After touring a training facility in Belgium and visiting the Guys & St Thomas’ innovation hub, this trip involved seeing trainee surgeons practice robotic surgery on chickens and pigs, and a live streamed surgery using a da Vinci robot. My thoughts below on a fascinating trip and a company at the forefront of driving robotic surgery forward.
The future is robotic – or so it appeared on my recent trip touring a training facility in Belgium before, back in the UK, visiting the Guys & St Thomas’ innovation hub the London Institute for Healthcare Engineering. I witnessed trainee surgeons practise robotic surgery on chickens and pigs, and then watched a live streaming of surgery taking place using a da Vinci robot – made by one of our holdings, US company Intuitive Surgical.
Only five years ago it was rare to see robots being used in medical surgery, with the exception of urology. Since then, medical professionals in many areas have adopted robotic technology to support the treatment of patients. Robotic surgery is now utilised in gynaecology, thoracic surgery, general surgery, and head and neck surgery, to name a few.
In line with our Enabling innovation in healthcare theme, we look to invest in those companies like Intuitive Surgical, which are breaking new ground with products or services that improve and extend the quality of life of patients.
Innovation in healthcare: the benefits of robotic surgery
In recent years, robotic surgery has revolutionised the medical field, yet it remains in its early stages of adoption. Currently, robotic surgery accounts for a mere 5% of procedures in the United States, with even lower penetration rates globally. However, the landscape is poised for a dramatic shift as the surgical profession increasingly embraces robotic technologies, uncovering new and innovative use cases that promise to transform patient care.
Surgeons and healthcare professionals expect an exponential rise in robotic surgery as the technology becomes more ingrained in medical practice and its uses cases become more widespread. Robotics in surgery offers several significant advantages that contribute to more consistent and efficient outcomes. The true strength of robotic systems lies in their ability to:
- Improve blood loss management: robotics enable more precise movements, leading to reduced blood loss during operations.
- Decrease hospital stay and recovery time: surgeries are typically less invasive, which translates to shorter hospital stays and faster recovery times for patients.
- Minimise complications: the precision and control offered by robotic systems result in fewer complications and more predictable surgical outcomes.
- Facilitate minimally invasive procedures: the ultimate goal of many surgeries is to be as minimally invasive as possible. Robotics can enable procedures through natural orifices, significantly reducing the physical impact on patients and accelerating recovery and discharge times.
Intuitive Surgical – the gold medal incumbent
IntuitiveSurgical ($156 billion market capitalisation) remains the undisputed leader in the robotic surgery market, maintaining its dominance as the first choice for surgeons and hospitals exploring using a robotic system worldwide. Founded in 1995, Intuitive has revolutionised the field of minimally invasive surgery with its da Vinci Surgical System, first launched in 1999. The company is focused on innovating to enable physicians and healthcare providers to improve the quality of, and access to, minimally invasive care to improve patient outcomes. Intuitive’s technology allows more efficient and less invasive ways to enter the body, its endoscopes provide clearer views of anatomy, its tools offer precise tissue interactions, and hone surgical skills. Over the past two decades, the company has built a formidable competitive moat, cementing its position as the market leader.
Its da Vinci Surgical System is renowned for its precision, control, and enhanced visualisation capabilities, which allow surgeons to perform complex procedures with greater accuracy. The upcoming release of the da Vinci 5 (DV5) has generated significant excitement among the surgical community. Some surgeons who have tested the DV5 have lauded its advancements, with some describing it as "the Rolls Royce of robotics”.
The DV5 introduces several key innovations, including forced feedback and haptics, allowing for even more precise movements. However, these advancements come at a cost. The DV5 is estimated to be priced into the millions of dollars.
In the Sustainable Future team, we believe Intuitive Surgical is extremely well-aligned with our theme Enabling innovation in healthcare given its pioneering position within robotic surgery. We hold the stock in the SF Managed Fund range, SF Global Growth Fund, and GF SF US Growth Fund.
Fundamentally, we believe Intuitive’s market leading position, first mover advantage, and investment in research and development (R&D) innovation justifies some impressive growth forecasts. Consensus forecasts show Intuitive growing revenues at a 15% annual growth rate over the next five years[1]. With returns on capital being reinvested back into the business, we expect to see Intuitive continue to iterate, innovate, and build upon its foundations as robotic surgery demand continues into the next decade.
Enter the challengers: a competitive landscape despite dominance
While Intuitive Surgical is currently the gold standard in robotic surgery, the landscape is evolving. Hospitals and health systems, including those within the NHS, strive to remain at the cutting edge of medical technology given the positive impact on patients in surgery. Despite the higher costs, these institutions are willing to invest in newer, longer-lasting robotics rather than purchasing used or second-hand equipment.
Following the expiration of key Intuitive Surgical patents from 2019, the field of robotic surgery has opened to a wave of new competitors. New robots are entering the market globally, most notably from the UK, Japan, and China. The standout challenger is Medtronic’s HUGO, which, despite a rocky initial market entry, has now successfully launched in European markets. This influx of new robotic systems is reshaping the competitive dynamics of the surgical robotics industry, offering alternatives that are becoming established as non-inferior to the da Vinci system, the long-standing leader.
How Intuitive aims to remain at the forefront of robotic surgical innovation while responding to a more competitive environment is a crucial question.
The future of robotics
The concept of fully automated surgery, where robots perform procedures independently without human intervention, remains an exciting prospect in the realm of medical innovation. However, the general consensus among surgeons – perhaps a biased view – is that this vision is unlikely to become a reality. Rather than replacing surgeons, the future of robotics in surgery is more likely set to enhance human capabilities through advanced AI prediction and assistance. This collaborative approach leverages the strengths of both human surgeons and robotic systems.
The future of robotics in surgery is bright, with significant advancements on the horizon and a large market opportunity. By enhancing human capabilities and improving real-time diagnosis and treatment, these technologies look to make surgeries safer, more efficient, and more effective – tying into the core themes we look for in the Sustainable Future investment process.
We remain excited by the journey forward, driven by companies like Intuitive Surgical, and believe the future will be one of collaboration between human ingenuity and robotic precision, heralding a new era in medical innovation.
[1] Factset consensus, 29th July 2024
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