%), and ProNova (6.82%).
2018 MARKET SHARE OF PROTON THERAPY SALES IN THE UNITED STATES
In 2018, there were only 12 proton therapy rooms installed in the world. Of this total, three were in the United States and were all installed by Mevion Medical Systems. This means that in 2018, Mevion Medical Systems had a 100% share of the United States proton therapy market. On the global scale though, IBA installed seven of the 12 proton therapy rooms installed globally, which represents 58% market share. IBA is followed by Mevion Medical Systems with four rooms (34%), and Hitachi with one room (8%). 

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Proton Therapy Unit Costs: IBA, Proton International, Mevion

IBA's proton therapy unit costs between $28,300,000 and $33,960,000 while Proton International's cost per unit is $39,250,000. The cheapest of the three is the Mevion unit which costs $25,000,000. The complete information has been compiled in the attached spreadsheet. 
IBAIBA's cost per unit for the proton therapy unit is between EUR 25 million and EUR 30 million as of 2018. According to the current exchange rate, the cost per unit in dollars is between $28,300,000 and $33,960,000. Along with the unit, IBA provides a long-term maintenance contract. If there is a discount negotiated, it can be significant and can completely erase the costs of maintenance. If the full price is charged, IBA's proton therapy unit costs between EUR 35 and 40 million, meaning that the discount can be negotiated and can reach as much as between EUR 10 million and EUR 15 million. According to the current exchange rate, this translates to $11,320,000 and $16,690,000.
Proton InternationalOne proton therapy unit, alongside the necessary medical center installed by Proton International, is worth £30 million. This translates to $39,250,000 according to the latest currency exchange rate. According to a press release, the typical cost per four centers is £160 million which means once center costs £40 million. Therefore, as some Proton International proton therapy unit cost £30 million, the estimated average negotiated discount is £10 million which usually comes when ordering a larger quantity. This translates to $13,080,000 according to the latest currency exchange rate.
MevionMevion's proton therapy unit cost is around $25,000,000. The annual maintenance cost is estimated to be 10% of the initial purchase price. If the initial purchase price is $25 million, the annual cost is $2.5 million (0.1 x $25 million).
ConclusionThe complete report for IBA, Proton International, and Mevion has been compiled in rows 7-11, columns C-E of the attached spreadsheet.  

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Proton Therapy Unit Costs: Top 3

Varian provides financing for its products while Hitachi and ProNova both provide discounts for bulk purchases. Below is an overview of our methodology and findings. Kindly refer to columns F-H, rows 7-11, of the attached spreadsheet for more information.
MethodologyWe manged to find or triangulate all the required information apart from the installation costs for Pronova's proton therapy equipment. To find the installation charges for Pronova proton therapy equipment, we searched through the company's official website and press releases but the company only states that it's proton therapy equipment comes in factory-built components for a "streamlined installation process." 

Next, we searched through media resources in the company's locality (Tennessee) such as Knox News and WKRN as well as national and international media sites such as Forbes and Reuters. We also searched through press release distributors such as PRNewswire and BusinessWire in an attempt to find press releases by ProNova or any hospitals, centers, or communities that had purchased ProNova's proton therapy products but the ones that we found only echoed Pronova's sentiments that its products cost lower than the rest to install.

Third, we searched through industry publications such as Medgadget as well as proton therapy authorities/associations including NAPT (USA) and ASTP-Proton (Europe). We also searched through market research resources such as Market Watch and MarketsandMarkets as well as company profiling sites such as Bloomberg in the hope that they have researched and reviewed the company. However, our research produced nothing on the installation costs of Pronova's products. 

Presumably, Pronova's installation costs could be insignificant since its proton therapy units come in factory-assembled components for easy installation. Kindly refer to columns F-H, rows 7-11, of the attached spreadsheet for more information. Below is an explanation of our calculations as well as our findings.
FindingsVarian
According to a 2017 HealthPact report, Varian was supplied the equipment that was installed in the Cincinnati Children's Hospital. Varian's proton therapy equipment cost $50 million. Another report by the U.K. Mirror details the NHS' acquisition of two proton therapy equipment for about $163.8 million. Therefore, Varian's products cost between $50 million and about $163 million. 

Varian, through MM Proton I, its international subsidiary, recently provided $91,500,000 in loans for the installation of its ProBeamSystem in New York. Based on this information, we can conclude that the company provides financing for its products.

The company's Probeam system costs $50 million and the company's installation costs are about 25% to 50% of the proton therapy equipment cost. According to FierceBiotech, it cost New York $115 million to purchase, install, and maintain a Probeam unit for 10 years. The installation cost being between 25% and 50% of $50 million = $12.5 million to $25 million. That would mean that the total cost of purchase and installation of a Probeam units ranges from $62.5 million to $75 million. 

Therefore, the maintenance cost would range between = ($115,000,000 - $75,000,000)/10 years to ($115,000,000 - $62,500,000)/10 years = $4,000,000 to $5,250,000
Hitachi
According to Nikkei Asian Review, Hitachi's equipment cost about $88.7 million on average. According to the 2017 HealthPact report, Hitachi charged about $182 million for a four-unit equipment yet the average price for a one-room unit is $88.7 million. That means that each unit cost about $182,000,000/4 = $45,500,000 which when subtracted from $88,700,000, the discount is about $43,200,000. The search for information on Hitachi's maintenance cost and installation costs was straightforward.
ProNova
According to a Pronova press release, it installed a single three-room ProNova SC360 proton therapy unit at a cost of about $99.6 million. Knox News reports that the company developed five three-room units at a cost of $50 million each. This translates to a discount of about 50% for buying in bulk. 