With artificial intelligence now firmly entrenched in many hospital operating rooms, the field of robotic surgery is starting to get competitive.
Giant companies like Alphabet (GOOGL), Johnson & Johnson (JNJ) and Medtronic (MDT) are training their sights on Intuitive Surgical (ISRG), the king of robotic surgery companies, in what is becoming a booming medical technology segment with lots of room to run.
Robotic surgery is an area of medical technology that could grow by billions of dollars as more machines are used to treat patients. While Intuitive now commands the space with $3.3 billion in annual sales, its signature da Vinci robotic surgeons are limited in the types of procedures they handle. The multi-limbed da Vinci can be used in a variety of procedures — including cardiac, colorectal, gynecological, head and neck, thoracic and urologic surgeries — but only as long as they’re minimally invasive.
How big the market could be is still unclear, yet analysts agree the potential has yet to be tapped. So more players are moving in, and quickly.
“I think investors need to understand that the robotics and AI (artificial intelligence) revolution is happening, and it’s touching every sector of the economy,” said Jeremie Capron, the director of research and managing partner for Robo Global, an index and advisory firm specializing in robotic industry investments. “This is a technological revolution that investors can’t afford to miss.”
Medical Technology Applications
In March, Auris Health became the first company to directly take on Intuitive when its catheter-based Monarch Platform gained U.S. approval. Intuitive will counterpunch by seeking approval for a flexible catheter similar to the Auris device, likely this year, RBC analyst Brandon Henry said in a recent report.
Meanwhile, others are working in areas where Intuitive Surgical doesn’t have a foothold. Smith & Nephew (SNN) has a robotic assistant for knee replacements. Stryker (SYK) has a robotic joint replacement system. Mazor Robotics (MZOR) and Zimmer Biomet (ZBH) have robotic offerings in brain and spinal surgery. Mazor alone could see around $3 billion in sales just from its systems.
But these players have a long way to go to take Intuitive Surgical’s throne.
In 2005, Intuitive had a market cap of $1.3 billion. Today, it’s worth nearly $52 billion. Capron calls Intuitive “an amazing stock.”
Image Credit: Nils Davey / IBD