Medtronic plans to answer da Vinci with rival soft tissue robot

Dive Brief:

Medtronic's answer to Intuitive Surgical’s market-dominating da Vinci robot was the star of nearly four-hour event on Tuesday including remarks by CEO Omar Ishrak and his designated successor Geoff Martha, a panel of surgeons, and a robot-assisted prostatectomy performed on a cadaver.
Wall Street got it first look at the robotic assisted surgery system, which will include surgical specialties general, urology, gynecology, thoracic, colorectal and bariatric. The medtech giant is looking to differentiate itself with a modular system that is pedestal-based with components upgraded individually and a surgeon console open to the operating room.
The undertaking has a new projected timeline to market, after a fiscal 2019 target was delayed. A U.S. launch is now expected roughly two years from now, said Bob White, president of Medtronic’s minimally invasive therapies group. CE marking is projected for the second half of fiscal 2021.

Dive Insight:

Medtronic took the wraps off of a robotic surgical platform that has been years in the making but about which few details have been shared publicly in a much anticipated event Tuesday at Hartford Hospital in Connecticut.

Predicting that robotics will “change the face of surgery” over the next decade, Ishrak emphasized the company’s effort is one of its most important and heavily invested projects ever, calling it a “game-changer” for the device giant.

Medtronic expanded its already extensive portfolio of surgical instruments through its $42.9 billion acquisition of Covidien in 2015. The company trains 9,000 surgeons annually around the globe on use of its surgical devices. Its robotic system has been developed with input from more than 100 leading surgeons, the company said.

Medtronic expects to apply for CE mark certification in Europe in the first quarter of fiscal 2021 and to file with FDA for an investigational device exemption in the first half of fiscal 2021. The IDE will allow for U.S. system placements, training and clinical data gathering. Studies in undisclosed global markets will begin in the second half of the current fiscal year.

While the company expects robotic surgery to be a significant contributor to growth in the coming years, it projected a minor financial impact in fiscal 2021, followed by a “more meaningful” contribution in 2022 and 2023.

Jefferies analyst Raj Denhoy calculated Medtronic’s robotics revenue at a modest $200 million to $250 million, or 1% to 2% of an expected $20 billion market, by fiscal 2023. “Despite subdued messaging, robotics still has the potential to bend the overall growth curve over time,” he wrote.

Medtronic executives portrayed the current robotic surgery market as vastly under-penetrated, at just 2% of all surgeries performed worldwide. Low adoption and utilization rates are due to a high cost per procedure, they argued, noting the average installed system is being used only once per day.

Analysts agreed about the market's room for growth.

"We believe that [Medtronic's] robot might be better for a certain category of procedures than [Intuitive Surgical's] platform which could result in a form of segmentation among hospitals," analysts at Needham & Co. wrote Wednesday. "Given this, we believe that the market is not a zero-sum game and that Medtronic's entry should help to significantly expand the market."

Medtronic is aiming to bring robot-assisted procedure costs into line with laparoscopic surgery, aided by its modular design, to appeal to both current robotic users and hospitals that have not yet invested in a system, executives said.

The module platform consists of a surgical tower that includes a generator, an open surgeon console to facilitate communication with operating room staff, and independent mobile carts for the robotic arms and surgical instruments. The tower, visualization system and instrumentation such as staplers can be used in both robotic and laparoscopic procedures, and various components are upgradable at the hospital’s pace.

“Robotics is something that is going to be a big part of the company going forward,” said Martha, who is scheduled to take the helm on April 27, 2020. Given Medtronic’s resources, “this is something that we can do, and this is something that we will win at,” he boasted.

Analysts at William Blair wrote to investors Wednesday they "expect the robot to garner some industry demand initially," but as a first-generation system, it "will need to prove its story before it has a more material impact on adoption."

The newly unveiled system is separate from Medtronic’s Mazor robotic spine platform, acquired in December for $1.7 billion. Other device makers such as Stryker and Zimmer Biomet are focused on robotics in joint replacement, and Johnson & Johnson earlier this year paid $3.4 billion to buy Auris Health, which is developing robotic technology for use in lung cancer procedures.