The Future of Robotic Surgery: Growth Drivers and Market Potential

Technological Advancements in Robotic Surgery

Technological advancements in robotic surgery are driving significant progress, with innovations like Intuitive Surgical's emergency general surgery applications, Johnson & Johnson's OTTAVA and Monarch platforms, Medtronic's AI surgical planning, and Stryker's R&D in computer science and robotics. These developments enhance clinical outcomes and economic efficiency, leading to broader adoption and standardization.

"In March this year, Dr. Nicole Linares from the University of Texas Southwestern, along with colleagues from other hospitals and data support from the Intuitive Health Economics Outcomes Research Team, reported outcomes describing the use of robotic technology in emergency general surgery cases." --- (ISRG, earning call, 2024/Q1)

"present value of greater than $100,000,000 And I am particularly excited about the progress in our robotics and digital ecosystem, including advances in our OTTAVA general surgery robot, the recent approval of the Monarch platform for bronchoscope in China and the continued market expansion for our Velis robotic assisted solution for total knee replacement." --- (JNJ, event transcript, 2024/04/25)

"And we see that continuing over the next several quarters here. And as Geoff mentioned, it's a combination of this technology portfolio, including AI surgical planning, including robotics, including power and surgical instrumentation imaging and navigation, putting that all together is creating this very attractive place where very good teams and reps and groups of people want to come together to work with Medtronic." --- (MDT, earning call, 2024/Q4)

"It features translational research laboratories and research and development units in computer science and robotics that design and develop tools for diagnosis, surgical planning and simulation aimed at improving and making surgical procedures safer." --- (SYK, press release, 2024/06/18)

"And you can see that grew by 52%. And this is where we see many of our customers moving from their operationalizing their robotics program to their standardizing now on robotics in surgery. And it's a function of their understanding of the clinical benefit and the fact that it's economically attractive because you get low complication rates, because you have lower length of step." --- (ISRG, event transcript, 2024/04/25)

Current Market Adoption and Trends

Innovation and new product launches are driving market adoption in robotic surgery, with companies like Intuitive Surgical expanding beyond urology into general, gynecologic, and thoracic procedures. Emerging markets and strategic pricing initiatives are also contributing to positive trends, indicating a broadening acceptance and growth in the sector.

"And lastly, then our priorities for this year, innovation is key to our success.We have a number of new products that have been cleared that are in the launch phase and we want those launches to go well We want customers to realize the benefits of the value that we're bringing to the market." --- (ISRG, AGM, 2024/04/25)

"Delivering on a new, compelling growth profile for driving above market revenue growthDiversifying into higher growth markets to accelerate revenue in higher growth areas and increase the Company's Weighted Average Market Growth Rate (WAMGR)Returning at least 65% of free cash flow to shareholders through dividends and share buybacks:Zimmer Biomet's board of directors has approved a new stock repurchase authorization, granting the Company authority to repurchase up to $2 billion in common stock." --- (ZBH, press release, 2024/05/29)

"Geoff Martha: Sure, Josh. Thanks for the question. Look, as I think most of you know, I mean, emerging market focus has been something that we've been on for a long time, and has been almost like an independent growth driver for us up until basically COVID, right, when certain markets like China shut down and then you had VBP." --- (MDT, earning call, 2024/Q4)

"We continue to see a positive trend from our pricing initiatives, particularly in our MedSurg and Neurotech businesses, almost all of which again contributed positive pricing for the quarter." --- (SYK, earning call, 2024/Q1)

"While geographic market maturity and levels of adoption differ by region and country, OUS da Vinci procedure growth is generally being driven by procedures beyond urology, reflecting surgeons' growing adoption of general surgery, gynecologic, and thoracic procedures." --- (ISRG, sec filing, 2024/Q2)

Competitive Landscape in Robotic Surgery

BDX's strategic acquisitions and product expansions have bolstered its competitive position in robotic surgery. ISRG's da Vinci system, with its advanced technology and significant capital investment, remains a market leader. JNJ faces competitive pressures in various segments, impacting its performance in the robotic surgery market.

"We've done some really attractive tuck in M and A whether or not it's building what's now one of the largest robotics businesses in med tech, a $750,000,000 pharmacy robotics business that we really scaled up through the acquisition of Parata or products like TIFA that you can see strong double digit growth in our surgery business over the last several quarters driven by that new reservable mesh and our upgrade that we have there and we have plans to expand that into new categories." --- (BDX, conference, 2024/05/14)

"The da Vinci surgical system generally sells for between $0.7 million and $3.1 million, depending on the model, configuration, and geography, and represents a significant capital equipment investment for our customers when purchased." --- (ISRG, sec filing, 2024/Q2)

"While trauma and spine were negatively impacted by competitive pressures and core trauma was further impacted by weather related softness in the U.S. Growth of 1.9% in surgery was driven primarily by procedure recovery and strength of our bio surgery and wound closure portfolios, partially offset by competitive pressures in China volume based procurement and energy and endo cutters." --- (JNJ, earning call, 2024/Q1)

"Just a reminder for everyone, they have very sensitive sensors that are built into the distal end, in the body end of the instruments that are sterilizable and cleanable, and they report back contact forces with tissue which at a sensitive way, which has been a goal for us and for surgery for a long time." --- (ISRG, earning call, 2024/Q1)

"Performance was driven primarily by competitive pressures in energy and endocutters, China VBP, prior year China recovery, EMEA tender timing across advanced surgery and supply constraints, and wound closure." --- (JNJ, earning call, 2024/Q2)

Cost-Benefit Analysis of Robotic Surgery

Robotic surgery offers a stable cost structure with products priced at $1,500,000. Long-term studies show significant patient outcome improvements, and force feedback technology enhances surgical proficiency. Collaborations with hospitals aim to deliver better patient experiences and lower total care costs, highlighting the comprehensive benefits of robotic surgery.

