The robotic hands of the da Vinci robotic surgery system.(Source:Alamy)
Surgery is increasingly relying on robotics. Approximately 10% of surgeries use robotic systems, and this percentage is expected to rise as more applications become available, more surgeons are trained to use robotic systems, and future-tech systems allow for improved theatre visualization. (Market Intel How Augmented Mixed And Virtual Reality Tech Unveils New Possibilities For Surgeons)
According to a new report, “Robotically Assisted Surgical Devices” by Meddevicetracker, the market for robotically assisted surgical devices is expected to grow from approximately $5.6bn in 2020 to about $11.5bn by 2025, which represents a compound annual growth rate (CAGR) of 15.7%.
Since robotic systems entered the operating suite in 1985, they have seen rising uptake. There are now more than 150 robotically assisted surgery (RAS) devices in use today. Proponents of RAS say the systems offer surgeons dexterity and access of open surgery combined with the safety and recovery speeds of minimally invasive surgery.
Long-time industry leader, Intuitive Surgical, Inc. has continued to innovate since its flagship product, da Vinci, became the first full RAS system approved by the US Food and Drug Administration in 2000. To date, the da Vinci remains the most widely used and sold RAS system.
By the end of the first quarter of 2021, there were 6,142 DaVinci systems installed worldwide. Despite COVID-19 impacting surgery volumes, over 1.2 million surgeries were performed using DaVinci during 2020, outpacing analyst consensus. (Intuitive Exceeds Expectations In Q1 As Da Vinci Sales And Surgeries Recover)
The market is set to change with rising competition from major medtech players and smaller innovators.
Major upcoming releases that will compete with Intuitive Surgical’s da Vinci, predominantly in the US, include Medtronic plc’s Hugo, expected to hit the US market in 2022; Vicarious Surgical Inc.’s currently unnamed system, expected in 2023; Johnson & Johnson (Pty) Ltd’s Ottava, expected in 2024, and Titan Medical Inc.’s ENOS, expected in 2025.
UK-based RAS maker CMR Surgical Ltd., a smaller market player, is also hoping to enter the US market with its Versius system, currently under review by the FDA, but already launched in several EU markets, India, the Middle East and Australia. (Minimally Invasive Surgery Down Under CMR Launches Versius to Australian Market)
To compete, several of these smaller players focus on niche surgeries and offer “pay-per-procedure" payment models. Instead of an upfront capital purchase of the system, hospitals are able to pay the manufacturer for every surgery performed using the system instead.
Per Vegard Nerseth, CEO of CMR Surgical, told Medtech Insight that this model had been popular with care groups, because it “means that the hospitals have stable costs. And that removes some of the barriers we have seen in the market for adoption of surgical robots.” (Exec Chat Rapid Expansion For CMR Surgical As It Launches Robotic System In More Countries)
The “pay-per-procedure" model may, however, maybe a short-lived sales model. The cost per procedure is likely to decrease over time as lower complexity robots intended for smaller ranges of surgeries, which cost a lot less, are released into the market.
‘Premium’ manufacturers, such as Intuitive, are also trying to drive down per procedure costs. In 2020, the company launched its Extended Use Instruments program, in which it introduced an updated set of instruments that can be used beyond the current 10-year lifespan, and for an additional two to eight surgeries.(Exec Chat Rapid Expansion For CMR Surgical As It Launches Robotic System In More Countries)
Competition in the RAS market for use in orthopedics is expected to intensify over the coming years, especially in total knee replacement surgeries with the big players Smith & Nephew plc, Stryker Corporation, Zimmer Biomet Holdings, Inc. and DePuy Synthes all racing to compete in terms of pricing and patient outcomes. (Orthopedic Roundup Q4 SN Stryker JJ Zimmer Biomet See PandemicRelated Sales Impact)
Other applications of robotically assisted surgery include brain and spinal surgery. Medtronic and Globus Medical Inc. currently lead this space. (Medtronic Claims Share Gains In Cardiovascular And Neurostim)
In 2018, Medtronic bought the remaining share of Mazor Robotics for $1.3bn, acquiring the Mazor line of instruments, which have been “meaningfully out-selling” Globus’ products over the past quarter, according to Medtronic’s CEO Geoff Martha. (Minimally Invasive Surgery Down Under CMR Launches Versius to Australian Market)
Globus Medical launched its ExcelsiusGPS interbody module for spinal surgery in late September 2020 and has reported increasing interbody usage as a result.
