Japan to reimburse TransEnterix's robotic surgery system

Dive Brief:

Japan has agreed to reimburse TransEnterix’s Senhance robotic surgical system in 98 benign and malignant laparoscopic procedures, the company announced Thursday.
TransEnterix, which is coming off a slow quarter for Senhance sales, called the Japanese market a "significant opportunity."
The reimbursement decision positions TransEnterix to compete with Intuitive Surgical in one of the largest markets for surgical robotic systems.

Dive Insight:

TransEnterix has struggled to gain traction since receiving FDA clearance for Senhance in October 2017. While TransEnterix sold 15 systems last year, it sold only one unit in the first quarter of 2019, prompting investors to drive down its stock price. TransEnterix has identified Japan as a market that can improve its prospects.

"Japanese regulatory clearance, when that happens, will be a significant opportunity for us," TransEnterix CEO Todd Pope said on a quarterly results conference call with investors in May.

TransEnterix secured regulatory clearance later that month and has now gained reimbursement for the robotic system in a wide range of procedures. Analysts at RBC Markets estimate the 98 categories covered by the decision include more than 1 million procedures a year in Japan.

The reimbursement decision is broader than that granted to Intuitive Surgical, TransEnterix’s rival for the robotic surgery market. However, TransEnterix has ceded a big headstart to its rival. TransEnterix has sold one system in Japan. Analysts at RBC estimate that Intuitive has installed more than 400 of its da Vinci systems in Japan and achieved procedure growth of up to 40% in the first half of 2019.

In plotting how to gain market share from its larger rival, TransEnterix has decided to rely on third parties for certain aspects of its commercial strategy.

"We plan to leverage a hybrid model in Japan where we will appoint a national distributor sales marketing and technical support, while we manage regulatory, clinical and training activities directly," Pope said in May. "We are in the final stages of appointing a distributor representative and expect to complete this selection later in the quarter."

The experience of Intuitive suggests Japan can be a significant market for TransEnterix provided it can make its commercialization model work. Speaking with investors last month, Intuitive CEO Gary Guthart said "Japan has been a great success" but noted a significant amount of work went into achieving that performance.

"It is really heavy lifting to do all the things required to build market access, from partnering networks to training centers to the clinical evidence base to support additional adoption," Guthart said.