"Now you have a product which costs $1,500,000 which doesn't increase in price, which is good." --- (ISRG, AGM, 2024/04/25)

"They have other reasons to die. It may not be that. But if you take it to 5,000 patients to find truth, which is what we did, follow patients up to 5 years, there's a very strong correlation between that as have been in all the surgical series. As you follow this out, just a recent meta analysis was published of 250,000 patients followed up to 20 years, absolutely severe PPM infected the prognosis of patients." --- (MDT, AGM, 2024/04/07)

"We believe that force feedback and looking at force feedback through case insights, can improve their time to proficiency on the robot. When it comes to kind of longer term clinical outcomes and what force feedback and the data surrounding it, it's what Gary described." --- (ISRG, earning call, 2024/Q2)

"Our teams continue to work closely with hospitals, physicians and care teams in pursuit of what our customers have now termed the quintupling, better, more predictable patient outcomes, better experiences for patients, better experiences for their care teams, better access to great care and ultimately, a lower total cost of care. We believe value creation in surgery and acute care is foundationally human." --- (ISRG, earning call, 2024/Q2)

Future Growth and Market Potential

Substantial R&D investments and strong market positions are driving future growth in robotic surgery. Companies like JNJ, MDT, and SYK are seeing significant sales growth and procedure expansion, while competition is expected to further stimulate market growth.

"We continued our commitment to driving future innovation by investing more than $15,000,000,000 in R and D during 2023. At our Enterprise business review in December, we provided guidance of our expected 5% to 7% cumulative average growth rate in operational sales in the second half of the decade." --- (JNJ, event transcript, 2024/04/25)

"And on operating expenses, we continue to make appropriate investments in R&D to drive our future growth." --- (MDT, earning call, 2024/Q4)

"But following the pandemic, our growth momentum has continued and we had an absolutely outstanding year of sales growth of over 11% organic growth in 2023. Turning to the next slide, you can see that we are a very well diversified global medtech leader with strong market positions in orthopedics and spine and med surg and neurotechnology." --- (SYK, event transcript, 2024/05/09)

"I know U. S. System placements were strong last year and again that's tied to procedure growth in some sense. The procedure growth that we saw last year drove the need for expanded capacity in many international markets." --- (ISRG, event transcript, 2024/04/25)

"Now competition will come, but we do believe that that's also going to drive additional market growth." --- (JNJ, conference, 2024/05/15)

Patient Outcomes and Satisfaction

Robotic surgery significantly enhances patient outcomes and satisfaction by providing more predictable results, better patient experiences, and lower overall care costs (ISRG). Nurses play a crucial role in leveraging these technologies to improve outcomes (SYK). Clinical trials also show significant improvements in symptoms and quality of life (ABT).

"Better, more predictable patient outcomes, better experiences for patients, better experiences for their care teams, and ultimately a lower total cost of care." --- (ISRG, earning call, 2024/Q1)

"Nurses are at the forefront of innovation within healthcare systems, using their expertise and voice to help improve patient outcomes." --- (SYK, twitter, 2024/05/03)

"To what extent we believe there is a patient impact, which is positive. Number two, does it -- is it consistent with the capabilities and knowledge that we have in-house." --- (JNJ, earning call, 2024/Q1)

"Data from the clinical trial supporting this approval demonstrated that, patients who receive TriClip experienced a significant improvement in the severity of their symptoms and quality of life." --- (ABT, earning call, 2024/Q1)

"I've explained the incredible prognostic importance of each one of those. Now here's the statistical thing that you have to do, which is how we didn't have time to go through, but it's it's pretty important from a design standpoint.1, once you meet your 2 primary endpoints, non inferiority for clinical outcomes, which means we're as good or better than SAPIEN, and then superiority for VAVA, you get to test a series of other powered secondary endpoints sequentially." --- (MDT, event transcript, 2024/04/07)

Investment and Funding in Robotic Surgery

Intuitive Surgical is prioritizing investments in R&D and product enhancements, adding employees and scaling manufacturing facilities to support innovation and future growth in the robotic surgery market.

"We continue to prioritize investments in R&D to fund innovation and future growth.During the quarter, we added approximately 550 employees, of which roughly half were in our manufacturing operations to support growth in customer demand." --- (ISRG, earning call, 2024/Q2)

"I think other and this is specific to DB5. Other work that we're doing on some of the product enhancements and as we're bringing up facilities for manufacturing as you're adding scale, right, you're able to get leverage off those investments." --- (ISRG, conference, 2024/05/15)