Other players in the brain and spine space include Brainlab AG with its Cirq robotic arm for spine surgery, eCential with its Surgivisio five-axis arm, and Zimmer Biomet with its ROSA ONE system for brain and spine procedures.
Globally, each market is projected to see high growth over the forecast period, with the US exhibiting the lowest CAGR due to the already relatively high market penetration. Developing nations, outside of the five major European markets (France, Germany, Italy, Spain and the UK) and Japan, are projected to see the highest growth.
Similar to other product markets, the market for RAS is driven by aging populations. As the global population of elderly people increases, so does the burden of disease. This drives demand for surgery, and thus, RAS.
Reimbursement is also a major market driver, particularly in the US where RAS is categorized as robot-assisted minimally invasive surgery. Any insurance that covers minimally invasive surgery also covers RAS procedures, including Medicare.
Another major driver of RAS is simply that it is robotically assisted. RAS proponents say they have the ability to make complex procedures easier and offer more precision and accuracy whilst freeing the surgeon's hands.
Additionally, as 5G infrastructure is rolled out globally, complex surgery can be done by expert surgeons remotely with minimal latency, allowing patients to receive potentially life-saving surgery in regions without specialist centers. (Ericsson Is Readying For A 5G Health Care Revolution)
As RAS technology improves, it is likely that training for it will be done during standard surgical training, whether at the university or prior to full qualification. This will drive adoption in every surgical specialty.
Another market driver is the willingness of some market players to compromise. A new da Vinci system can cost millions of dollars, something many hospitals simply cannot afford. (On-Demand Robotics The Way Forward In Minimally Invasive Surgery)
Distalmotion SA Dexter device represents a technological and economical middle ground between traditional MIS and RAS, allowing health care providers to access some of the advantages of RAS, without high upfront or ongoing costs. (Distalmotions Dexter Robot Enters Clinical Use In Gyne Procedures)
Among the biggest barrier to wider adoption of RAS systems is cost.
High upfront capital purchase costs for RAS systems, combined with expensive instrumentation and maintenance fees, mean RAS are typically more expensive than doing conventional surgery.
This limiter is compounded by the current lack of literature showing that RAS has superior patient outcomes compared to open surgery. To justify higher upfront costs, health care providers need to see significantly improved patient outcomes or secondary cost savings because of faster patient recovery times.
Market access is another limiter. Obtaining regulatory approval for RAS systems is slow in some regions, particularly in Japan and China. Given a ‘fast’ regulatory timeline is approximately two years for RAS in general, products often see delays.
RAS pioneer Intuitive remains the dominant player in the global RAS market.
Its two robotic platforms, the da Vinci and newer Ion, which is a system specifically for minimally invasive peripheral lung biopsy, brought in global revenues of $4.4bn in 2020, carving out a 78.2% market share. Intuitive has maintained strong growth with revenue growing at an 8.2% CAGR between 2018 and 2020, fending off competition from other suppliers.
Intuitive’s earnings are also bolstered by per-procedure payments and maintenance fees. Per-procedure costs vary between $700 and $3,500 with system maintenance costs running between $80,000 and $190,000 per year, according to figures disclosed by Intuitive in 2020.
Intuitive’s strategy for capturing new RAS market share is focusing on surgical procedures where minimally invasive surgery penetration is low.
This means that once a da Vinci-suitable method for a surgery is found, Intuitive instantly has 100% RAS market share for that procedure.
A good example of this is mitral valve repair.
Typically performed in approximately half of patients, with the other half having mitral valve replacements, Intuitive has found that mitral valve repairs done using the da Vinci outperform mitral valve replacements.
Intuitive also performed strongly during the COVID-19 pandemic.
During 2020, RAS procedure volume increased by only 1.1%.
However, general surgeries performed using the da Vinci increased 3.1% in the US and 6.1% in countries outside the US, outpacing competitors who saw slower growth or even a decreased volume.
During the company’s first quarter earnings call of this year on 20 April, Intuitive’s CEO Gary Guthart pointed to the firm’s strong performance.
“Overall, capital strength indicates anticipation of future procedure opportunity by our customers. A significant number of systems were part of multisystem deals by hospitals and integrated delivery networks, supporting a theme in which customers who know robotic-assisted surgery well continue to invest with us,” Guthart told investors.
This year, Intuitive plans to focus on improving its recent product launches, the single port da Vinci SP (which is a da Vinci robot that features multiple tools attached to one arm, allowing for complex keyhole surgery to be performed with only one access hole), and the Ion, as well as the informatics platforms behind them.
