Varian Medical Systems, Inc. (NASDAQ : VAR) is the world's largest producer of cutting-edge radiation therapy equipment used to treat cancerous tumors. Its other, significantly smaller businesses include X-ray tubes for scientific research and X-ray security equipment.^[1] The company earned $2.2 billion in revenue and $319 million in net income in 2009.^[2]

Varian holds about 60% of global market share in radiotherapy equipment. High switching costs protect Varian's market share since a brand-new system costs $2-3 million, compared to upgrades like Varian's newest product RapidArc, which cuts treatment time and costs $400,000. On the other hand, Varian's "open systems" approach lets customers integrate its upgrades with old equipment from competitors, presenting an additional opportunity to steal market share. The reverse is not true of all its competitors.

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