Kristine Harjes: Who else is in the space? Does Intuitive have it to itself?
Todd Campbell: They are absolutely the market share leader, they're the Goliath out there.
There's some upstarts, we'll talk about them in a second, who want to hone in on their
territory. But they've been groundbreaking and controlling this market for the last 16
years. They've got 3,600 of their da Vinci systems installed throughout the globe. 2,400
here in the U.S. alone. If you're going to get robotic surgery at this point in time,
it's going to be done using a da Vinci system. Of course, that's very good for investors,
because first you've got these systems being sold, and they're not cheap, but they also
have recurring revenue streams that they receive from installing those systems, because every
time a procedure is done, some instruments need to be discarded and thrown in the garbage
and replaced with new instruments. As it stands now, we're talking about a market that's about
$2.3-2.4 billion, and it could grow fairly exponentially over the course of the next
decade or two.
Harjes: Right, you've got that razor-and-blade model that we know is extremely effective.
70% of their sales right now come from that recurring blade-type model, which seems really
promising. But you mentioned that there are some upstarts that could threaten them.
Campbell: Yeah, there are a couple different companies. One is really an upstart, and the
other is just a deep pocket of a company. The upstart is a company called TransEnterix.
They are developing something called the SurgiBot. The SurgiBot is a much lower entry-point cost,
about a third the value, roughly, of the average da Vinci system. It has not been FDA approved
yet. They were supposed to get approval last month, it got pushed back to potentially getting
approval this month. If it does get approval, then they're going to go out and start pitching
to smaller hospitals that haven't been able to pony up the million dollars-plus to buy
the da Vinci.
There's some advantages -- they claim they've got a system that provides with better feedback
to the doctor, haptic feedback, an articulating camera that could be something that doctors
would favor. And, you don't have to sit behind a console and be that far-removed from the
patient. This is a mobile system that theoretically can be moved from operating room to operating
room. But again, TransEnterix is a very, very small firm. They don't have a lot of cash
on their balance sheet. They are going to launch this thing and basically hope demand
is big enough to be able to eventually carve a way, a little bit at a time, at Intuitive
Surgical's dominance.
Then, the other company is much bigger. We're talking about a combination between
Johnson & Johnson and Google Life Sciences. They created this company called Verb Surgical.
They're going to take Johnson & Johnson's fast experience and surgical instruments and medtech,
put that together with Google's experience in analytics, and try to come up with a better
mouse trap than Intuitive Surgical. But they just got started last year. Who knows when
they might even have a product that could compete in this place?
Harjes: So, one final question on this topic. Looking forward, say, three to five years,
do you think this is a winner-take-all market? If so, which of these three ventures would
you put money behind.
Campbell: No, I don't think it's winner-take-all at all. Last year, there was 652,000 procedures
done via robot. That was about 20% of all the procedures that have been done since the
first da Vinci rolled out 15-16 years ago. Procedure volume is growing exponentially.
12-14% a year. And as it stands right now, Intuitive Surgical thinks that, without any
further innovation, their target market is more than four times as big as it is today.
There's 50 million surgeries that are done in the U.S. every year. 200 million done worldwide.
I think this is a market opportunity that has a lot of long legs. The way to play it,
if you're interested, in my opinion, would be Intuitive Surgical. Then, of course, keep
your eye on these other players.