The Changing Role of Suppliers in the Robotic-Assisted Surgery Market

The robot-assisted surgery (RAS) market has grown rapidly. Many contract manufacturers have benefited from the introduction of these sophisticated precision devices. Yet the marketing of surgical robots also points to a visible split in the supply chain. Front and center are the digital enhancements in the next generation of robots but little is mentioned about the tangible components essential to deliver the promise of superior patient and financial outcomes. As robots move beyond a human surgeon’s capabilities on account of electronic hardware and software, a new opportunity in micromanufacturing will open to contract manufacturers (CMs) capable of making the investment in time and capital.

RAS has moved from novelty to normal. There is no agreement as to the percentage of surgeries conducted with robots but it is likely over 20% in the United States.¹ The majority of some procedures are robotic with 80% to 90% of radical prostatectomies being completed with robotic assistance.2 Over 50% of orthopedic, cardiothoracic, and neurological surgeons surveyed in 2022 reported using robotic technology to conduct their procedures.³ There are over 100 RAS OEMs and startups, with Intuitive Surgical—the industry’s largest player—touting its more than 9,400 robots in the field have completed 14.8 million procedures. What was once science fiction is now commonplace.

RAS OEMs sell their products by emphasizing their therapeutic and digital capabilities. The evidence for superior patient outcomes and lower healthcare costs is slim but real. Many hospitals trust that as robots become more common, lower costs and fewer complications will replace the uncertainty and the technology’s considerable expenses in the headlines. The core of RAS OEMs marketing campaigns are often the remarkable product features offered by the latest generation of robots. An example is Intuitive’s promotional campaign for its newest iteration, the da Vinci 5. Approved by the U.S. Food and Drug Administration in March, the da Vinci 5 surpasses its predecessors in computing power, superior visualization technology, improved haptics (tactile feedback), and opportunities for AI and augmented reality, according to the company. The new system also features workflow enhancements to reduce transition time between surgeries and ensure reliable information sharing among the care team. Intuitive, however, is not alone. Promotional materials for Stryker Corp.’s Mako Total Knee 2 robot also stress the product’s new digital, rather than mechanical, features.

Surgical robots are being sold much like computer systems. In fairness, that’s largely what they are but such a sales approach differs from the usual means of marketing surgical instruments. For more than a century, surgical products were sold on the basis of the benefit of their tangible components. Products like powered orthopedic instruments and laparoscopic devices were hailed by their manufacturers as triumphs of material science, physical engineering, and precision manufacturing. Surgical devices were (and still are) epitomes of tangible technologies. Robots blend the tangible with the digital but the focus on the digital advantages is slanting the medtech supply chain in a manner forcing tangible product incumbents—mostly metal, plastic, and elastomeric component suppliers—to rethink their business strategies.

In a world of tangible products, tangible component manufacturers rule the supply chain. They influence product design, product development, and the range of capabilities surgeons will enjoy in the operating room. In a world of blended digital/tangible products, the supply chain expands to include electronics and software (hence, digital) vendors. Each group competes for content in a new device. Often, there is no conflict, but rather a collegial collaboration to provide the OEM customer with the requested product. If digital features are the key selling points, it is likely the tangible product CMs will have less influence on the robot’s final form. They likely will not dictate how a product should be built.

For surgical robots, this moment has passed, because the emphasis is on new digital features. Tangible component manufacturers are catering to the needs of design teams who often have backgrounds outside of precision manufacturing. Electronics engineers are calling more of the shots on future robots’ specific features, leaving metals and plastics suppliers on the sidelines of RAS development. They are playing a less prominent role in overall design but there are new opportunities forthcoming with the next generation of surgical robots.

In the computer world, hardware and software move at different paces. New hardware breakthroughs create opportunities for software developers. As software computing requirements outrun hardware, chip manufacturers develop more powerful chips that re-challenge the software world. This model seems to apply to RAS products as well.

The current generation of surgical robots completes the first phase of robots’ use in operating rooms. Today’s robotic technology mimic a capable human surgeon. While they rarely conduct procedures humans cannot perform, the digital features of next generation of robots will move surgery to new levels of precision beyond the capabilities of its human counterparts. Visualization technologies provide detail of real-time internal conditions previously only visible to a pathologist after a procedure is complete. Operating fields are dropping from inches to millimeters. Motion control and haptics allow positioning and steadiness an unaided hand cannot match. Exceptional precision is becoming available but today’s robots rarely press beyond what a doctor can do if called upon.

The next generation of robots will move beyond human limitations. RAS will continue but be supplemented by autonomous robotic surgery (ARS). ARS will allow a pre-programmed device to enter the body and perform surgeries in miniscule operating fields deeper within organs, vasculature, and bones than currently possible. A surgeon will still oversee the procedure but the robot will largely be on autopilot. Devices will become smaller and possibly self-propelled. RAS will also improve and be in use where fine operations such as a lung tumor excision or potential brain embolism treatment are required. Consequently, the role of the surgeon will shift from pilot to air traffic controller.

An example of micro components’ criticality at the frontier of robotic surgery is the Symani Surgical System by Medical Microinstruments Inc. MMI asserts that its robot includes miniaturized instruments capable of working with “micro and supermicro vessels”; at the J.P. Morgan Healthcare Conference earlier this year, company representatives described surgery in which a 0.8 mm artery was joined to another, something near-impossible even with today’s mainstream robots.

Tangible product manufacturers wishing to service the expanding RAS/ARS market will have many opportunities for projects but micro manufacturing disciplines stand out for growth. Exceptional visualization and motion control allow for the creation of smaller, less-invasive delivery systems and instrumentation. Were one to greenfield a medical manufacturing site, it would likely be filled with dedicated micro machining and micro molding technologies.

While there is no agreement on what makes a component “micro,” I define micro manufacturing as the ability to create device-critical features of 1 millimeter or less. Micro manufacturing will be the greatest area of opportunity for CMs interested in a commercial edge in the growing RAS/ARS market.

With RAS/ARS here to stay and tangible component CMs no longer in the driver’s seat, micro manufacturing of metal and plastic/elastomeric components offers incumbent suppliers a strong strategy for profiting from the next round of surgical robots. 

References

1. Estimate based on growth of surgical  robot sales with baseline of 15.1% of surgeries being performed robotically in 2018 in Michigan. tinyurl.com/mpo240711
2. tinyurl.com/mpo240712
3. tinyurl.com/mpo240633

Tony Freeman is president of A.S. Freeman Advisors LLC, a mergers and acquisitions and corporate valuation advisory firm. Please contact him at [email protected] with questions and comments.