Gary S. Guthart, Ph.D., President and CEO
Lonnie M. Smith, Chairman of the Board of Directors
Marshall L. Mohr, Exec. VP and CFO
Salvatore J. Brogna, Exec. VP and COO
Myriam J. Curet, M.D., Exec. VP and Chief Medical Officer
Dave J. Rosa. Exec. VP and Chief Commercial Officer
Bob DeSantis, Sr. VP, Instruments and Accessories
Brian Miller, Ph.D., Sr. VP, Systems and Vision
Colin Morales, Sr. VP, Secondary Market Equipment and Service
NO. OF EMPLOYEES: 4,444
GLOBAL HEADQUARTERS: Sunnyvale, Calif.
Intuitive essentially cornered the surgical robot market since launching the first iteration of its da Vinci system back in 2000. Recently, however, some competition has emerged in a young surgical robotic company named TransEnterix. Last October, the N.C.-based firm won FDA clearance for the Senhance Surgical System. Cleared for colorectal and gynecological surgery, it is the first system to compete head-to-head with da Vinci. Further, TransEnterix’s stock surged upward upon the announcement, while Intuitive’s shares fell slightly as investors fretted over impending competition.
Should Intuitive worry about the tiny contender? Senhance and da Vinci are comparable—both enable surgeons to conduct high-precision surgeries by operating robotic arms from workstations near the patient, and both target similar procedures.
Unlike da Vinci, however, Senhance features haptic feedback—da Vinci systems instead incorporate a form of tactile-visual sensory substitution to display information through visual cues. Senhance can recreate the sense of touch felt by surgeons using traditional surgical instruments. Further, surgeons using Senhance can control the robotic arm-mounted camera by moving the eyes and head, and Senhance’s instruments are reusable. Hospitals would presumably not have to stock up on as many replacement instruments and accessories as with a da Vinci system.
However, despite Senhance’s landmark FDA clearance and some alluring features, TransEnterix will have a tough battle to win against Intuitive. The company hasn’t made much progress in the global markets where da Vinci has already won approval, selling merely one unit in Germany and one in Japan in the first half of 2017. Assuaging some Intuitive fears, TransEnterix CEO Todd Pope said the company had “a lot of ground to cover” to compete directly with da Vinci in an interview with Reuters.
“We feel like we have got a lot of open field running ahead of us,” he said. “We are not going to be competing head-on with Intuitive.”
Analysts do not expect TransEnterix to chase the urological or prostate indications that Intuitive specializes in. Rather, Pope said the company would seek to convert delicate laparoscopic surgery, which is significantly wearing on surgeons, over to Senhance.
Intuitive should instead be worrying about Medtronic’s entry into the market. The global medical device giant’s revenue is 10 times that of Intuitive, and Medtronic plans to roll out its own surgical robot at some point this year. Although the global firm could face similar challenges to TransEnterix in gaining market entry, its size and stability as well as long-term relationships with hospitals could allow it to take at least some market share from Intuitive over time. Johnson & Johnson has also been teasing the public about entering the surgical robotics field by way of Verb Surgical, its long-heralded joint venture with Verily Life Sciences.
ANALYST INSIGHTS: Intuitive Surgical continues to benefit from being a ‘first-mover’ in surgical robotics. While many others (J&J, Google, Medtronic, etc.) are investing and trying to ‘catch up,’ Intuitive continues to simply execute and to increase its hospital ‘footprint.’ This will make it more difficult for the follow-on competitors to penetrate into their market share. Time to market is currently an advantage for this incumbent.
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
Intuitive’s 2017 fiscal year performance (year ended Dec. 31) ought to ease some of that apprehension, however. Shares of the company reached an all-time high last April after the da Vinci surgery robot maker reported first-quarter earnings and sales that beat analyst estimates—$5.09 of earnings on sales of $674 million for that quarter—which topped Thomson Reuters estimates of $4.93 on sales of $669.7 million. According to CNBC, Intuitive shipped 133 of its da Vinci systems during the first quarter, compared to 110 delivered in Q1 of 2016.
Intuitive was able to sustain that impressive pace for the full year. The firm posted 2017 revenue of $3.1 billion, soaring nearly 15 percent upward over the previous year. This year’s surge in sales is a continuation of a very profitable trend for Intuitive. The company had also posted double digit revenue expansion in 2016, rising 13 percent from the year prior.
In fact, nearly every facet of Intuitive’s business boasted double-digit hikes in 2017. Instruments and accessories revenue grew 17 percent to $1.6 billion, systems sales escalated 15 percent to $910 million, and services income upturned 13 percent to reach $582 million. Much of this windfall was a result of a 16 percent boost in the use of da Vinci systems and a 13 percent rise in the installed system base—from 3,919 to 4,409 by the year’s end. da Vinci sales outside the United States also ballooned a whopping 23 percent from the previous year.
Gynecology proved to be Intuitive’s largest U.S. specialty in 2017, with about 252,000 procedures performed. General surgery applications followed not far behind with approximately 246,000 operations, most of which were ventral or inguinal hernia repair procedures. da Vinci’s use in colorectal procedures in 2017 grew as well, thanks to 2016’s launch of the da Vinci Xi system, EndoWrist Stapler and Vessel Sealer, and Integrated Table Motion.
The latest in Intuitive’s surgical robot iterations, the da Vinci X Surgical System, also won CE mark approval last April, and the FDA cleared it for use last May. da Vinci X uses the same vision cart and surgeon console found on the flagship da Vinci Xi system, and allows users to customize with whichever advanced capabilities and upgrade pathways their practice requires. The new surgical robot enables focused-quadrant procedures like prostatectomy, hernia repair, and benign hysterectomy, touting flexible port placement and 3D digital optics. da Vinci X’s setup technology also features voice and laser guidance, drape design to simplify surgical preparations, and a lightweight, fully integrated endoscope.
“The da Vinci X System is a value-oriented option for hospitals that are just starting their robotic-assisted surgical program and for our existing customers who want to expand their existing robotics programs,” said Henry Charlton, Intuitive’s senior vice president of U.S. sales. “As customers’ needs grow, the da Vinci X System can grow with them. The da Vinci X System enables our customers to take immediate advantage of Intuitive’s full ecosystem of support and services.”
Last November, results from the first clinical study of the company’s flexible robotics platform were published in the journal CHEST. The 30-patient study was conducted at Royal Brisbane and Women’s Hospital in Australia, in procedures where the platform was used safely to take lung tissue samples for biopsy. In the study, most of the target lung nodules were less than two centimeters in diameter.
The robotic-assisted, catheter-based technology is intended to access hard-to-reach areas of the body through natural openings like the mouth. When used in the lungs, it may be able to make early lung cancer diagnoses. The CHEST study also indicated no device-related adverse events, instances of pneumothorax, or excessive bleeding.
“I was able to reach nodules in the peripheral lung that I wouldn’t have been able to reach before,” said David Fielding, M.D., thoracic physician and principal investigator in the study. “The robotic-assisted technology in sampling facilitates diagnosis at a stage in which most patients wouldn’t yet know that they have cancer. Early diagnosis should allow us to start care plans for patients earlier and offer curative treatments.”