The company is also working to expand the clinical use range of its systems.
Currently, approvals in Asia and Europe for procedures outside of urology with any of its systems are sparse. Intuitive is hoping to enter these markets. Within the US, Intuitive is focusing on expanding bariatric, colorectal and hernia indications for the da Vinci.
Stryker, the second-largest player in the overall RAS systems market, had 2020 sales of $514.5m, which accounted for a 9.2% market share, driven by sales of its MAKO system for knee and hip arthroplasty.
The MAKO system was not entirely developed by Stryker. In 2013, Stryker acquired MAKO surgical and its RIO robotic arm for $1.65bn, which, at the time, was a significant acquisition. The MAKO system was approved for total hip arthroplasty (THA) in 2010. However, it took until 2017 for it to be approved for total knee arthroplasty (TKA) due to problems developing clinical evidence and training surgeons.
Despite the pandemic, where many elective surgeries were put on hold, Stryker’s CEO Kevin Lobo said during the company’s 27 April earnings call that it had a “banner first quarter for MAKO.”
Deutsche Bank’s analyst, Pito Chickering, however, wrote in his 3 June report that the MAKO performed poorer than expected during the second quarter of this year – particularly in anterior hip surgery, “usage has not been as strong as expected,” which Stryker said was due to a slow software roll-out.
With the MAKO system only currently being used for THA and TKA (with shoulder replacement expected to be launched in 2022), growth potential for Stryker in the RAS market is limited.
Morningstar’s Debbie Wang wrote in her 12 May analyst report, “We would not be surprised if Stryker manages to acquire Smith & Nephew over the next couple of years, as the latter's arthroscopy businesses would all fit in well with Stryker's portfolio,” providing Stryker more potential surgeries for its MAKO system.
Stryker is also working on spinal surgery RAS applications.
It is currently developing two robotic tracts, one for the MAKO, and one for the Cardan system, which it acquired when it purchased Cardan Robotics in 2019. (Stryker Closes Gap With Competitors In Strategic Spinal Robotics Acquisition)
In 2020, Medtronic was the third-largest market player in the RAS systems market with an estimated 1.6% market share, worth about $90m.
Medtronic’s Hugo RAS system, which garnered FDA investigational device exemption in May combines wristed instruments, 3D visualization and surgical video capture option into one system.
In June, Medtronic announced urological surgeon Ruben Olivares performed the first robotic prostatectomy using the Hugo system at Clínica Santa Maria in Santiago, Chile.
Designed to directly compete with Intuitive’s da Vinci, Hugo includes a universal tower, a surgeon control console, and up to four independent carts that carry the robotic arms that control the surgical instruments. The robot’s portable, modular design makes it easier for hospitals to use more often and will keep per-procedure costs lower.
Medtronic’s Hugo aims to capture market share in general surgery, urology, gynecology, colorectal and bariatric RAS procedures.
In a management discussion panel held by Bernstein on 3 June, Medtronic CEO Geoff Martha said Medtronic’s surgical robotics division and renal denervation trials will rack up total losses of roughly $400m in the 2022 financial year.
“We're ramping up investment because [these products are] closer [to launch]. [Hugo] just launched in countries that have lower regulatory barriers like India and Latin America, filed for the CE Mark, filed for US IDE [investigational device exemption], the FDA just approved that.”
Medtronic hopes to launch the Hugo in the US in 2022 and in India prior to 2022.
Other Market Players
Alongside the “big three,” there are many smaller market players that capture the remaining 10.9% of the market.
Smith & Nephew (Navio) had a 1.0% market share in 2020, Globus Medical (ExcelsiusGPS) had a 0.7% share, and Zimmer Biomet (ROSA and WalterLorenz surgical-assisted arm) a 0.9% share. The remaining 8.3% was split between even smaller players, including AKTORmed, Avatera Medical, CMR Surgical, eCential, Medrobotics, Preceyes B.V., and XACT Robotics Ltd.
Some of these smaller players are banking on using their robots to alter the very nature of surgery, recording each and every movement performed with a RAS system. Chief technical officer at CMR Surgical, Luke Hares likened the industry to a book.
“We have written the first few chapters on robotic surgery … For the first time, we are learning what we are doing across the whole population - across all the patients, across all the surgeons … and that is going to be very exciting.” (CMR Surgical And Microsoft Collaboration Opens Up Questions About Surgical Data Storage)